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ACCA Strategic Professional · Strategic Business Leader · The board of directors

Brenner AG is incorporated in a jurisdiction requiring a two-tier board. The supervisory board includes employee representatives and appoints and dismisses the members of the management board. Which of the following is the main governance advantage of this structure compared with a unitary board?

The main advantage is the clear, formal separation of oversight from day-to-day management. The supervisory board monitors and appoints the management board, so executives cannot dominate the oversight function, which strengthens independence and accountability compared with a unitary board.

  1. AClear separation of oversight from day-to-day management, reducing the risk of one person dominatingCorrect
  2. BFaster decision making because fewer people are involved in strategy
  3. CExecutives can sit on both tiers, so information flows more freely
  4. DNon-executive directors gain detailed operational knowledge of the business

Explanation

The two-tier model formally separates monitoring (supervisory board) from management (management board), reducing the risk of dominance by executives. Distractors are weaknesses or wrong features: two-tier boards are typically slower, executives do not sit on the supervisory board, and supervisors tend to have less operational knowledge.

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