ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders
Marden Foods operates under a comply-or-explain governance regime. Its board chose not to separate the roles of chair and chief executive for the current year because of a transitional period after an unexpected resignation. Which disclosure would best satisfy the regime's expectations?
The board should publicly explain the departure, why it occurred, how the associated risks are being mitigated and when compliance will be restored. Comply-or-explain relies on transparent, reasoned explanation to all shareholders, so silence, a misleading compliance claim or private briefings to selected investors would not satisfy it.
- ANo disclosure, because the departure is temporary
- BA statement that the company complies with all provisions, noting the transition in the directors' biographies
- CAn explanation of the departure, the reasons, how risks are mitigated and when compliance is expected to be restoredCorrect
- DA disclosure of the departure only to major institutional shareholders at private meetings
Explanation
Comply-or-explain requires a meaningful public explanation: what departed, why, mitigating measures and expected duration. Silence or a misleading compliance claim breaches the regime. Private communication to some shareholders fails the requirement of public reporting to all stakeholders.
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