ACCA Applied Knowledge · Business and Technology · Governance in business organisations
Marlow plc's chief executive, Ana Ruiz, has just retired and the board proposes that the chairman, Tom Keller, takes over as chief executive while remaining chairman. Which governance concern is most directly raised by this proposal?
The main concern is that power becomes concentrated in one person. Separating chairman and chief executive gives a balance of authority, with the chairman leading the board and overseeing the executive, so combining the roles weakens that check.
- AToo many non-executive directors would remain on the board
- BThe audit committee would lose its independence from the auditors
- CConcentration of power in one individual, removing the separation between running the board and running the businessCorrect
- DThe company would be unable to appoint a company secretary
Explanation
Best practice separates the chairman (leading the board) from the chief executive (running the business) so no one person has unfettered power. Combining the roles removes this check. The other options are unrelated to the proposal.
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