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ACCA Strategic Professional · Strategic Business Leader · Governance scope and approaches

Marlowe plc's board has appointed the same individual as chair and chief executive for ten years. A shareholder group notes that most governance codes based on the OECD approach separate these roles. Which risk is the main reason for that separation?

Governance codes separate the roles because combining chair and chief executive concentrates power in one person and weakens the board's independent oversight of management. The chair leads and monitors the board, while the CEO runs the business. Separation does not guarantee profits or reflect any legal bar on listing.

  1. AConcentration of power in one person weakens the board's independent oversight of managementCorrect
  2. BThe combined role makes the company ineligible to list on any exchange
  3. COne person cannot legally sign the annual report
  4. DSeparation guarantees higher profits within a year

Explanation

Separating chair and chief executive balances power: the chair leads the board and monitors, while the CEO runs the business. A combined role concentrates authority and reduces independent challenge. The other options state legal prohibitions or guaranteed outcomes that codes do not claim.

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