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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Effectiveness and Building Better Boards

Meghdoot Textiles Ltd, a listed public company, has a board that meets regularly and has good attendance, yet directors rarely challenge management proposals and most decisions are approved within minutes. Which view best reflects the concept of board effectiveness?

The board is not yet effective. Board effectiveness depends on the quality of oversight, questioning and contribution to strategy, not on attendance or meeting frequency alone. Routine quick approvals without challenge suggest weak scrutiny of management despite good formal participation.

  1. AThe board is effective because attendance and meeting frequency show that it is discharging its duties
  2. BThe board is effective because quick approvals show that management proposals are sound
  3. CThe board is not yet effective because effectiveness depends on the quality of oversight, challenge and contribution, not on attendance aloneCorrect
  4. DThe board is not effective only if it has fewer than four meetings in a year

Explanation

Board effectiveness is about how well the board provides strategic direction, oversight and constructive challenge to management. Attendance and meeting numbers are inputs and do not prove quality. Option A mistakes process compliance for real performance.

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