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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

Rudra Infra Ltd's CEO, who also chairs the board, personally selects directors, sets his own pay and dominates every meeting. Which structural reform most directly reduces this concentration of power?

Separating the roles of chairperson and chief executive and strengthening independent director committees best reduces the concentration. It creates checks on management, removes self-determination of pay and board selection, and improves accountability to shareholders and other stakeholders.

  1. AIncreasing the share capital
  2. BSeparating the roles of chairperson and chief executive and strengthening independent director committeesCorrect
  3. CShifting the registered office to another state
  4. DReducing the number of board meetings to one a year

Explanation

Concentration arises from combining chair and CEO roles and from management-controlled selection and pay. Separating roles and empowering independent nomination and remuneration committees restores checks and balances. The other options do not address it, and fewer meetings would worsen oversight.

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