ACCA Applied Knowledge · Business and Technology · Governance in business organisations
The directors of Marden Ltd are required to explain and justify their actions to shareholders, who can then vote to remove them at the annual general meeting if dissatisfied. Which governance concept does this arrangement mainly illustrate?
This illustrates accountability. Directors must explain and justify their actions to the shareholders who own the company, and shareholders can sanction them, for example by voting them out at the annual general meeting. Integrity concerns honest conduct, whereas accountability concerns answering to owners for stewardship.
- AAccountabilityCorrect
- BIntegrity
- CReputation
- DProbity
Explanation
Accountability means directors must answer to shareholders for their stewardship and can face consequences, such as removal, if performance is unsatisfactory. Integrity is about honest and straightforward conduct, not about answering to owners. The scenario focuses on explaining actions and facing sanction, which is accountability.
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