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CSEET · Economic and Business Environment · Elements of Corporate Governance

Which feature of a board is most consistent with good corporate governance?

A board that includes independent directors is most consistent with good governance, because they can objectively oversee management and protect the interests of all shareholders. Boards made up only of executives or one family, or without committees, lack independent scrutiny and weaken oversight.

  1. AInclusion of independent directors who can objectively oversee managementCorrect
  2. BAll directors being full-time executives of the company
  3. CChairperson and all directors drawn from one promoter family
  4. DNo separate committees so that decisions remain quick

Explanation

Independent directors bring objectivity and protect the interests of all stakeholders, which strengthens oversight. A board made entirely of executives or one family lacks independent scrutiny, and avoiding committees reduces focused oversight of areas such as audit.

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