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ACCA Applied Knowledge · Business and Technology · Governance in business organisations

Which of the following best describes the key difference between a unitary board and a two-tier board?

A unitary board combines executive and non-executive directors in one body, while a two-tier board separates a supervisory board, which oversees and appoints, from a management board that runs the business. The distinction concerns structure, not company type.

  1. AA unitary board has only executive directors, whereas a two-tier board has only non-executive directors
  2. BA unitary board contains executive and non-executive directors in a single board, whereas a two-tier board has a separate supervisory board overseeing a management boardCorrect
  3. CA unitary board is used only by private companies, whereas a two-tier board is used only by listed companies
  4. DA unitary board has no chairman, whereas a two-tier board has two chairmen

Explanation

In a unitary board, executives and non-executives sit together and share responsibility. In a two-tier system, a supervisory board (often including employee or other stakeholder representatives) oversees a management board that runs the business. The other options misstate the distinctions.

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