CIMA Exam CIMAPRA19-P03-1 Topic 3 Question 46 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 46
Topic #: 3

GHY is a listed company. Tom isGHY'sCEO and Peter isitsnon-executive Chair of the Board. Tom and Peterbothhave substantial relevant business and industrial experience andboth are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter's appointment. They have become close friends.

Tom briefs Peter on every aspect of the business. Tom and Peter jointlyagreethe agenda foreveryboard meetingandboth agree on the manner in which matterswill be presented to theboard.

Taking account of the principles of goodcorporategovernance, which of the following statements is correct?

AIt is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.

BNon-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.

CThe relationship between Peter and Tom may have a detrimental effect on company decision making as the Boardis not always being informed about matters in an unbiased manner.

DSince the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.

Show Suggested Answer

Suggested Answer: B, C, E

by Annamae at May 23, 2024, 11:57 PM

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Wei

3 hours ago

Wow, Tom and Peter are like the Siegfried and Roy of corporate governance! I hope they don't start performing any tiger acts in the boardroom.

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Tawna

4 days ago

While a good working relationship is important, the fact that they jointly agree on the agenda and how matters are presented to the Board suggests a lack of independent oversight. This could be problematic.

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Sena

16 days ago

The close relationship between Tom and Peter raises concerns about the objectivity and independence of the Board's decision-making process. The non-executive chair should maintain a certain distance to ensure proper oversight.

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Craig

4 hours ago

A) It is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.

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Natalie

27 days ago

That's a valid point, Nidia. It's important for the board to be informed in an unbiased manner.

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Nidia

30 days ago

I disagree, I believe option C is more accurate. Their close friendship could lead to biased decision making.

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Natalie

1 months ago

I think option A is correct. Tom and Peter's relationship seems beneficial for the company.

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