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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Alishia

13 days ago

The fact that Tom briefs Peter on every aspect of the business and they jointly agree on everything sounds a bit too cozy for my liking. I hope they don't start braiding each other's hair during the meetings.

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Wei

17 days 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

21 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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2 months ago

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

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