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CIMAPRA19-P03-1 Exam - Topic 2 Question 82 Discussion

C Ltd is a private, family-owned company which is hoping to become listed on a recognised Stock Exchange within the next two years. At the moment, the Board of Directors comprises five directors; four of whom are from the founding family and all of whom are involved in the day-to-day running of the business. The remaining director obtained a seat on the Board threeyearsagoas a condition of an investment by a venture capital fund.The Board meets in half-day sessionsonce a fortnight and the Board meetings are reasonably well run. All decisions are taken by the Board as a whole. There are no sub-committees.Which of the following steps would it be appropriate for C Ltd to take in the light of the proposed listing?
A) Appoint enough independent non-executive directors (NEDs)that they make up at least 50% of the Board. and B) Appoint one of the NEDs as Chair of the Board. and D) Set up at least three sub-committees namely remuneration, nomination, and audit committees.
C) Insist that the venture capital company director be removed as he is not necessarily motivated to act in the best interests of C Ltd.
E) Ensure that the current executive directors are given 10 year contracts starting on the day the company is floated, to ensure consistency and continuity in the management of the company.
F) Set up an 'agenda setting' sub-committee consisting of the current executive directors to decide the agenda for each Board meeting.

CIMAPRA19-P03-1 Exam - Topic 2 Question 82 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 82
Topic #: 2
[All CIMAPRA19-P03-1 Questions]

C Ltd is a private, family-owned company which is hoping to become listed on a recognised Stock Exchange within the next two years. At the moment, the Board of Directors comprises five directors; four of whom are from the founding family and all of whom are involved in the day-to-day running of the business. The remaining director obtained a seat on the Board threeyearsagoas a condition of an investment by a venture capital fund.

The Board meets in half-day sessionsonce a fortnight and the Board meetings are reasonably well run. All decisions are taken by the Board as a whole. There are no sub-committees.

Which of the following steps would it be appropriate for C Ltd to take in the light of the proposed listing?

Show Suggested Answer Hide Answer
Suggested Answer: A, B, D

by Nana at Apr 06, 2026, 11:57 PM

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Kendra
7 hours ago
They definitely need more independent NEDs for the listing.
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Dominic
5 days ago
Sub-committees are essential for good governance, no doubt!
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Xuan
11 days ago
Wait, 10-year contracts? That sounds risky!
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Maryln
16 days ago
Removing the venture capital director seems extreme, though.
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Teri
2 months ago
Totally agree, at least 50% NEDs is a must!
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Kate
2 months ago
They definitely need more independent NEDs for a proper listing.
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Jesus
3 months ago
I feel like giving the executive directors long contracts, like in option E, might not be the best move. It could tie the company down too much, but I need to think more about that.
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Roxanne
3 months ago
Setting up sub-committees like in option D was something we practiced in case studies. It could really help with the structure, especially for a company looking to go public.
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Gail
3 months ago
I'm not entirely sure about the necessity of removing the venture capital director. I think they might still have valuable insights, but I guess it depends on their influence.
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Deja
3 months ago
I remember we discussed the importance of having independent NEDs for better governance, so option A seems like a solid choice.
upvoted 0 times
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