CIMAPRO19-P03-1 Exam - Topic 5 Question 88 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 88
Topic #: 5

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?

AAppoint enough independent non-executive directors (NEDs)that they make up at least 50% of the Board.

BAppoint one of the NEDs as Chair of the Board.

CInsist that the venture capital company director be removed as he is not necessarily motivated to act in the best interests of C Ltd.

DSet up at least three sub-committees namely remuneration, nomination, and audit committees.

EEnsure 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.

FSet up an 'agenda setting' sub-committee consisting of the current executive directors to decide the agenda for each Board meeting.

Show Suggested Answer

Suggested Answer: B, C, D

by Theresia at Mar 06, 2025, 05:09 PM

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Weldon

6 months ago

Not sure about removing the venture capital director, he might have valuable insights.

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Ricki

6 months ago

Setting up sub-committees is a must for better governance.

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Francisca

6 months ago

Wait, why would they give 10-year contracts? That sounds risky!

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Quentin

7 months ago

I disagree, the current board seems to be doing fine without them.

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Amber

7 months ago

C Ltd definitely needs more independent NEDs for a proper listing.

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Polly

7 months ago

Setting up sub-committees seems like a good idea, especially for audit and remuneration, but I wonder if three is the right number.

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Reid

7 months ago

I feel like removing the venture capital director might be too extreme; they could still bring valuable insights, right?

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Meaghan

8 months ago

I think appointing a NED as Chair could help with independence, but I’m not clear if that’s a requirement for listing.

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Shaun

8 months ago

I remember we discussed the importance of having independent non-executive directors for better governance, but I'm not sure if 50% is necessary.

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Blondell

8 months ago

This is a tricky one. There are a lot of moving parts to consider, like the existing board composition, the venture capital investor, and the need for public market credibility. I'll need to weigh the pros and cons of each option carefully.

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Albert

8 months ago

I feel pretty confident about this one. The company needs to bring in more independent voices to the board and establish proper board committees to oversee key areas. Options A and D seem like the clear winners to me.

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Sena

8 months ago

Okay, I've got a strategy for this. The question is really about ensuring the company has strong independent oversight and decision-making processes in place before going public. I'd focus on options A, B, and D as the best steps to take.

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Florinda

8 months ago

Hmm, I'm a bit confused by this one. There are a lot of options to consider, and I'm not sure which ones are the most appropriate. I'll need to think through the corporate governance implications of each step carefully.

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Noelia

8 months ago

This question seems straightforward - it's asking about the steps a private company should take to prepare for a public listing. I think the key is to focus on corporate governance best practices.

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Eloisa

1 year ago

I heard the Board meetings are 'reasonably well run' - is that corporate speak for 'chaotic and dysfunctional'? Better work on that before going public, or the stock might tank faster than a lead balloon.

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Billi

11 months ago

D) Set up at least three sub-committees namely remuneration, nomination, and audit committees.

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Leonida

11 months ago

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.

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Cornell

11 months ago

B) Appoint one of the NEDs as Chair of the Board.

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Sunshine

11 months ago

A) Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

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Yoko

11 months ago

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.

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Dominque

12 months ago

B) Appoint one of the NEDs as Chair of the Board.

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Alonso

12 months ago

A) Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

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Natalie

1 year ago

An 'agenda setting' committee? Sounds like the founding family wants to keep a tight grip on things. Not very progressive for a public company, if you ask me.

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Mauricio

12 months ago

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.

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Latosha

1 year ago

B) Appoint one of the NEDs as Chair of the Board.

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Rhea

1 year ago

A) Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

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Ilene

1 year ago

10-year contracts for the executive directors? That's overkill. Talk about job security! I'd rather focus on setting up proper committees to oversee the transition.

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Kyoko

1 year ago

D) Set up at least three sub-committees namely remuneration, nomination, and audit committees.

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Bernardine

1 year ago

B) Appoint one of the NEDs as Chair of the Board.

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Jennie

1 year ago

A) Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

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Fannie

1 year ago

Removing the venture capital director is a bit risky. They have a vested interest in the company's success, so it's better to work with them constructively.

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Margurite

1 year ago

Appointing enough independent non-executive directors is definitely the way to go. That will help bring in fresh perspectives and ensure better governance for the listing.

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