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    PracticeACCAACCA BT — Business & Technology Practice Exam 6Question 35
    Easy1 markMultiple Choice
    Organisational structure, culture, governance and sustainabilitySection ASyllabus BCorporate Governance

    ACCA · Question 35 · Organisational structure, culture, governance and sustainability

    True or False: To maintain good corporate governance, Non-Executive Directors (NEDs) should ideally have previously worked as executives in the same company to ensure they understand the business deeply.

    Answer options:

    A.

    True

    B.

    False

    How to approach this question

    Consider the primary role of an NED: independent oversight. Prior employment creates a conflict of interest.

    Full Answer

    B.False✓ Correct
    Corporate governance codes stress the importance of independent Non-Executive Directors. A former executive of the company is generally not considered independent due to pre-existing relationships and potential bias towards their own past decisions.

    Common mistakes

    Assuming industry knowledge is more important than independence.
    Question 34All questionsQuestion 36

    Practice the full ACCA BT — Business & Technology Practice Exam 6

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