- 8 Marks
Question
Dr. Kingsley Tettey is the Chairman of the 4-member board of directors, and Dr. Joy Tettey is the Medical Director. Clearly, the Chairman is not the Chief Executive Officer (CEO) or Medical Director of LCH.
Required:
Discuss what the Ghana Code of Best Practices and the UK Corporate Governance Code state about this governance structure.
(8 marks)
Answer
- UK Corporate Governance Code:
- The UK Corporate Governance Code strongly advocates for the separation of roles between the chairman and the chief executive officer. The main rationale is to prevent any individual from dominating the board and its decision-making process. Specifically:
- The roles of chairman and CEO should not be held by the same person.
- A CEO should not go on to become the chairman of the company.
- No individual should have unfettered powers of decision-making on the board.
- The UK Corporate Governance Code strongly advocates for the separation of roles between the chairman and the chief executive officer. The main rationale is to prevent any individual from dominating the board and its decision-making process. Specifically:
- Ghana Code of Best Practices:
- The Ghana Code of Best Practices aligns with the UK code but offers some flexibility:
- Ideally, the roles of chairman and managing director/CEO should be separated, particularly for listed companies.
- In some cases, such as in smaller companies, these roles may be combined for economic reasons.
- If combined, the responsibilities of each role should be clearly defined to avoid confusion or power concentration.
(8 marks)
- The Ghana Code of Best Practices aligns with the UK code but offers some flexibility:
- Topic: International financial management
- Series: MAR 2023
- Uploader: Theophilus