Subject: CORPORATE GOVERNANCE

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CG – L4 – Q5 – ESG Issues in Development Banks

Identify and examine five main ESG issues for a development bank's board in meeting regulatory reporting and disclosure.

Environmental, Social and Governance (ESG) issues have become central to many board decisions in banks. Critically examine the FIVE main issues the Board of Directors of a Development Bank should consider in satisfying regulatory reporting and disclosure requirements.

(25 marks)

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CG – L4 – Q4 – Company Secretary as Chief Governance Officer

Analyze the perspective that the Company Secretary should serve as the Bank's Chief Governance Officer.

Critically examine the current view in corporate governance that the Company Secretary should be designated as the Chief Governance Officer (CGO) of the Bank.

(25 marks)

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CG – L4 – Q3 – Tenure of Office for Board and CEOs

Examine the practical significance of regulated tenures for bank board chairs, members, and CEOs

Critically examine the practical importance of the approved tenure of office of the Board Chairpersons, Board Members and the Chief Executive Officers (CEOs) of Banks. (25 marks)

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CG – L4 – Q2 – Internal Board Evaluation

Discuss the importance of conducting an Internal Board Evaluation and outline five key elements to include.

Critically examine the importance of a board conducting an Internal Board Evaluation (IBE) and the FIVE key elements that should be included in the evaluation.

(25 marks)

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CG – Level 4 – Q1 – Effectiveness of Business Model and Governance Mechanisms

Analyze the effectiveness of Daily Bank Plc's business model based on the given financial excerpts and scenario, and propose five key corporate governance mechanisms for future effectiveness.

The Daily Bank Plc (Sikaman) is a subsidiary of the Daily Bank Plc. Sikaman depends largely on agricultural and other primary exports for its foreign exchange earnings. The Chairman of Daily Bank Plc (Sikaman), Dr. Frank Owusu has received the revised end of the third quarter financial performance of the Bank from the Chairperson of the Audit Committee, Mrs. Mary Adobea. He has invited the Chairman of the Risk Committee, Dr. Kofi Roomy to assist in the discussion concerning the financial performance before the entire board meets. The Chairman’s attention has been drawn to the following excerpts from the unaudited comprehensive income statement as at 30th September, 2022 by the Director of Finance who is also expected to be in attendance. The excerpts are presented below. The Chairman of the Board has also asked the other Chairpersons to consider a recent internal memo from the group that instructed the Management Team to exit from the bond market, but it appeared to have been a missed strategic decision and opportunity because it has been received at the time the market is illiquid. This has created some degree of accountability challenge at the Board level. The Chairman has continued to question, why the board could not call for a shift in the allocation of resources on their own evolution but had to be prompted by the Group’s Board. Summary unaudited statement of Comprehensive Income of Daily Bank Plc. For the third quarter, for the year ended 30th September, 2022.

Items September 2022 Amount in millions of cedis (GHS’000s) September 2021 Amount in millions of cedis (GHS’000s)
Profit for the Period 280,000 300,000
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Expected credit loss on investment securities at fair value other comprehensive income (FVOCI) (300) 200
Change in fair value of financial assets at FVOCI (net of tax) (200,000) 40,000
Other Comprehensive income for the period net of tax (230,000) 40,200
Total Comprehensive Income 50,000 340,200

Source: Daily Bank Plc. www.db.sikaman
The Board of Daily Bank Plc (Sikaman) intends to refocus on the business model and the strategy being implemented by the bank. The business model statement recently approved by the Board in the previous annual report was accepted by most of the shareholders and stakeholders present at the latest annual general meeting (AGM). The current financial performance has put the Chairman of the Board on inquiry and is not convinced about the quality of the governance mechanisms in place. These mechanisms are required to protect the bank by minimising potential losses that can potentially occur due to being slow to react to global, environmental and political risks in Sikaman.
Required:
(i) Critically examine effectiveness of the business model of Daily Bank Plc. (35 marks)
(ii) Critically examine the FIVE key corporate governance mechanisms that the Board should introduce to be effective in future. (15 marks)

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CG – APR 2023 – L4 – Q5 – Application of Transaction Cost Theory to Digital Product Approval

Examine application of Transaction Cost Theory in board approval of a digital product.

The Board of Kashbank Plc has been introduced to the various bank corporate governance theories as part of its board development programme organised by the accounting firm Bash. The Directors are interested in the Transaction Cost (TC) Theory and want to understand how they should apply transaction cost issues to their decision to approve the the introduction of a digital product called MoneyTalks.

REQUIRED

Critically examine how the Board of Kashbank should apply the Transaction Cost (TC) Theory in approving the digital product, MoneyTalks to be introduced to customers.

(25 marks)

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CG – APR 2023 – L4 – Q4 – Management of Country and Sovereign Risk

Examine measures for the Risk Committee to manage country and sovereign risk.

Country and sovereign risk has become central to governance decisions in banks and accountabilities of both the Audit and Risk Committees of boards of banks. Critically examine the FIVE measures the Risk Committee of the Board should institutionalise to satisfy the expectations of the Board in their management of country and sovereign risk.

(25 marks)

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CG – APR 2023 – L4 – Q3 – Governance Framework for Responsible Banking

Examine governance framework for enforcing responsible banking in a recovering bank.

Responsible Banking is central to strategies of banks recovering from financially distressed economies and financial sectors. Critically examine the governance framework that the Board of Goodbank Plc in Ashland should institutionalise to enforce responsible banking practices.

(25 marks)

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CG – APR 2023 – L4 – Q2 – Role of Remuneration Committee under Basel III

Examine responsibilities of the Remuneration Committee to enhance its TOR for Basel III compliance.

The Board of Light Bank Plc intends to review the role of the Remuneration Committee to satisfy the requirements of Basel III. Pillar III requirement on disclosures. The Board has engaged you as a Corporate Governance Consultant. You are satisfied from an initial assessment of the committee’s terms of reference (TOR) that it covers areas such as role, constitution, membership, proceedings of meetings, reporting and disclosure, governance and resources, and terms of reference. You observe that the section on responsibilities does not reflect the strategic objectives of the bank.

REQUIRED

Critically examine the main responsibilities (tasks/ functions) of the Remuneration Committee to assist the board of Light Bank Plc to have a comprehensive Terms of Reference (TOR) for the Committee. (25 marks)

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CG – APR 2023 – L4 – Q1 – Impact of DDEP on Bank Governance and Capital Restoration Programme

Examine measures and procedures for capital restoration in a bank affected by DDEP, focusing on governance aspects.

The Board of Goldbank Plc in Sikaman has observed that the recent Domestic Debt Exchange Programme (DDEP) has negatively affected the governance and decisions of the bank. The Board is particularly concerned about the impact it is having on its governance performance standards and structures.

A major observation is the impact of the DDEP on the balance sheet or statement of position of the bank. The DDEP has resulted in a significant reduction of the Common Equity Tier 1 (CET1) capital of the bank. The situation also suggests that the strategic corporate governance objective of securing or protecting shareholders’ assets has been undermined. You are aware of some regulatory forbearances including a period of capital restoration and restructuring deployed by the regulator. It appears many of the governance indices set for bank corporate governance control and monitoring have been breached, or do not seem to have any governance interpretation for decision-making.

The Board of Goldbank intends to engage you as a corporate governance consultant to help it to establish the full impact of the programme on the bank’s governance structures and mechanisms.

The Chairperson, Dr. Rita Agyei is particularly interested in the aspects that relate to the Capital Restoration Programme.

REQUIRED

(i) Critically examine the FIVE main corporate governance measures that should be taken by the Board towards its Capital Restoration Programme (CRP). (35 Marks)

(ii) Examine the governance procedures that should be implemented to co-ordinate the capital restoration programme in Goldbank Plc. (15 Marks)

(TOTAL. 50 MARKS)

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CG – L4 – Q5 – ESG Issues in Development Banks

Identify and examine five main ESG issues for a development bank's board in meeting regulatory reporting and disclosure.

Environmental, Social and Governance (ESG) issues have become central to many board decisions in banks. Critically examine the FIVE main issues the Board of Directors of a Development Bank should consider in satisfying regulatory reporting and disclosure requirements.

(25 marks)

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CG – L4 – Q4 – Company Secretary as Chief Governance Officer

Analyze the perspective that the Company Secretary should serve as the Bank's Chief Governance Officer.

Critically examine the current view in corporate governance that the Company Secretary should be designated as the Chief Governance Officer (CGO) of the Bank.

(25 marks)

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CG – L4 – Q3 – Tenure of Office for Board and CEOs

Examine the practical significance of regulated tenures for bank board chairs, members, and CEOs

Critically examine the practical importance of the approved tenure of office of the Board Chairpersons, Board Members and the Chief Executive Officers (CEOs) of Banks. (25 marks)

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CG – L4 – Q2 – Internal Board Evaluation

Discuss the importance of conducting an Internal Board Evaluation and outline five key elements to include.

Critically examine the importance of a board conducting an Internal Board Evaluation (IBE) and the FIVE key elements that should be included in the evaluation.

(25 marks)

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CG – Level 4 – Q1 – Effectiveness of Business Model and Governance Mechanisms

Analyze the effectiveness of Daily Bank Plc's business model based on the given financial excerpts and scenario, and propose five key corporate governance mechanisms for future effectiveness.

The Daily Bank Plc (Sikaman) is a subsidiary of the Daily Bank Plc. Sikaman depends largely on agricultural and other primary exports for its foreign exchange earnings. The Chairman of Daily Bank Plc (Sikaman), Dr. Frank Owusu has received the revised end of the third quarter financial performance of the Bank from the Chairperson of the Audit Committee, Mrs. Mary Adobea. He has invited the Chairman of the Risk Committee, Dr. Kofi Roomy to assist in the discussion concerning the financial performance before the entire board meets. The Chairman’s attention has been drawn to the following excerpts from the unaudited comprehensive income statement as at 30th September, 2022 by the Director of Finance who is also expected to be in attendance. The excerpts are presented below. The Chairman of the Board has also asked the other Chairpersons to consider a recent internal memo from the group that instructed the Management Team to exit from the bond market, but it appeared to have been a missed strategic decision and opportunity because it has been received at the time the market is illiquid. This has created some degree of accountability challenge at the Board level. The Chairman has continued to question, why the board could not call for a shift in the allocation of resources on their own evolution but had to be prompted by the Group’s Board. Summary unaudited statement of Comprehensive Income of Daily Bank Plc. For the third quarter, for the year ended 30th September, 2022.

Items September 2022 Amount in millions of cedis (GHS’000s) September 2021 Amount in millions of cedis (GHS’000s)
Profit for the Period 280,000 300,000
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Expected credit loss on investment securities at fair value other comprehensive income (FVOCI) (300) 200
Change in fair value of financial assets at FVOCI (net of tax) (200,000) 40,000
Other Comprehensive income for the period net of tax (230,000) 40,200
Total Comprehensive Income 50,000 340,200

Source: Daily Bank Plc. www.db.sikaman
The Board of Daily Bank Plc (Sikaman) intends to refocus on the business model and the strategy being implemented by the bank. The business model statement recently approved by the Board in the previous annual report was accepted by most of the shareholders and stakeholders present at the latest annual general meeting (AGM). The current financial performance has put the Chairman of the Board on inquiry and is not convinced about the quality of the governance mechanisms in place. These mechanisms are required to protect the bank by minimising potential losses that can potentially occur due to being slow to react to global, environmental and political risks in Sikaman.
Required:
(i) Critically examine effectiveness of the business model of Daily Bank Plc. (35 marks)
(ii) Critically examine the FIVE key corporate governance mechanisms that the Board should introduce to be effective in future. (15 marks)

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CG – APR 2023 – L4 – Q5 – Application of Transaction Cost Theory to Digital Product Approval

Examine application of Transaction Cost Theory in board approval of a digital product.

The Board of Kashbank Plc has been introduced to the various bank corporate governance theories as part of its board development programme organised by the accounting firm Bash. The Directors are interested in the Transaction Cost (TC) Theory and want to understand how they should apply transaction cost issues to their decision to approve the the introduction of a digital product called MoneyTalks.

REQUIRED

Critically examine how the Board of Kashbank should apply the Transaction Cost (TC) Theory in approving the digital product, MoneyTalks to be introduced to customers.

(25 marks)

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CG – APR 2023 – L4 – Q4 – Management of Country and Sovereign Risk

Examine measures for the Risk Committee to manage country and sovereign risk.

Country and sovereign risk has become central to governance decisions in banks and accountabilities of both the Audit and Risk Committees of boards of banks. Critically examine the FIVE measures the Risk Committee of the Board should institutionalise to satisfy the expectations of the Board in their management of country and sovereign risk.

(25 marks)

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CG – APR 2023 – L4 – Q3 – Governance Framework for Responsible Banking

Examine governance framework for enforcing responsible banking in a recovering bank.

Responsible Banking is central to strategies of banks recovering from financially distressed economies and financial sectors. Critically examine the governance framework that the Board of Goodbank Plc in Ashland should institutionalise to enforce responsible banking practices.

(25 marks)

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CG – APR 2023 – L4 – Q2 – Role of Remuneration Committee under Basel III

Examine responsibilities of the Remuneration Committee to enhance its TOR for Basel III compliance.

The Board of Light Bank Plc intends to review the role of the Remuneration Committee to satisfy the requirements of Basel III. Pillar III requirement on disclosures. The Board has engaged you as a Corporate Governance Consultant. You are satisfied from an initial assessment of the committee’s terms of reference (TOR) that it covers areas such as role, constitution, membership, proceedings of meetings, reporting and disclosure, governance and resources, and terms of reference. You observe that the section on responsibilities does not reflect the strategic objectives of the bank.

REQUIRED

Critically examine the main responsibilities (tasks/ functions) of the Remuneration Committee to assist the board of Light Bank Plc to have a comprehensive Terms of Reference (TOR) for the Committee. (25 marks)

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CG – APR 2023 – L4 – Q1 – Impact of DDEP on Bank Governance and Capital Restoration Programme

Examine measures and procedures for capital restoration in a bank affected by DDEP, focusing on governance aspects.

The Board of Goldbank Plc in Sikaman has observed that the recent Domestic Debt Exchange Programme (DDEP) has negatively affected the governance and decisions of the bank. The Board is particularly concerned about the impact it is having on its governance performance standards and structures.

A major observation is the impact of the DDEP on the balance sheet or statement of position of the bank. The DDEP has resulted in a significant reduction of the Common Equity Tier 1 (CET1) capital of the bank. The situation also suggests that the strategic corporate governance objective of securing or protecting shareholders’ assets has been undermined. You are aware of some regulatory forbearances including a period of capital restoration and restructuring deployed by the regulator. It appears many of the governance indices set for bank corporate governance control and monitoring have been breached, or do not seem to have any governance interpretation for decision-making.

The Board of Goldbank intends to engage you as a corporate governance consultant to help it to establish the full impact of the programme on the bank’s governance structures and mechanisms.

The Chairperson, Dr. Rita Agyei is particularly interested in the aspects that relate to the Capital Restoration Programme.

REQUIRED

(i) Critically examine the FIVE main corporate governance measures that should be taken by the Board towards its Capital Restoration Programme (CRP). (35 Marks)

(ii) Examine the governance procedures that should be implemented to co-ordinate the capital restoration programme in Goldbank Plc. (15 Marks)

(TOTAL. 50 MARKS)

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