Strategy and Goverance

Question 1

Board of Directors

Answer 1

● Adopt a strategic planning process and at least once per year, approve the strategic plan.
● Assess performance of the organisation and whether it is achieving its objectives.
● Select, evaluate, and approve compensation of the CEO.
● Identification of risks and oversight of systems to manage risks.
● Monitoring of internal controls and management information systems.
● Approval of Financial Statements.
● Adopt a written business code of conduct that is applicable to everyone in the organisation
and monitor compliance with the code.
● Adopt a communication policy for the organisation.
● Monitoring of financial performance.
● Assessment of Senior Managemen

Question 2

Board of Directors (public) - requirement?

Answer 2

only required for PUBLIC companies but can be adopted by private companies.

Question 3

Board of Directors (private)- requirement?

Answer 3

○ Smaller BoD
○ Exists to protect minority shareholders or other stakeholders
○ No requirement for a certain number of members to be independent and therefore
management usually sits on Private company Boards.
○ Chairman is often the CEO

Question 4

BOD - composition

Answer 4

■ Independence (majority of members must be independent).
■ Expertise (members should have multiple different areas of expertise).
■ Size (there should be an odd number of members to ensure no ties when
voting with the most optimal range being 5-11 members).

Question 5

BOD - meetings

Answer 5

Frequency of Meetings
■ There are no strict requirements on how often the Board should meet but
generally speaking it should be often enough to provide strong oversight into
the operations of the Company.
■ In practice, this is likely between once a month and once a quarter with
sub-committees meeting separately

Question 6

BOD - Length of Term for BoD members

Answer 6

■ There should be a balance between ensuring each member can serve long
enough to understand the company and short enough so that new opinions
are constantly being brought into the business.
■ Best approach for replacing a board is to stagger end dates so that new
board members can acclimatise and become competent prior to old
members leaving.

Question 7

AUDIT COMMITTEE DETAILS

Answer 7

● Independent (management should not be on the Audit Committee)
● Financially literate
● Minimum 3 members

Question 8

AC - PRIMARY RESPONSIBILITIES

Answer 8

● Reviewing annual and interim Financial Statements
● Reviewing internal and external audit reports
● Understanding Management’s use of estimates and judgement in the Financial Statements
● Monitoring compliance with regulatory requirements
● Oversight for Management reporting on internal controls
● Direct communication with internal and external auditors for issue reporting.

Question 9

AC in public vs private companies

Answer 9

no specific rules that apply to audit committees of private companies, there are specific rules that apply to public companies

Question 10

AC (strategic fit)

Answer 10

discuss if the individuals are well fit to be on the commitee (expereience, profession, etc).