Date: 09-08-2023

Faculty Business And Accounting

Assessment Name End Assessment Paper Code BCGV/A24E-1

(Eg: End/Sup)
E ff

Module Name Corporate Governance Module Code B7-CGV-20

Semester Jan – Jun 2024 Submission Mode Blackboard

QP-ASR-001|Rev 001

(E.g Turnitin,
( E.g Jul-Dec-2021)
blackboard, hardcopy)

Total Marks Duration 8 days

100 (E.g.,
mins/hours/days/weeks

Assessment Type Submission Date

(Applicable for 06 – 13 May
(Eg: Submission
Written/Practical/Sub
submission-based 2024
exams only)
mission)

Instructions

1. Your Student ID and name must be indicated on the answer sheet. Failure to do so will mean that your
work cannot be marked.
2. Answer ALL questions in Section A, answer any TWO questions in Section B and ALL questions in
Section C.
3. Answers should be clear and readable.
4. Use Microsoft Word to write your answers, Times New Roman, font size 12 and 1.5 spacing. Justify
your work.
5. You can do more research to answer questions but ensure you do not plagiarise.
6. Properly reference all your sources using Harvard referencing style.
7. Failure to follow instructions will lead in loss of marks.
8. Usage of AI tools in this assessment is not allowed.

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Date: 09-08-2023

SECTION A: ANSWER ALL QUESTIONS IN THIS SECTION (40 MARKS)

QUESTION 1
DTC is a newly established company based in Lesotho, a country with strong principles of corporate
governance. There are four theories that seek to explain corporate governance. Explain in detail, what is
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meant by agency theory and identify any three principals and their agents. (12 marks)

QUESTION 2
QP-ASR-001|Rev 001

Thato is a newly appointed Chief Executive Officer (CEO) at one of the leading banks in Botswana. The
Chairman of the Board has just resigned and there is a proposal by the shareholders to nominate Thato as the
chairman. List TWO (2) advantages and TWO (2) disadvantages of a CEO becoming the Chairman of the Board.
(8 marks)

QUESTION 3
Chemic Limited manufactures cleaning chemicals at its factory in Maseru. It has 200 employees, which makes
it the largest employer in its industry within a 30-mile radius. The factory is located on the side of Maqalika
Dam, 5 kilometers from the main north road. Identify FIVE (5) Corporate Social Responsibilities of Chemic
Limited. (10 marks)

QUESTION 4
Corporate scandals are usually an indication of the lack of responsibilities and accountabilities from the Board.
Despite not being the day-to-day decision- makers (The Board), they are expected to govern the corporate.
Explain any FIVE (5) roles of the board of directors. (10 marks)

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Date: 09-08-2023

SECTION B: ANSWER ANY TWO (2) QUESTIONS IN THIS SECTION (40 MARKS)

QUESTION 1
Due to an increase in global corporate scandals, there has been continuous reviews and amendments of codes
and reports in different countries. In the Republic of South Africa, the King Report was then introduced.
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Identify and explain in detail any FIVE (5) principles of the King IV report. (20 marks)

QUESTION 2
QP-ASR-001|Rev 001

Company SDB has, for many years, been dominated by the Chief Executive Officer (CEO). The Board of
Directors has never queried nor challenged decisions made by the CEO due to their loyalty to her. Some
minority shareholders have tried numerous times to voice their concerns about the lack of the Audit and Risk
Committees in the Board operations. Explain in detail the importance of an audit committee and the risk
committee in board operations. (20 marks)

QUESTION 3
Suppose you are appointed as an expert in corporate governance and are therefore assigned to do an analysis
of the corporate companies versus the family-owned companies. Your research yielded results such that, of
the 50 companies you have researched on, 20% of large companies have a share ownership and 30% are
family-owned. You are then requested to do a presentation about the differences between these two
company structures. Differentiate in detail, the differences between the corporate companies and the family-
owned companies. (20 marks)

SECTION C: ANSWER ALL QUESTIONS IN THIS SECTION (20 MARKS)

Page 3 of 4
Date: 09-08-2023

READ THE CASESTUDY BELOW AND ANSWER THE QUESTION(S) THAT FOLLOW
BEC Company (Pty) LTD is an electricity distributor in Lesotho. It currently distributes electricity through a
network of cables to local companies and Lesotho citizens. BEC shares are owned by three other companies
with an interest in the company’s profitability. The board of BEC has made a proposal to import electricity
from Mozambique, adding to the two already existing transmission networks which are ‘Muela Hydropower
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and ESKOM respectively. The CEO and minority shareholders are unhappy about this proposal, their reason
being that the operations and profitability of BEC are satisfactory.
BEC for many years has been dominated by the CEO because of his 20 years employment in the company. The
QP-ASR-001|Rev 001

Board has never voted against him, challenged, or disagreed with his proposals since they are closely
associated and appointed by him. The minority shareholders had recently voiced their opinions regarding the
lack of truly independent non-executive directors (NEDs), as those appointed are very close business
associates to the CEO. This proposal was dismissed by the CEO as he emphasized that he knew BEC better than
anyone and will decide on what is best for the company.
His view was that all the members of the board, who he appointed were experts in their respective duties and
had a diverse skillset needed to direct the company. Some of the Executive Directors did not understand the
concerns of the minority shareholders.

QUESTION 1
Explain in detail what an independent non-executive director is. (5 marks)

QUESTION 2
Identify and explain any FIVE (5) roles of the NEDs in the board operations. (10 marks)

QUESTION 3
Explain why the already existing NEDs are not considered independent, refer to the case study. (5 marks)

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