Question
Which of the following reflects a sign of strong
corporate governance practices?Solution
Good corporate governance ensures accountability, transparency, and checks on management power. • Separation of CEO and Chairperson roles (A): This prevents excessive concentration of authority in one individual and strengthens oversight. SEBI, based on recommendations of the Uday Kotak Committee, mandated this separation for the top 500 listed companies(effective April 1, 2020). This is a hallmark of good governance. • Independent directors forming only a minority (B): This weakens governance since SEBI recommends that at least 50% of the Board consist of independent directors (previously 33%). • Independent directors restricted in meeting shareholders (C): Limiting their ability to independently interact with shareholders undermines transparency and accountability.
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