August 2025 Boardroom Dynamics Past Paper Answers

Description

QUESTION ONE

SAWA LOGISTICS PLC (SLP)
Sawa Logistics PLC (SLP), a Kenyan logistics company listed at the Nairobi Securities Exchange (NSE), has navigated decades of economic shifts. Its boardroom dynamics reflect not only its internal culture but also the broader evolution of corporate governance in Kenya. SLP adopts a unitary board structure that comprises of a non-executive Chairman, a Chief Executive Officer (CEO), two other executive directors, three non-executive directors (NEDs) and two independent non-executive directors (INEDs). Guided by agency theory, the board operates with standing committees including audit, nomination and remuneration and a recently formed strategy committee. To fulfil its mandate on fiduciary duties, SLP adheres to the principles of Capital Markets Authority (CMA) Code of Corporate Governance Practices for Public Issuers (2015).

The board’s composition reflects a deliberate effort towards diversity, albeit with some inherent biases. The Chairman, Elias Kimani, is a respected figure, a long-serving former CEO of a rival logistics firm, representing the#8220;old guard”. The current CEO, Aisha Mohamed, is significantly younger and brings a strong digital transformation background. The NEDs include a seasoned financial expert, a retired civil servant with extensive regulatory knowledge and a human resource specialist. The INEDs comprise Jane Mwakio, a renowned corporate governance expert and David Ochieng, a technopreneur who recently sold his successful start-up. While there is a good mix of gender and a good spread of ages, a subtle generational divide sometimes permeates discussions.
SLP’s boardroom dynamics reveals a nuanced interplay of power, expertise and historical influence. Elias Kimani, the Chairman, holds significant sway, often guiding discussions and sometimes pre-empting conclusions. While his experience is invaluable, some younger directors, particularly Aisha Mohamed and David Ochieng, occasionally find his traditional approach slow to adapt to rapid technological changes. Jane Mwakio, the governance expert plays a crucial role as an independent voice, often pushing for adherence to best practices and ensuring robust debate. There’s a noticeable tension between the drive for digital innovation pushed by the CEO and David Ochieng and the more cautious, risk-averse stance often voiced by the long-serving NEDs and the Chairman, who prioritise established operational stability. Informal alliances tend to form, with executive directors generally aligning with the CEO and the NEDs often siding with the Chairman.

A recent pivotal board decision illustrates these dynamics: the proposal to invest 500 million shillings in a new AI-driven logistics optimisation platform. Aisha Mohamed, the CEO, presented a compelling business case, emphasising long-term efficiency and competitive advantage. The strategy committee, chaired by David Ochieng, had already thoroughly vetted the proposal. During the board meeting, Elias Kimani initially expressed reservations about the substantial capital outlay and the perceived disruption to existing operations. The retired civil servant NED echoed concerns about implementation risks and regulatory hurdles. However, Jane Mwakio meticulously questioned the due diligence processes and risk mitigation strategies, ensuring all facets were explored. David Ochieng provided crucial technical insights, demystifying the technology. The executive directors, having been part of the strategic development, supported the CEO’s vision. The debate was extensive, stretching over two meetings. Ultimately, after much deliberations and the CEO agreeing to a phased implementation plan with clear performance milestones, the board approved the investment by a majority vote, with two NEDs abstaining. This decision, while a victory for the CEO’s vision, underscored the continuous negotiation of power and perspective that defines SLP’s boardroom.

Required:
(a) To fulfil their mandate on certain duties, SLP Directors adhere to the principles of the Capital Markets Authority (CMA) Code of Corporate Governance Practices for Issuers of Securities to the public.
Evaluate FIVE guidelines for performing these duties as per the Code. (10 marks)
(b) Explain FIVE features of the Board structure that SLP has adopted. (10 marks)
(c) Jane Mwakio and David Ochieng belong to a critical category of Directors at SLP.
Analyse FIVE challenges faced by these directors while executing their mandate. (10 marks)
(d) Guided by a certain theory, the Board operates with standing committees.
Assess FIVE challenges associated with this theory. (10 marks)
(Total: 40 marks)

QUESTION TWO
(a) Examine FIVE roles of a Corporate Secretary as a consultant to the Board. (5 marks)
(b) Jax Ltd. intends to improve the quality of decisions made by its Board of Directors.
Explain FIVE interventions that the company needs to adopt in order to achieve this. (5 marks)
(c) Organisational failures can significantly influence governance and leadership at the highest level of an institution.
Assess FIVE ways in which such failures can affect boardroom dynamics within an organisation. (5 marks)
(Total: 15 marks)

QUESTION THREE
(a) Diversity enhances the effectiveness and performance of corporate boards.
Summarise SIX types of diversity. (6 marks)
(b) Expert power is one of the five bases of power identified by social psychologists, John French and Bertram Raven in their classic 1959 taxonomy of power.
With reference to the above statement, outline FIVE sources of this power. (5 marks)
(c) Explain FOUR ways in which emotional intelligence (EI) contributes to effective boardroom dynamics. (4 marks)
(Total: 15 marks)

QUESTION FOUR
(a) Governance and organisational culture are two pillars that underpin how organisations operate, make decisions and relate to their stakeholders.
In view of the above statement, explain FIVE elements of culture that affect governance. (5 marks)
(b) Analyse FIVE physical characteristics of a boardroom that contribute to effective meetings. (10 marks)
(Total: 15 marks)

QUESTION FIVE
(a) Outline FIVE roles of a 21st Century governance professional in a rapidly changing global business environment.
(5 marks)
(b) Assess FIVE methods that may be used to conduct performance management for board of directors. (10 marks)
(Total: 15 marks)
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