December 2025 Boardroom Dynamics Past Paper Answers

Description

CERTIFIED SECRETARIES (CS) ADVANCED LEVEL BOARDROOM DYNAMICS
TUESDAY: 2 December 2025. Afternoon Paper. Time Allowed: 3 hours.
This paper consists of five (5) questions. Question one is a case study. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE
UMOJA BANK LIMITED (UBL)

Umoja Bank Ltd. (UBL) is a mid-tier commercial bank licensed by the Central Bank of Kenya (CBK). Over the past two decades, the bank has grown from a community savings institution into a listed company at the Nairobi Securities Exchange. As the bank expanded, its governance structures, boardroom culture among other practices, came under increasing scrutiny from regulators, shareholders and the public.

Although UBL’s governance framework is dynamic, it is aligned with the Companies Act the Capital Markets Authority (CMA) Code of Corporate Governance and Central Bank prudential guidelines. The bank has a board of directors with ten members, three of whom are executive directors, four independent non-executive directors and three founders. Committees such as the Audit and Risk Committee, the Credit Committee and the Human Resources and Remuneration Committee enable board support. However, there have been concerns regarding the independence of the board, given that the founding family continues to hold a high level of control. Such tension between the ownership interests and regulatory needs remains the long-existing governance challenge.
The UBL boardroom culture is a blend of hierarchical traditionalism and modern corporate culture. While the chairperson encourages open discussion, in practice some board members predominantly those from the founding family domineer the discussions. Independent directors feel obliged to follow the majority rather than contributions from the minority. The culture has created the perception that merit is secondary and loyalty receives more value. Younger and female directors, as well as foreign experienced professionals, cannot be heard. The result has been risk-averse decision making with little willingness to rock the boat, thus hindering innovation.

Decision-making has historically been consensus-based at UBL, but it has been slow and by special interest. For example, as the bank was considering venturing into mobile lending, some of the directors were against it on grounds that it would interrupt traditional sources of income and others saw it as critical for competitiveness. The process took a two-year delay and competitors got significant market share during the time. This put the cost of indecision as well as the need for evidence-based, timely and transparent processes under the spotlight. Of late, the board has attempted to adopt data-driven decision-making, incorporating market analytics, risk modelling and expert advisory reports. The process is still incomplete and disagreements are common in reconciling innovation with risk appetite.

The stakeholder interactions at UBL have been unsteady. On one hand, the bank has established a solid relationship with institutional investors and regulators and has regular consultative meetings with the CMA and CBK. At the same time, retail clients and local community groups have been outraged that they have been overlooked. Small and Microenterprises last grumbled during the COVID-19 pandemic, when the bank cut lending conditions, that it was neglecting their struggles. It resulted in reputational damage that could not be repaired by the corporate communications team. The board has now launched quarterly stakeholder forums in which customers, employees’ unions and investors can raise matters directly. However, the inclusion of stakeholders’ voices within board discussion remains a persisting challenge.
One of the weaknesses of UBL is talent management. Although the bank hires extremely capable graduates, there is high turnover of mid-level managers due to limited career advancement and perceptions of bias. The Human Resources and

Remuneration Committee has been blamed for the absence of diversity and weak implementation of performance-based systems. Additionally, the bank has not made a dedicated investment in women and younger manager leadership development. This left a succession planning deficiency as there were limited internal successors ready to assume executive roles. The board most recently supported a talent management approach centered on mentorship, continuous professional development and open promotion standards, but results are yet to be seen.
In line with CMA requirements, UBL conducts annual board reviews facilitated by external consultants. While reports always identify areas for improvement such as: improving independence, improving boardroom culture and integrating strategy with new market trends; implementation has been slow. Evaluation is not regarded by some directors as a game-changer but as a box-ticking exercise. For instance, recommendations for limiting control by family directors and enhancing gender diversity have been documented but not rigorously followed up. Effectiveness of evaluations has therefore been undermined by absence of follow-up mechanisms and accountability measures. Governance structures and practices at UBL are solid on paper, but power dynamics, cultural currents and indecision weaken the integrity of boardroom decisions. In order to thrive, UBL must establish independence, embrace diversity, respond to the recommendations of assessment and establish a culture of transparency that holds respect for both regulatory requirements and market sentiments.

Required:
(a) From the governance structure adopted by UBL, outline FOUR challenges that may arise. (4 marks)
(b) The Human Resources and Remuneration Committee at UBL introduced certain measures for effective talent management.
With reference to the above statement, explain effectiveness of the THREE talent management approaches adopted by board of directors at Umoja Bank Limited (UBL). (6 marks)

(c) Describe FIVE key stakeholder relationship gaps at UBL. (10 marks)
(d) Board evaluations at UBL are perceived by many directors as routine formalities rather than meaningful performance improvement tools.

Analyse FIVE reasons why board evaluations at UBL are perceived as a “box-ticking exercise”. (10 marks)
(e) Examine FIVE ways in which the boardroom culture at UBL affects the quality and inclusivity indecision-making. (10 marks)
(Total: 40 marks)

QUESTION TWO
(a) In recent years, evolving corporate challenges such as digital transformation, sustainability demands and stakeholder activism reshaped how boards lead and make strategic decisions.
With reference to the above statement, outline SIX shifts in approaches to leadership within modern boardroom.
(6 marks)

(b) Explain FIVE roles of self-regulation in corporate governance as reflected in the evolution of corporate governance codes. (5 marks)
(c) Power in organisations is both an art and a science.
With reference to the above statement, examine FOUR components of the art of power. (4 marks)
(Total: 15 marks)

QUESTION THREE
(a) Describe FOUR ways in which board learning and development can improve board performance and organisational success. (4 marks)
(b) Examine FIVE strategies that boards of directors can adopt to promote diversity within the boardroom. (5 marks)
(c) Boards of directors require not only technical skills and competencies but also strong personal characteristics to function effectively.
With reference to the above statement, explain SIX such characteristics. (6 marks)
(Total: 15 marks)

QUESTION FOUR
(a) Mechanisms of leadership influence refer to the various methods, processes and channels through which leaders affect the thoughts and actions of others.
With reference to the above statement, outline FIVE types of leadership influence. (5 marks)

(b) The directors of Takwimu Ltd. have embraced behavioral agility to enhance effectiveness in their organisation.
Analyse FIVE strategies that they may adopt to achieve this agility. (5 marks)

(c) Board systems are the structured frameworks that define its operations, resource management, accountability and overall functioning.

In view of the above statement, explain FIVE such systems. (5 marks)
(Total: 15 marks)

QUESTION FIVE
(a) Evaluate FOUR trends in technology that are influencing modern boardroom meeting design and dynamics.
(4 marks)
(b) Examine FIVE organisational failures that may impact boardroom dynamics and hence affect the effectiveness of the board. (5 marks)

(c) The Stewardship Theory developed in the 1990s by Donaldson and Davis offers a more humanistic and relational approach to management.
Required:
Explain SIX criticisms of this theory. (6 marks)
(Total: 15 marks)
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