TUESDAY: 6 December 2022. Afternoon Paper. Time Allowed: 3 hours.
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
MINESWIPE CORPORATIONS LIMITED (MSL)
Mineswipe Corporation Limited (MSL) is a software programming company that was incorporated in Kenya in the year
2005. The company has 10 branches across the country with its headquarter based in Nairobi. The board of directors
meet quarterly unless there is an urgent matter to be deliberated on hence calling of a special board meeting. Until the
year 2015, the company had been profitable and commanded over 40% of the software programming market share in the
country. For a long period of time, the company was an original equipment manufacturer (OEM) for ten leading IT
companies. However, the situation has since changed, the company’s revenues have been dwindling and premium
customers have been shifting to other programming companies. The market share has since hit an all-time low of 10%
and the best talent has been leaving in droves.
During a recent board of directors meeting, the chairman, who was recently elected to the position and who is a computer
programming expert was concerned about the affairs of the company. He was worried that if the situation was not tamed
with the urgency it deserved, the company would collapse. He convinced his colleagues to hire a consultant to assess the
company’s position and recommend a turnaround strategy.
The board hired Moshiat Kush, a renowned corporate governance auditor and provided him with the terms of reference
for his task. While the management knew the challenges facing the company, the board of directors did not involve them
in their revival plans. The management was not involved in the recruitment of the consultant although they were expected to assist and work with him.
After a few weeks, Moshiat Kush delivered his findings to the Chair of the board as per the terms of reference (TORs). A
couple of issues highlighted by the consultant included:
• The size of the board was small, there were only three directors including the chairman.
• The board committees were not properly structured and were constituted on an ad hoc basis.
• The board lacked diversity.
• Poor product costing.
• There was no clarity between the roles of the board and those of the management.
• The company did not have a corporate secretary.
• The company had been regularly cited for non-compliance with statutory obligations.
The Chair of the board was alarmed by the findings. He engaged the company’s Chief Executive Officer (CEO) to
discuss the report. The CEO however was in agreement of the content of Moshiat Kush report including the findings. He
told the Chair of the board that the company failed to take care of the group dynamics and division of roles which resulted to overlaps and roles confusion. These overlaps affected delivery of service and performance of the employees.
New employees and directors were also not effectively recruited and on boarded. He also added that the management and
employees felt left out from decision making hence did not feel like they had any stake in the company. This largely
contributed to talent flight.
After the discussion with the CEO, the Chair promised to table the matters raised during the subsequent board meeting so
that a resolution could be passed to help turn around the company.
Required:
1. The size of MSL board was small, there were only three directors including the chairman.
Assess FIVE challenges that the organisation may have encountered due to a small board size. (10 marks)
2. Evaluate FIVE different types of diversity that MSL board could have sought while recruiting its directors. (10 marks)
3. In the preliminary recommendations, a corporate secretary was to be hired immediately by MSL.
Summarise FIVE roles that the corporate secretary would be performing. (10 marks)
4. According to the CEO of MSL, group dynamics affected the company’s performance.
Evaluate FIVE stages that are involved in development of teams. (10 marks)
(Total: 40 marks)
QUESTION TWO
1. Maisha Limited adopts a unitary board structure.
Identify FIVE features of a unitary board structure. (5 marks)
2. A newly formed company is looking to fill up director positions on its board.
Assess FIVE necessary components in determining the structure of a board. (5 marks)
3. Organisational politics are self-serving behaviors that employees use to increase the probability of obtaining positive outcomes in organisations.
With regard to the above statement, outline FIVE elements of organisational politics. (5 marks)
(Total: 15 marks)
QUESTION THREE
1. Conducting regular board meetings is a good practice in good corporate governance.
Based on the above statement, analyse FIVE characteristics of effective board meetings. (5 marks)
2. Cognitive biases result from the brain’s efforts to simplify the incredibly complex world in which people live.
With reference to the above statement, appraise FIVE common cognitive biases. (5 marks)
3. Explain FIVE ways through which stakeholders could build trust through conversations. (5 marks)
(Total: 15 marks)
QUESTION FOUR
1. Self-regulation is an important component in corporate governance.
Assess FIVE components of self-regulation. (5 marks)
2. Explain FIVE benefits of low power distance cultural dimension to an organisation’s board. (5 marks)
3. Evaluate FIVE flaws that hinder effectiveness of decision making at board meetings. (5 marks)
(Total: 15 marks)
QUESTION FIVE
1. Ethical dilemmas are commonplace in society but can negatively impact the business of a company.
In view of the above statement, explain FIVE ethical dilemmas that company directors may face. (5 marks)
2.Outline FIVE types of information that should be provided to newly recruited board members. (5 marks)
3. Board evaluations are used to assess and report on individual directors and the whole board.
Evaluate FIVE areas of focus in board evaluation. (5 marks)
(Total: 15 marks)
