ICM Corporate Governance
Domain focus
ICM Corporate Governance tests the board’s governance architecture: roles, committees, independence, board evaluation, succession and stakeholder disclosure. Expect questions that require you to distinguish the board’s oversight role from management’s execution role and to apply MCCG-style “apply and explain” reasoning.
Core rules and concepts
- The board provides leadership and oversight; management runs the business. Delegation must be documented through a board charter, reserved matters and delegation matrix.
- Separation of chair and CEO supports effective oversight, especially where the chair was previously CEO.
- Independence is assessed in substance: relationships, cross-directorships, tenure and economic ties can impair it.
- Audit, risk, nomination and remuneration committees need clear terms of reference, independent membership and direct access to information.
- Board evaluation should assess composition, dynamics and effectiveness, not just attendance.
- Sustainability and stakeholder engagement are governance matters because they affect risk and long-term value.
Worked example
A listed issuer has nine directors, only three independent, a combined chair/CEO and no audit-committee financial expert. The chair says, “We have good profits, so governance is fine.”
Reasoning: profitability does not answer governance gaps. The combined roles concentrate power; three of nine independent directors may be insufficient for the applicable independence expectations; and the audit committee needs appropriate financial capability. The board should separate the chair/CEO roles, review independence in substance, strengthen committee composition and disclose the explanation under the applicable governance reporting regime.
Traps that cost marks
Counting independent directors without testing substance. Assuming committee existence equals committee effectiveness. Treating “apply and explain” as “comply or ignore”. Forgetting that board evaluation and succession are ongoing duties.