Corporate Governance

Why is corporate governance required?

• To ensure the directors' objectives are met

• Because of a divorce between ownership and control

• To reduce the company's operational costs

• To increase the company's profits every year

What does corporate governance seek to ensure?

• That the directors behave in a way to ensure shareholders' objectives are met

• That the company has no debts

• That the company always makes a profit

• That all employees receive bonuses

What is a common structure for corporate governance boards?

• Dual management system

• Single executive board

• Unitary board structure

• Multi-tier system

What approach does the Sarbanes-Oxley Act represent in corporate governance?

• Rules-based approach

• Flexible approach

• Voluntary code

• Principles-based approach

What is required from companies regarding the UK code on corporate governance?

• To follow it without exception

• To apply it on a comply or explain basis

• To ignore it if it doesn't suit their business model

• To only follow it if they are a multinational company

What is the role of non-executive directors (Neds) on the board?

• To solely focus on profit maximization

• To represent the needs of the shareholder

• To represent the needs of the employees

• To manage day-to-day operations

Why should the roles of chairperson and CEO be separate?

• To prevent too much power being concentrated in one pair of hands

• To ensure better operational efficiency

• To reduce the workload on the CEO

• To comply with international laws

What is the purpose of the audit committee?

• To manage the company's marketing strategies

• To oversee the company's expansion plans

• To review the financial statements and ensure audit processes

• To recruit new board members

What does the remuneration committee focus on?

• Deciding the company's budget

• Setting the pay for executive directors

• Overseeing the company's charitable donations

• Managing the company's investments

What is a key principle of best practice in corporate governance?

• Having at least half the board made up of non-executive directors

• Having all executive directors on the audit committee

• Merging the roles of chairperson and CEO

• Eliminating the need for a nomination committee