Corporate Governance Flashcards
7 cards from real ACCA SP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Corporate Governance flashcards as text
According to the UK Corporate Governance Code, what approach must listed companies take if they do not comply with a specific provision?
Answer: They must explain their reasons for non-compliance
The UK Corporate Governance Code operates on a 'comply or explain' basis, requiring companies to either comply with provisions or publicly explain why they have not.
Which theory identifies the conflict of interest that arises when managers may prioritise their own interests over those of shareholders?
Answer: Agency theory
Agency theory specifically addresses the principal-agent relationship, where agents (managers) may not always act in the best interests of principals (shareholders).
Under the UK Corporate Governance Code, after how many years of service is a non-executive director generally no longer considered independent?
Answer: 9 years
The UK Corporate Governance Code states that non-executive directors who have served for more than nine years should no longer be considered independent without specific justification.
Which board committee is primarily responsible for reviewing the company's financial reporting processes and the effectiveness of internal controls?
Answer: Audit committee
The audit committee oversees internal and external audit functions, financial reporting integrity, and the effectiveness of the company's internal control systems.
In a unitary board structure, which of the following best describes the board's composition?
Answer: Both executive and non-executive directors serving on a single board
A unitary board structure combines both executive and non-executive directors on a single board, which is the standard model in UK corporate governance.
Which UK code sets out responsibilities for institutional investors to monitor and engage with their investee companies to promote long-term value?
Answer: The UK Stewardship Code
The UK Stewardship Code sets out responsibilities for institutional investors to actively monitor, engage with, and report on their investee companies.
According to the UK Corporate Governance Code, why should the roles of Chief Executive Officer and Chairman not be held by the same individual?
Answer: To maintain appropriate separation of management and governance leadership
Separating the CEO and Chairman roles prevents excessive concentration of power, maintaining a balance between running the business and overseeing the board.