ACCA SP Corporate Governance 2

Question 1

Which type of director is typically employed full-time by the company and directly responsible for its day-to-day management?

Accepted Answer

Executive director

Answer

Non-executive director

Answer

Shadow director

Answer

Independent director

Question 2

What is the primary purpose of a remuneration committee in a listed company?

Accepted Answer

To set the remuneration packages of executive directors

Answer

To determine the salaries of all permanent employees

Answer

To allocate bonuses to non-executive directors

Answer

To manage the company's employee pension fund

Question 3

In the context of corporate governance, what does the principle of 'transparency' primarily require of companies?

Accepted Answer

Disclosing material information to stakeholders in a timely and accurate manner

Answer

Publishing all internal management accounts publicly each quarter

Answer

Allowing all shareholders to attend board and committee meetings

Answer

Sharing commercially sensitive data with key competitors

Question 4

Which of the following is a key characteristic that distinguishes an independent non-executive director from other directors?

Accepted Answer

They have no material relationship with the company that could affect their judgement

Answer

They are employed full-time by the company on a fixed-term contract

Answer

They are appointed exclusively by the company's major institutional shareholders

Answer

They chair all of the company's board committees simultaneously

Question 5

Which corporate governance problem arises when a single individual dominates the board and overrides the checks and balances of governance structures?

Accepted Answer

The dominant personality problem

Answer

Insider trading risk

Answer

Audit committee failure

Answer

Dividend manipulation risk

Question 6

What is the primary role of the Senior Independent Director (SID) under the UK Corporate Governance Code?

Accepted Answer

To be available to shareholders as an alternative contact point to the Chairman

Answer

To replace the Chairman at all scheduled board meetings when unavailable

Answer

To chair all board committees on a rotating basis

Answer

To act as the primary liaison between the board and external auditors

Question 7

Which theory suggests that directors should act as responsible stewards of company assets, naturally aligning with shareholders' long-term interests?

Accepted Answer

Stewardship theory

Answer

Agency theory

Answer

Stakeholder theory

Answer

Transaction cost theory