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

Executive directors are employed full-time by the company and are directly involved in managing its operations on a day-to-day basis.

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

The remuneration committee sets executive director remuneration packages to ensure they are appropriate, fair, and aligned with long-term company performance.

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

Transparency requires companies to disclose material and relevant information to stakeholders accurately and in a timely manner, enabling informed decision-making.

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

Independence requires that non-executive directors have no material business, financial, or personal relationship with the company that could compromise their objective judgement.

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

The dominant personality problem occurs when one individual's excessive power within a company undermines governance checks and balances, as seen in high-profile corporate failures.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Corporate Governance 2