CCCP Corporate Governance & Ethical Practices 4

Question 1

Which of the following is an example of a 'related-party transaction' that requires board disclosure?

Accepted Answer

A company purchasing services from a firm owned by the CEO's spouse

Answer

Transactions between a company and entities connected to its insiders are related-party transactions requiring disclosure and independent approval.

Question 2

A 'poison pill' shareholder rights plan is PRIMARILY used to:

Accepted Answer

Dilute a hostile acquirer's stake to make a takeover prohibitively expensive

Answer

Poison pills trigger the right to buy additional shares at a discount if any party acquires a threshold stake, making hostile takeovers more costly.

Question 3

ESG reporting standards are MOST important for corporate governance because they:

Accepted Answer

Provide investors with material non-financial information to assess long-term risk

Answer

ESG disclosures give investors insight into environmental, social, and governance risks that may materially affect long-term corporate performance.

Question 4

The 'duty of care' requires corporate directors to:

Accepted Answer

Act with the care an ordinarily prudent person would exercise in a similar position

Answer

The duty of care requires directors to be informed, deliberate, and attentive—exercising the judgment of a reasonably prudent person.

Question 5

Which of the following is a key characteristic of an 'independent' board director under NYSE listing standards?

Accepted Answer

Has no material relationship with the company that could affect independent judgment

Answer

NYSE standards require that independent directors have no material relationships—financial, familial, or professional—that could compromise their objectivity.

(CCCP) Certified Corporate Compliance Professional Practice Test

(CCCP) Certified Corporate Compliance Professional Practice Test

CCCP Corporate Governance & Ethical Practices 4