CEA Corporate Governance & Compliance 5

Question 1

A company operating in multiple countries adopts a single global code of ethics. What is the PRIMARY challenge this approach presents?

Accepted Answer

Local legal requirements or cultural norms may conflict with the global standard

Answer

While a uniform global code promotes consistency, it may conflict with local laws, customs, or business practices, requiring careful adaptation or supplemental local policies.

Question 2

Which of the following BEST describes a 'dual-class share structure' and its governance implication?

Accepted Answer

A share structure where some shares carry more voting rights than others, concentrating control

Answer

Dual-class share structures allow founders or insiders to retain voting control even as they sell economic interests, raising concerns about accountability to ordinary shareholders.

Question 3

Which of the following actions would most likely violate the anti-retaliation provisions of the Dodd-Frank Act?

Accepted Answer

Terminating an employee who reported potential securities violations to the SEC

Answer

Dodd-Frank explicitly prohibits employers from retaliating against employees who report potential securities law violations to the SEC.

Question 4

What is the role of a company's General Counsel in relation to the compliance function?

Accepted Answer

The General Counsel provides legal advice but the CCO independently manages compliance

Answer

In many organizations, the General Counsel and Chief Compliance Officer are separate roles; legal counsel advises on law while the CCO manages the compliance program independently.

Question 5

A board of directors adopts a 'majority voting' standard for director elections. What does this mean?

Accepted Answer

A director must receive more votes 'for' than 'against' to be elected or re-elected

Answer

Under majority voting, a director must receive more 'for' votes than 'withheld' or 'against' votes to be elected, giving shareholders more meaningful influence over board composition.

(CEA) Certified Ethics Associate Practice Test

(CEA) Certified Ethics Associate Practice Test

CEA Corporate Governance & Compliance 5