FREE Corporate Governance Questions and Answers
Breach of the _________ may result in disqualification of directors.
Explanation:
Breaches of the Companies Act 2016 and the Insolvency Act 1986 can potentially lead to the disqualification of directors. The specific provisions and requirements for director disqualification can vary depending on the jurisdiction, so it's important to refer to the relevant laws and seek legal advice specific to your jurisdiction.
Director duties are not likely to involve
Explanation:
Directors of a company are typically responsible for managing the affairs of the company in the best interests of its shareholders as a whole. This duty is often referred to as the duty to promote the success of the company, which is a statutory duty in many jurisdictions.
While shareholders may desire high dividends, it is not the duty of directors to propose high dividends for the sake of satisfying shareholder desires alone. Rather, directors must balance the interests of shareholders with those of other stakeholders, such as employees, customers, suppliers, and creditors, as well as the long-term interests of the company.
Which of the following can contribute to effective governance?
Explanation:
Small board size, diversity of the board, and a longer-term vision are factors that can contribute to building good governance within a company. By considering these factors, companies can improve their governance practices, enhance transparency, accountability, and stakeholder trust, and ultimately contribute to the long-term success of the organization.
It's important to note that good governance encompasses multiple aspects, including ethical practices, sound decision-making processes, effective board oversight, compliance with laws and regulations, and proper risk management. These factors work together to create a strong governance framework within a company.
What would be a potential solution if a company wants to select more than 15 directors?
Explanation:
Under the Companies Act, 2013, a public company can have a maximum of 15 directors on its board. If a company wants to appoint more than 15 directors, it will have to pass a special resolution in a general meeting of the company to approve the appointment of additional directors.
A special resolution is a resolution passed by the members of the company with a specific majority, usually two-thirds or more of the votes cast at a general meeting. The Companies Act, 2013 requires a special resolution for certain significant matters, including increasing the number of directors beyond the maximum limit of 15 for a public company.
According to the 2013 Company Act, public companies must have a minimum number of directors.
Explanation:
According to the Companies Act 2013, a public company in India is required to have a minimum of three directors.
A business could become bankrupt if ...
Explanation:
Insolvency refers to a financial state in which a company is unable to meet its financial obligations and pay its debts as they become due. If a company is unable to pay its creditors in full after realizing its assets, it can be considered insolvent.
When a company becomes insolvent, it often leads to insolvency proceedings, such as liquidation or bankruptcy, depending on the jurisdiction and applicable laws. In these proceedings, the company's assets are typically sold off to repay creditors to the extent possible. The order of priority for repayment may be determined by specific legal provisions or agreements.
Which of the following is not one of the corporate governance Combined Code of Practice's guiding principles?
Explanation:
Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It encompasses various principles aimed at promoting transparency, accountability, fairness, and effective decision-making within an organization.