Free Corporate Governance Questions and Answers

Question 1

Which of the following is not one of the corporate governance Combined Code of Practice's guiding principles?

Accepted Answer

acceptability

Answer

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.

Question 2

Director duties are not likely to involve

Accepted Answer

a duty to propose high dividends for shareholders

Answer

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.

Question 3

A business could become bankrupt if ...

Accepted Answer

cannot pay creditors in full after realization of its assets

Answer

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.

Question 4

Breach of the _________ may result in disqualification of directors.

Accepted Answer

Companies Act 2016 and Insolvency Act 1986

Answer

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.

Question 5

According to the 2013 Company Act, public companies must have a minimum number of directors.

Accepted Answer

three

Answer

Explanation:
According to the Companies Act 2013, a public company in India is required to have a minimum of three directors.

Corporate Governance Practice Test

Corporate Governance Practice Test

Free Corporate Governance Questions and Answers