RCMS Ethics & Corporate Governance 5

Question 1

Which of the following scenarios best illustrates a 'related-party transaction' requiring board-level disclosure?

Accepted Answer

A company awards a consulting contract to a firm owned by the CEO's spouse

Answer

A contract with a firm owned by the CEO's spouse is a related-party transaction because it involves a director's family member and creates a potential conflict.

Question 2

Under the concept of 'stakeholder theory,' corporate governance should primarily serve:

Accepted Answer

All parties affected by the company's operations, including employees, customers, and communities

Answer

Stakeholder theory holds that companies owe duties not only to shareholders but to all groups affected by their business activities.

Question 3

An employee's manager directs them to falsify safety inspection records to avoid a costly shutdown. The employee's BEST first step under an ethical compliance framework is to:

Accepted Answer

Refuse and report the instruction through the ethics hotline or escalation chain

Answer

Refusing to falsify records and reporting the instruction through proper channels is the correct ethical and compliance response.

Question 4

What is the purpose of an annual 'ethics attestation' that employees sign each year?

Accepted Answer

To confirm the employee has read the code of conduct and disclosed any known conflicts or violations

Answer

Ethics attestations confirm that employees have reviewed policies and require them to disclose any conflicts of interest or known violations.

Question 5

Which of the following BEST describes the 'business judgment rule' in corporate law?

Accepted Answer

Courts will generally not second-guess informed, good-faith business decisions made by directors

Answer

The business judgment rule is a legal presumption that protects directors from personal liability for informed, good-faith decisions made in the company's interest.

(RCMS) Registered Compliance Management Specialist Certification Practice Test

(RCMS) Registered Compliance Management Specialist Certification Practice Test

RCMS Ethics & Corporate Governance 5