SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL) Subject: Corporate Governance

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1 Sample Questions: Section I: Subjective Questions 1. What a note on the fiduciary role of the directors. 2. Should there be a separate law for investor protection? Give your comments. 3. Discuss the role of independent directors in investor s protection? 4. Which are the agencies for regulation of corporate governance in India? 5. What in your opinion are the key personal qualities that the board collectively must possess? 6. In your opinion, how does CSR benefit any organisation? 7. List down the major corporate crimes happening in the economic world. What in your opinion are the causes for their increase in today s world? 8. Write a short note on ethical practices in Corporate Governance. Section II: Objective Questions Multiple Choice Single Response 1. The directors who are expected to bring impartiality, objectivity and independence in their decision making are, 1] Non executive directors 2] Auditors 3] Executive directors 4] Promoters 2. Director performance can be gauged by 1] awareness of the organization s strengths and weaknesses and of the impact of the board s decisions upon them 2] generating and recognize imaginative solutions and innovations 3] showing a readiness to take decisions, make judgments, take action and make commitments 4] it includes awareness, generating new ideas and readiness to take decisions 3. Independence of the board is critical because 1] it ensures the board fulfils its oversight role objectively and holds the management accountable to the

2 shareholders 2] it gives the board more powers 3] it makes the board earn lot of profits 4] they add sophistication to the board 4. Nominee director cannot be termed independent director because 1] nominee directors are only reporting to the financial institution as they are employed by them 2] nominee directors do not retire by rotation 3] they need to attend only those meeting where financial maters are being discussed 4] nominee directors will be senior people 5. A director having substantial powers of the management of the company is called 1] managing director 2] whole time director 3] chief executive officer 4] chairman 6. The stock exchange that has proposed new listing standards that would require companies to improve their corporate governance to restore public confidence in corporate governance. 1] NASDAQ 2] NYSE 3] NSE 4] BSE 7. Participation of the investors has increased with the Automated On-line Screen Based Trading System as it has 1] facilitated open out cry system 2] facilitated trading form different centres simultaneously 3] deregulated control over brokers 4] increased financial literacy 8. Economies have been becoming more integrated due to 1] globalisation 2] privatisation 3] corporate governance 4] foreign Investments 9. The advantage of globalisation is that 1] corporations have greater flexibility to operate across boarders 2] increased the likelihood of economic disruptions in one nation affecting all nations 3] Growth of local industries and manufacturing 4] spread of materialistic lifestyle and attitude that sees consumption as a means to prosperity 10. Nominee director cannot be termed independent director because 1] nominee directors are only reporting to the financial institution as they are employed by them 2] nominee directors do not retire by rotation 3] they need to attend only those meeting where financial maters are being discussed 4] nominee directors will be senior people Multiple Choice Multiple Response

3 11. Different models of corporate governance are, 1] Anglo-Saxon Model 2] German model 3] Japanese model 4] Indian model 12. The risks associated with auditing are 1] expected misstatement 2] control risk 3] inherent risk 4] there are no risks 13. When corporates fail to follow ethical practices 1] the people who suffer directly are the investors 2] it results in corporate crimes 3] corporate governance suffers 4] the company will earn lot of losses 14. Derivative actions are 1] actions are an effective guard against oppressive decisions 2] persons having same locus stand can make a common compliant 3] empower the small shareholders 4] an expensive process 15. In recognition of excellence in corporate governance, the following awards have been constituted, 1] 'Golden Peacock Award for Excellence in Corporate Governance ' 2] 'ICSI National Award for Excellence in Corporate Governance' 3] Golden Peacock Global Award for Corporate Governance in Emerging Economies 4] The National Award for corporate governance 16. Ethical leadership means the following under corporate governance 1] believing that institutional sustainability comes first 2] foster a climate of trust and candor 3] establish board room relationships based on trust 4] there is no such thing as ethical leadership 17. The main functions of RBI include 1] regulating the financial system 2] banker to banker 3] manager of foreign exchange 4] redressal of investor grievances 18. The distinctive features of the Anglo-Saxon model are, 1] Clear divide between owners and the management 2] High tension model 3] Institutional investors are short term investors 4] Promoter shareholders are dominate owners Fill in the Blanks 19. When companies want to list their shares in any exchange they enter into agreement with the stock exchange. 1] Listing Agreement 2] Memorandum for Listing

4 3] Contract or Listing 4] Prospectus 20. The regulations for the internal management of the company are laid out in the. 1] Articles of Association 2] Rule book of the company 3] The Charter 4] Memorandum of Association 21. is a serious legal and regulatory contraventions of the process of governance law that is of a recent origin. 1] corporate crime 2] fraud 3] abetting suicide 4] none of the above 22. The CBI has formed a to investigate and tackle the growing menace of economic crimes. 1] Economic Intelligence Wing 2] SFIO 3] Enforcement Directorate 4] Social Welfare Wing 23. The view upholds that only social responsibility of business is to create shareholder wealth and the pursuit of social goals dilutes businesses primary purpose. 1] free market view 2] Gandhian view 3] philanthropic view 4] classical view 24. The policy is the process a government, central bank, or monetary authority of a country uses to control (i) the supply of money, (ii) availability of money. 1] monetary policy 2] fiscal policy 3] investment 4] disinvestment 25. Social responsibility is the performance of activities by a private enterprise without the in its philosophy. 1] expectation of direct economic gain or loss 2] expectation of positive result 3] expectation of concessions 4] expectation of awards and recognition 26. Bribery and corruption, tax evasion, money laundering, counterfeiting and piracy, and human trafficking are all instances of. 1] disadvantages of globalisation 2] impact of economic slow down 3] irregular government policies 4] crimes 27. In order to eliminate a conflict of interest situation and ensure alignment of investorsâ interest with the exchanges, the process that was introduced was.

5 1] demutualisation and corporatisation of the stock exchanges 2] rolling settlement 3] dematerialisation 4] registration of brokers and sub brokers 28. The objects of the company are defined in the. 1] Memorandum of Association 2] Articles of Association 3] Board's Report 4] Prospectus State True or False 29. The chairman of the audit committee should be an independent director. 30. Every transaction must have a counter-party for the transaction to go through. 31. The basic functions of the Reserve Bank is to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India. 32. The investor base in India is huge and investors are a heterogeneous group. 33. Class action suits as a tool in the hands of the minority shareholder. 34. Lack of corporate governance is one of the primary factors contributing to corporate crimes. 35. CSR should not be seen as a window dressing activity. 36. Most of the businesses in India are family owned where the control is in the hands of a closed group of people. 37. A performance evaluation of the board of directors is done by the nomination and the governance committee. 38. Foss vs. Harbottle recognised the legal personality of the company. Match the Following 39. 1] Mismanagement is understood to mean 2] Oppression involves a conduct which is 3] Sustainability in consumption pattern is essential 4] Sale of assets of the company at a low price and without compliance with the Act is an 40. 1] The difference between an interdependent and an integrated world 1] misuse of corporate funds and resources 2] unfair, harsh and prejudicial towards a section of shareholders 3] if we are looking at long time existence and well being of the human race and that of the Earth s resources 4] Act amounting to mismanagement 5] proper and efficient management of business 6] Act amounting to distress sale 1] is a qualitative one

6 2] Integration requires or presumes a 2] to protect, direct, and control government 3] WorldCom 3] expenses booked as capital expenditure 4] Xerox 4] accelerated revenue recognition 5] inflated earnings, hid debt in SPEs 6] looting by CEO, improper share deals, evidence of tampering and falsifying business records 41. Right to attend general meetings 1] is the right of the shareholders 2] Adam Smith 2] an inquiry into the Nature and Causes of the Wealth of Nations 3] Of the main objectives of the Companies Act has been 3] to ensure good governance with a view to creating to shareholders wealth without any discrimination to minority 4] The concept of good karma' or giving' is shareholders 4] embedded in our spiritual scriptures ] An incorporated association operates on the principle of separation of owner ship and management 2] Application supported by blocked amount 3] The investors are protected to a certain extent under the 5] is the right of the debenture holders 6] oppression and mismanagement 1] where the Board of Directors have to run the company keeping in view the shareholders interests. 2] is an application for Subscribing to a public issue or rights issue, where the money gets blocked and the payment is made only on allotment 3] Companies Act, 1956, The Securities Contract (Regulation) Act 1956 and the Securities Exchange Board of India (SEBI). 4] IPO grading has been made mandatory 4] for all primary issues of unlisted companies. 5] the amount is debited to the applicants account at the time of application 6] for all listed companies