Q.1 What is the primary role of the Board of Directors in a company?
Managing daily operations
Setting strategic direction
Supervising employee tasks
Auditing financial accounts
Explanation - The Board of Directors provides overall strategic guidance, leaving daily operations to management.
Correct answer is: Setting strategic direction
Q.2 Who typically appoints the members of the Board of Directors?
Shareholders
Employees
Government
Customers
Explanation - Shareholders elect the Board of Directors at the annual general meeting.
Correct answer is: Shareholders
Q.3 Which committee is primarily responsible for overseeing financial reporting?
Nomination Committee
Remuneration Committee
Audit Committee
CSR Committee
Explanation - The Audit Committee monitors financial reporting and ensures compliance with accounting standards.
Correct answer is: Audit Committee
Q.4 Independent directors are important because they:
Increase company profits
Provide unbiased judgment
Control employee behavior
Approve marketing strategies
Explanation - Independent directors bring objectivity and help prevent conflicts of interest.
Correct answer is: Provide unbiased judgment
Q.5 Which of the following is NOT a function of the Board of Directors?
Policy making
Monitoring management
Ensuring compliance
Conducting daily sales
Explanation - Daily sales are operational tasks handled by management, not the Board.
Correct answer is: Conducting daily sales
Q.6 What is the main responsibility of the Nomination Committee?
Hiring staff
Recommending directors
Managing CSR
Approving loans
Explanation - The Nomination Committee identifies and recommends qualified candidates for directorship.
Correct answer is: Recommending directors
Q.7 The Remuneration Committee focuses on:
Director compensation
Product pricing
Marketing budget
Tax compliance
Explanation - This committee ensures fair and transparent compensation for directors and executives.
Correct answer is: Director compensation
Q.8 Why is corporate governance important for companies?
It ensures ethical conduct
It reduces tax liability
It increases sales directly
It manages product development
Explanation - Corporate governance builds trust, accountability, and ethical practices within organizations.
Correct answer is: It ensures ethical conduct
Q.9 The CSR Committee is responsible for:
Employee training
Community welfare projects
Executive bonuses
Shareholder meetings
Explanation - The CSR Committee ensures the company invests in socially responsible initiatives.
Correct answer is: Community welfare projects
Q.10 Which body holds the Board of Directors accountable?
Government
Shareholders
Employees
Customers
Explanation - The Board is ultimately answerable to shareholders for the company’s performance.
Correct answer is: Shareholders
Q.11 Which committee ensures transparency in financial disclosures?
CSR Committee
Audit Committee
Nomination Committee
Remuneration Committee
Explanation - The Audit Committee monitors financial accuracy and transparency.
Correct answer is: Audit Committee
Q.12 What is a quorum in board meetings?
Minimum number of directors present
Decision-making process
Voting rights of shareholders
Time limit for meetings
Explanation - A quorum ensures valid decision-making by requiring minimum attendance.
Correct answer is: Minimum number of directors present
Q.13 Which principle is central to corporate governance?
Secrecy
Accountability
Profit maximization
Risk-taking
Explanation - Accountability ensures that directors act responsibly toward stakeholders.
Correct answer is: Accountability
Q.14 Who appoints the company’s CEO?
Employees
Board of Directors
Government
Shareholders directly
Explanation - The Board is responsible for hiring and evaluating the CEO.
Correct answer is: Board of Directors
Q.15 Why are board committees formed?
To reduce workload
To replace the board
To handle daily operations
To compete with management
Explanation - Committees help manage specialized tasks efficiently, aiding the board.
Correct answer is: To reduce workload
Q.16 What is a non-executive director?
A director not involved in daily operations
A part-time employee
An auditor
A shareholder
Explanation - Non-executive directors focus on oversight, not operations.
Correct answer is: A director not involved in daily operations
Q.17 The effectiveness of the Board depends on:
Board size and diversity
Number of customers
Market share
Advertising budget
Explanation - A balanced and diverse board brings better decision-making.
Correct answer is: Board size and diversity
Q.18 Which committee deals with risk management?
Audit Committee
Risk Committee
Nomination Committee
Remuneration Committee
Explanation - The Risk Committee assesses and manages potential risks to the company.
Correct answer is: Risk Committee
Q.19 What is the fiduciary duty of directors?
To act in shareholders’ best interest
To maximize personal gains
To reduce expenses
To compete with management
Explanation - Fiduciary duty requires directors to prioritize company and shareholder interests.
Correct answer is: To act in shareholders’ best interest
Q.20 The Board of Directors must balance interests of:
Only shareholders
Only employees
All stakeholders
Only government
Explanation - Corporate governance ensures fairness toward all stakeholders, not just shareholders.
Correct answer is: All stakeholders
Q.21 Which document defines the powers of the Board?
Articles of Association
Marketing plan
Employee handbook
Tax policy
Explanation - The Articles of Association outline the authority and responsibilities of the Board.
Correct answer is: Articles of Association
Q.22 Why are independent directors essential for audit committees?
They bring external funds
They ensure unbiased oversight
They manage operations
They reduce tax rates
Explanation - Independent directors reduce conflicts of interest in financial oversight.
Correct answer is: They ensure unbiased oversight
Q.23 Who chairs the Audit Committee in most companies?
The CEO
An independent director
The CFO
A shareholder
Explanation - Independent directors chair audit committees for impartiality.
Correct answer is: An independent director
Q.24 The Remuneration Committee ensures that:
Pay structures are fair
Profits are maximized
Marketing is effective
Loans are repaid
Explanation - Fair pay aligns executive incentives with company goals.
Correct answer is: Pay structures are fair
Q.25 Who is responsible for calling board meetings?
Company Secretary
CEO
Shareholders
Government
Explanation - The Company Secretary ensures proper scheduling and documentation of board meetings.
Correct answer is: Company Secretary