Q.1 What is the primary objective of corporate governance?
Maximizing short-term profits
Ensuring accountability, fairness, and transparency in a company's relationship with stakeholders
Minimizing taxation for shareholders
Reducing employee turnover
Explanation - Corporate governance ensures accountability, fairness, and transparency in a company's dealings with its stakeholders, including shareholders, employees, customers, and the community.
Correct answer is: Ensuring accountability, fairness, and transparency in a company's relationship with stakeholders
Q.2 Which body is primarily responsible for overseeing corporate governance in a company?
Board of Directors
Shareholders
External Auditors
Company Secretary
Explanation - The Board of Directors is responsible for overseeing the company's governance practices, ensuring accountability, and protecting the interests of shareholders and stakeholders.
Correct answer is: Board of Directors
Q.3 What is the role of independent directors in corporate governance?
To manage day-to-day operations
To represent management's interests exclusively
To provide unbiased judgment and protect shareholder interests
To approve only financial transactions
Explanation - Independent directors provide impartial judgment in board decisions, help prevent conflicts of interest, and protect shareholder interests.
Correct answer is: To provide unbiased judgment and protect shareholder interests
Q.4 Which of the following is a key principle of corporate governance?
Transparency
Profit maximization only
Avoiding stakeholder communication
Unlimited executive powers
Explanation - Transparency is a core principle of corporate governance, ensuring that all stakeholders have access to accurate and timely information about the company.
Correct answer is: Transparency
Q.5 What is the primary function of a compliance officer in a company?
To execute marketing strategies
To ensure adherence to laws, regulations, and internal policies
To manage daily operations
To audit financial statements
Explanation - A compliance officer ensures that the company follows all applicable laws, regulations, and internal policies, mitigating legal and ethical risks.
Correct answer is: To ensure adherence to laws, regulations, and internal policies
Q.6 Which legislation primarily governs corporate governance in India?
Companies Act, 2013
Indian Penal Code, 1860
Income Tax Act, 1961
Securities Contracts Regulation Act, 1956
Explanation - The Companies Act, 2013 provides a comprehensive framework for corporate governance in India, including provisions on board composition, disclosures, and compliance.
Correct answer is: Companies Act, 2013
Q.7 Which committee is responsible for auditing the financial statements of a company?
Nomination and Remuneration Committee
Audit Committee
Stakeholders Committee
CSR Committee
Explanation - The Audit Committee oversees the auditing process, ensures accuracy of financial statements, and monitors compliance with accounting standards.
Correct answer is: Audit Committee
Q.8 What does 'stakeholder' mean in the context of corporate governance?
Only shareholders of a company
Any party affected by the company's actions, including employees, customers, and society
Government officials regulating the company
The company's competitors
Explanation - Stakeholders include all parties affected by a company's actions, such as employees, customers, suppliers, shareholders, and the broader community.
Correct answer is: Any party affected by the company's actions, including employees, customers, and society
Q.9 Which of the following is an example of non-compliance?
Following tax regulations
Submitting financial statements on time
Ignoring environmental regulations
Conducting regular internal audits
Explanation - Ignoring environmental regulations is non-compliance and can result in legal penalties and reputational damage.
Correct answer is: Ignoring environmental regulations
Q.10 Which report is a key tool for promoting transparency in corporate governance?
Annual Report
Employee Attendance Report
Inventory Report
Marketing Campaign Report
Explanation - The annual report provides detailed information about the company's financial performance, governance, and operations, promoting transparency to stakeholders.
Correct answer is: Annual Report
Q.11 Which of the following best describes 'ethical governance'?
Decision-making focused solely on profit
Adherence to laws, ethical principles, and stakeholder interests
Avoiding communication with shareholders
Delegating all responsibilities to executives
Explanation - Ethical governance combines legal compliance with ethical behavior, ensuring decisions consider the interests of all stakeholders.
Correct answer is: Adherence to laws, ethical principles, and stakeholder interests
Q.12 What is the primary function of a whistleblower policy?
To punish employees for mistakes
To encourage reporting of unethical or illegal activities
To manage marketing strategies
To conduct performance appraisals
Explanation - A whistleblower policy provides employees a safe channel to report unethical or illegal practices without fear of retaliation.
Correct answer is: To encourage reporting of unethical or illegal activities
Q.13 Which of the following is a characteristic of good corporate governance?
Lack of accountability
Transparency and integrity
Centralized unchecked power
Prioritizing short-term gains only
Explanation - Good corporate governance relies on transparency, integrity, accountability, and ethical decision-making.
Correct answer is: Transparency and integrity
Q.14 Which committee typically decides remuneration of executives in a company?
Audit Committee
Nomination and Remuneration Committee
CSR Committee
Stakeholders Committee
Explanation - The Nomination and Remuneration Committee recommends policies and packages for executives, ensuring fairness and alignment with company objectives.
Correct answer is: Nomination and Remuneration Committee
Q.15 What is the relationship between corporate governance and investor confidence?
Better governance increases investor trust
Governance has no effect on investors
Poor governance increases investor confidence
Governance only affects employees
Explanation - Strong corporate governance practices foster transparency and accountability, increasing investor trust and confidence in the company.
Correct answer is: Better governance increases investor trust
Q.16 Which of the following statements is true about corporate compliance?
It only involves financial reporting
It involves adherence to laws, policies, and ethical standards
It is optional for large companies
It applies only to employees, not management
Explanation - Corporate compliance ensures that the organization follows all applicable laws, internal policies, and ethical standards across all operations.
Correct answer is: It involves adherence to laws, policies, and ethical standards
Q.17 Which of the following is a consequence of poor corporate governance?
Increased transparency
Fraud, mismanagement, and loss of investor trust
Higher ethical standards
Improved stakeholder relationships
Explanation - Weak governance can lead to fraud, mismanagement, legal issues, and a loss of investor and stakeholder confidence.
Correct answer is: Fraud, mismanagement, and loss of investor trust
Q.18 Which body in a company ensures compliance with environmental laws?
Board of Directors
Compliance/Regulatory Committee
Audit Committee
Marketing Department
Explanation - A compliance or regulatory committee ensures the company adheres to applicable laws and regulations, including environmental requirements.
Correct answer is: Compliance/Regulatory Committee
Q.19 What does 'risk management' in corporate governance refer to?
Ignoring potential threats
Identifying, assessing, and mitigating risks to protect the company
Focusing only on financial gains
Delegating responsibilities to employees
Explanation - Risk management involves identifying potential risks, evaluating their impact, and implementing measures to mitigate them, ensuring sustainable business operations.
Correct answer is: Identifying, assessing, and mitigating risks to protect the company
Q.20 Which of the following is a requirement under SEBI for listed companies in India?
Mandatory CSR reporting
Appointment of independent directors and disclosure of financial statements
Exemption from audits
No need to disclose related party transactions
Explanation - SEBI mandates listed companies to appoint independent directors, disclose financial statements, and follow other governance practices to protect investors.
Correct answer is: Appointment of independent directors and disclosure of financial statements
Q.21 Which of the following best describes the purpose of a code of conduct?
To list all employee salaries
To outline acceptable and ethical behavior for employees and management
To serve as a marketing tool
To replace laws and regulations
Explanation - A code of conduct provides guidance on expected ethical behavior and compliance standards for employees and management.
Correct answer is: To outline acceptable and ethical behavior for employees and management
Q.22 Which of the following is considered a conflict of interest in corporate governance?
Director voting on a transaction in which they have a personal stake
Directors attending board meetings
Annual financial reporting
Implementing CSR activities
Explanation - A conflict of interest occurs when a director or employee’s personal interests interfere with the best interests of the company or stakeholders.
Correct answer is: Director voting on a transaction in which they have a personal stake
Q.23 Which of the following ensures transparency in executive decision-making?
Internal control systems and board oversight
Secret meetings
Ignoring regulatory requirements
Executive-only decisions without reporting
Explanation - Internal controls, audits, and board oversight ensure that executive decisions are transparent and accountable.
Correct answer is: Internal control systems and board oversight
Q.24 Which practice helps prevent fraud in corporate governance?
Regular internal audits and strong internal controls
Concealing financial data
Bypassing regulatory checks
Single-person decision-making
Explanation - Regular internal audits and robust controls are key practices to detect and prevent fraud within organizations.
Correct answer is: Regular internal audits and strong internal controls