Q.1 Which of the following is a primary purpose of corporate compliance?
To increase profits by any means
To ensure adherence to laws and regulations
To reduce employee salaries
To control the stock market
Explanation - Corporate compliance ensures that organizations follow legal regulations, internal policies, and ethical standards to avoid legal penalties.
Correct answer is: To ensure adherence to laws and regulations
Q.2 Which act governs insider trading in India?
Companies Act, 2013
Securities and Exchange Board of India Act, 1992
Income Tax Act, 1961
Consumer Protection Act, 2019
Explanation - The SEBI Act regulates securities markets, including prohibitions against insider trading to ensure market integrity.
Correct answer is: Securities and Exchange Board of India Act, 1992
Q.3 Which of the following is NOT a function of the Compliance Officer in a company?
Monitoring regulatory changes
Training employees on compliance
Auditing financial statements for tax purposes
Reporting compliance violations
Explanation - While compliance officers ensure adherence to laws, auditing for taxes is typically the responsibility of finance/accounting teams.
Correct answer is: Auditing financial statements for tax purposes
Q.4 Which of the following best describes 'Due Diligence' in legal and compliance context?
A casual review of company processes
A comprehensive appraisal of legal, financial, and operational risks
A marketing strategy
A financial investment plan
Explanation - Due diligence involves thoroughly evaluating potential risks before business transactions or partnerships.
Correct answer is: A comprehensive appraisal of legal, financial, and operational risks
Q.5 The Prevention of Money Laundering Act (PMLA) in India primarily aims to:
Regulate company profits
Prevent money laundering activities
Ensure consumer rights
Regulate employee salaries
Explanation - PMLA establishes laws to detect and prevent money laundering and to confiscate property obtained through illicit means.
Correct answer is: Prevent money laundering activities
Q.6 Which of the following is considered a conflict of interest?
An employee following company policies
An employee using personal relationships for business advantage
An employee attending a training session
An employee reporting compliance issues
Explanation - A conflict of interest occurs when personal interests may interfere with professional responsibilities, creating ethical concerns.
Correct answer is: An employee using personal relationships for business advantage
Q.7 Which Indian legislation protects whistleblowers in companies?
Whistle Blowers Protection Act, 2014
Companies Act, 2013
Information Technology Act, 2000
Indian Penal Code, 1860
Explanation - The Act safeguards employees reporting corruption or misconduct against retaliation and ensures confidentiality.
Correct answer is: Whistle Blowers Protection Act, 2014
Q.8 Which of the following is an example of regulatory compliance in banking?
Offering high-interest loans
Maintaining KYC (Know Your Customer) documentation
Increasing profit margins
Launching a marketing campaign
Explanation - KYC compliance ensures banks verify customer identities to prevent fraud, money laundering, and terrorist financing.
Correct answer is: Maintaining KYC (Know Your Customer) documentation
Q.9 The Companies Act, 2013 requires which of the following for corporate governance?
Maintaining proper books of accounts
Issuing personal loans to directors without limits
Avoiding financial audits
Reducing employee benefits
Explanation - The Companies Act mandates accurate record-keeping, transparency, and accountability in corporate governance.
Correct answer is: Maintaining proper books of accounts
Q.10 Which of the following is a key principle of compliance programs?
Punishing all employees equally
Preventing violations before they occur
Focusing only on profits
Avoiding regulatory inspections
Explanation - Effective compliance programs are proactive, aiming to prevent legal violations and ethical breaches rather than only responding to them.
Correct answer is: Preventing violations before they occur
Q.11 Which of the following is governed under the Information Technology Act, 2000?
Cybercrimes and electronic transactions
Banking interest rates
Consumer product standards
Labor wages
Explanation - The IT Act provides legal recognition for electronic commerce, digital signatures, and penalties for cybercrimes in India.
Correct answer is: Cybercrimes and electronic transactions
Q.12 Which of the following actions is required under anti-bribery compliance?
Giving gifts to influence decisions
Reporting bribery attempts
Ignoring unethical behavior
Increasing company profits
Explanation - Anti-bribery compliance requires organizations to prevent, detect, and report bribery or corrupt practices.
Correct answer is: Reporting bribery attempts
Q.13 Under SEBI regulations, which of the following must publicly traded companies disclose?
Annual financial statements
Employee personal contacts
Client passwords
Daily sales targets
Explanation - SEBI mandates transparency in financial reporting for investor protection and market integrity.
Correct answer is: Annual financial statements
Q.14 Which of the following constitutes insider trading?
Using public information to trade stocks
Using confidential company information for personal gain
Buying government bonds legally
Investing in mutual funds
Explanation - Insider trading is illegal and involves trading securities based on non-public, material information.
Correct answer is: Using confidential company information for personal gain
Q.15 What is the role of a Compliance Audit?
Check for legal and regulatory adherence
Evaluate employee performance
Increase product sales
Develop marketing strategies
Explanation - Compliance audits assess whether a company follows applicable laws, regulations, and internal policies.
Correct answer is: Check for legal and regulatory adherence
Q.16 Which of the following is a risk mitigation strategy in compliance?
Ignoring minor violations
Conducting employee training on regulations
Delaying reporting to authorities
Avoiding audits
Explanation - Training helps employees understand legal obligations, reducing the risk of compliance breaches.
Correct answer is: Conducting employee training on regulations
Q.17 Which of the following best defines 'Regulatory Compliance'?
Ensuring business operations follow applicable laws and regulations
Avoiding taxes
Focusing only on profit generation
Expanding global operations
Explanation - Regulatory compliance involves adhering to laws, rules, and guidelines relevant to an organization's operations.
Correct answer is: Ensuring business operations follow applicable laws and regulations
Q.18 Which of the following is considered unethical practice in business?
Transparent disclosure of financials
Manipulating accounts to hide losses
Following labor laws
Reporting safety hazards
Explanation - Falsifying financial statements is unethical and illegal, violating accounting standards and regulatory requirements.
Correct answer is: Manipulating accounts to hide losses
Q.19 Which of the following is the responsibility of a legal department in a company?
Ensuring compliance with laws and contracts
Managing daily operations of the factory
Designing products
Selling company shares
Explanation - The legal department ensures that the company adheres to applicable laws and contractual obligations.
Correct answer is: Ensuring compliance with laws and contracts
Q.20 Which of the following is an example of corporate governance?
Board oversight of company strategy
Ignoring shareholder complaints
Hiding financial reports
Paying bribes to officials
Explanation - Corporate governance involves structured oversight and accountability mechanisms to protect stakeholder interests.
Correct answer is: Board oversight of company strategy
Q.21 Which act requires maintenance of registers of charges and loans in India?
Companies Act, 2013
SEBI Act, 1992
Income Tax Act, 1961
Negotiable Instruments Act, 1881
Explanation - The Companies Act mandates companies to maintain records of charges, loans, and other statutory registers for transparency.
Correct answer is: Companies Act, 2013
Q.22 Which of the following best explains 'Ethics' in corporate compliance?
Following laws only when convenient
Doing what is legally right and morally acceptable
Maximizing profits at all costs
Avoiding employee training programs
Explanation - Ethics involves aligning business operations with legal requirements and moral principles to ensure responsible conduct.
Correct answer is: Doing what is legally right and morally acceptable
Q.23 Which regulatory body oversees banking compliance in India?
Reserve Bank of India (RBI)
SEBI
IRDAI
Ministry of Corporate Affairs
Explanation - RBI regulates banks in India, ensuring adherence to banking laws, risk management, and compliance standards.
Correct answer is: Reserve Bank of India (RBI)
Q.24 Which of the following is a primary objective of anti-money laundering (AML) laws?
To prevent the use of illegal funds in financial systems
To increase tax revenue
To promote stock trading
To regulate labor wages
Explanation - AML laws detect and prevent money laundering to protect the integrity of financial institutions and the economy.
Correct answer is: To prevent the use of illegal funds in financial systems