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Questions and Answers
What is the primary characteristic of good governance that emphasizes the involvement of both genders?
What is the primary characteristic of good governance that emphasizes the involvement of both genders?
Which aspect of good governance ensures that legal frameworks are enforced impartially?
Which aspect of good governance ensures that legal frameworks are enforced impartially?
What does transparency in governance imply?
What does transparency in governance imply?
Which characteristic of good governance accounts for the protection of vulnerable societal groups?
Which characteristic of good governance accounts for the protection of vulnerable societal groups?
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What is a primary objective of corporate governance regarding shareholders?
What is a primary objective of corporate governance regarding shareholders?
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Which feature of governance is demonstrated by the establishment of an official website for public access to information?
Which feature of governance is demonstrated by the establishment of an official website for public access to information?
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What role does civil society play in good governance?
What role does civil society play in good governance?
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How does corporate governance aid in self-assessment for firms?
How does corporate governance aid in self-assessment for firms?
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Which of the following characteristics is essential for the implementation of good governance?
Which of the following characteristics is essential for the implementation of good governance?
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What effect does strong corporate governance have on shareholders' wealth?
What effect does strong corporate governance have on shareholders' wealth?
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In governance, what is the significance of participation being 'informed and organized'?
In governance, what is the significance of participation being 'informed and organized'?
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What does good corporate governance primarily aim to improve within an organization?
What does good corporate governance primarily aim to improve within an organization?
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Which of the following groups is NOT considered a stakeholder in corporate governance?
Which of the following groups is NOT considered a stakeholder in corporate governance?
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What role does an independent board play in a well-governed company?
What role does an independent board play in a well-governed company?
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Which principle is central to effective corporate governance?
Which principle is central to effective corporate governance?
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What is one of the consequences of effective corporate governance for potential investors?
What is one of the consequences of effective corporate governance for potential investors?
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Who is responsible for ensuring compliance with section 91?
Who is responsible for ensuring compliance with section 91?
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What is the purpose of creating a Citizen’s Charter?
What is the purpose of creating a Citizen’s Charter?
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Which principle of good governance focuses on meeting the needs of the community through effective mediation?
Which principle of good governance focuses on meeting the needs of the community through effective mediation?
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Which aspect of good governance ensures that vulnerable groups have opportunities to improve their well-being?
Which aspect of good governance ensures that vulnerable groups have opportunities to improve their well-being?
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How does good governance define effectiveness in relation to resources?
How does good governance define effectiveness in relation to resources?
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What does accountability in good governance require?
What does accountability in good governance require?
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What should institutions do to achieve good governance regarding stakeholder needs?
What should institutions do to achieve good governance regarding stakeholder needs?
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What does the term sustainability refer to in the context of good governance?
What does the term sustainability refer to in the context of good governance?
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Who are the individuals responsible for initially forming a corporation?
Who are the individuals responsible for initially forming a corporation?
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What is the role of stockholders in a stock corporation?
What is the role of stockholders in a stock corporation?
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What distinguishes members of a non-stock corporation from those of a stock corporation?
What distinguishes members of a non-stock corporation from those of a stock corporation?
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What is a primary function of promoters in a corporation?
What is a primary function of promoters in a corporation?
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Which of the following best defines subscribers in the context of corporations?
Which of the following best defines subscribers in the context of corporations?
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Which statement accurately describes underwriters in a corporation?
Which statement accurately describes underwriters in a corporation?
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In the context of governance, which of the following best describes its meaning?
In the context of governance, which of the following best describes its meaning?
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What is the distinction between corporators and incorporators?
What is the distinction between corporators and incorporators?
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What should the board do to ensure transparency in financial reporting?
What should the board do to ensure transparency in financial reporting?
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What is a primary responsibility of the board concerning management oversight?
What is a primary responsibility of the board concerning management oversight?
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Which of the following represents good corporate governance practice regarding board structure?
Which of the following represents good corporate governance practice regarding board structure?
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How can a board promote ethical decision-making?
How can a board promote ethical decision-making?
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What is one of the key roles of a board in relation to risk management?
What is one of the key roles of a board in relation to risk management?
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Which best describes the board's responsibility toward conflicts of interest?
Which best describes the board's responsibility toward conflicts of interest?
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What principle should guide the board in laying the foundation for management and oversight?
What principle should guide the board in laying the foundation for management and oversight?
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What is essential for the board to encourage enhanced performance?
What is essential for the board to encourage enhanced performance?
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Study Notes
Components of a Corporation
- Incorporators are the original founders of a corporation, listed in the Articles of Incorporation. They must be natural persons.
- Corporators are all members of a corporation, whether shareholders or members of a non-stock corporation.
- Stockholders or shareholders are the corporators of a stock corporation, which is a private corporation where capital is divided into shares.
- Members are the corporators of a non-stock corporation, where capital comes from fees paid by individuals composing it.
- Promoters are individuals who initiate the formation, operation, and purpose achievement of a corporation.
- Subscribers are individuals who agree to purchase original, unissued shares at a later date. They may or may not be incorporators.
- Underwriters are those who sell shares to the general public.
Definition of Governance
- Governance refers to the processes of power, authority, and influence used within a society to enact policies and decisions for public life and social upliftment.
- It encompasses all processes of governing, whether by government, markets, or networks, over social systems.
- Governance involves decision-making and implementation, exercised through leaders of a country or organization.
Characteristics of Good Governance
- Participation: Active participation of both men and women is crucial, whether direct or through institutions. It should address the concerns of vulnerable individuals.
- Rule of Law: An impartial and fair legal framework is essential, along with human rights protection, particularly for minorities. Independent judiciary and an impartial police force are key.
- Transparency: Decision-making and enforcement processes must adhere to rules and regulations. Information should be readily accessible to those impacted by decisions.
- Responsiveness: Processes and institutions must serve stakeholder needs within a reasonable timeframe. Agencies should establish service standards, often referred to as Citizen's Charters.
- Consensus Oriented: Reaching a consensus on matters that benefit the whole community is necessary, considering long-term perspectives for sustainable development.
- Equity and Inclusiveness: All members should feel included and have opportunities to improve their well-being, especially vulnerable groups.
- Effectiveness and Efficiency: Processes and institutions should produce results that meet societal needs, using resources effectively and sustainably.
- Accountability: All institutions, including government, private sector, and civil society, must be accountable to the public and stakeholders.
Objectives of Corporate Governance
- Fair and Equitable Treatment of Shareholders: All shareholders deserve equal treatment, which is safeguarded by good governance.
- Self-Assessment: Corporate governance enables firms to assess their behavior and actions before regulatory scrutiny, minimizing risks and fines.
- Increase Shareholders’ Wealth: Good governance protects long-term shareholder interests and can lead to higher valuations and investor confidence.
- Transparency and Full Disclosure: Promoting transparency and full disclosure of company transactions is a core objective.
Basic Principles of Effective Corporate Governance
- Transparency and Full Disclosure: Companies should meet the information needs of investors, maintain financial reporting integrity, and provide timely and balanced disclosures.
- Accountability: There should be clear roles and responsibilities defined for the board and management, emphasizing ethical and responsible decision-making.
- Corporate Control: The board should prioritize long-term shareholder value growth, create an environment for risk-taking, encourage performance enhancement, and recognize and manage risks.
Illustrative Application of the Basic Principles of Corporate Governance
- Laying a Solid Foundation: Formalize and disclose board and management roles and responsibilities.
- Board Structure: Incorporate independent directors, separate chairperson and CEO roles, and establish a nomination committee.
- Ethical and Responsible Decision Making: Establish a code of conduct for directors and executives.
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Description
This quiz explores the key components of a corporation, including roles such as incorporators, shareholders, and promoters. Additionally, it delves into the concept of governance and its significance in corporate structure. Test your understanding of these fundamental business concepts.
