Corporate Governance and Board of Directors Quiz ch 9

<p>The director may be in breach of their fiduciary duties</p> Signup and view all the answers

<p>To outline rules and procedures for the company's governance</p> Signup and view all the answers

<p>When they are in a fiduciary relationship with the company</p> Signup and view all the answers

<p>The company may be entitled to claim any profit made from that transaction</p> Signup and view all the answers

<p>When it is primarily for personal benefit rather than benefiting the company</p> Signup and view all the answers

<p>Duty to act in good faith, duty to promote success</p> Signup and view all the answers

<p>A pension for his wife upon his death</p> Signup and view all the answers

<p>It was not intended for the benefit of the company</p> Signup and view all the answers

<p>To regulate and develop Saudi companies by providing appropriate rules and regulations</p> Signup and view all the answers

<p>By a board that includes 5 members appointed by the prime minister</p> Signup and view all the answers

<p>Preliminary provisions, Shareholders' rights, Disclosure and transparency, Board of directors' functions, Publication and coming into force</p> Signup and view all the answers

<p>Approving strategic scheme and supervising implementation, representing shareholders</p> Signup and view all the answers

<p>Should contain at least 3 members and not more than 11; majority should be non-executive; chairman must not hold an executive position; majority should be fully independent; members should not act as directors in more than 5 JSC at the same time</p> Signup and view all the answers

<p>Phase One: publishing the CGR. Phase Two: educate market participants. Phase Three: revision of CGR</p> Signup and view all the answers

<p>When businesses voluntarily choose to behave ethically and responsibly considering societal and environmental impacts.</p> Signup and view all the answers

<p>Yes, it has gained attention worldwide but is limited in Saudi due to recent recognition supported by Saudi Arabia’s 2030 vision.</p> Signup and view all the answers

<p>fairness, honesty, responsibility, and independency</p> Signup and view all the answers

<ol> <li>Duty of care 2. Duty of loyalty 3. Duty to act in good faith 4. Duty to promote success</li> </ol> Signup and view all the answers

<p>The company is entitled to claim any profit made from the breach of duty.</p> Signup and view all the answers

<p>When the contract is not for the benefit of the company.</p> Signup and view all the answers

<p>When they are in a fiduciary relationship with the company.</p> Signup and view all the answers

<p>The whole object of the contract wasn't to benefit the company.</p> Signup and view all the answers

<p>They're responsible for the company's affairs, sometimes required to represent shareholders and make decisions on their behalf.</p> Signup and view all the answers

<p>Incorporation bylaws are responsible for articles of the company's affairs.</p> Signup and view all the answers

<p>The company was entitled to claim the profit made from that transaction.</p> Signup and view all the answers

<p>They breach their fiduciary duties to the company.</p> Signup and view all the answers

<p>To ensure directors act in the best interest of the company.</p> Signup and view all the answers

<p>It demonstrated that the contract should benefit the company, not the director or their family.</p> Signup and view all the answers

<p>The duties of the CMA include developing and regulating the Saudi Stock Market, creating greater security by protecting investors and the public from unfair practices, increasing the efficiency and transparency of the market, reducing transaction risks, and monitoring all activities and transactions on the Saudi market.</p> Signup and view all the answers

<p>Corporate governance was established by the board of CMA in 2006 and amended in 2010.</p> Signup and view all the answers

<p>The main parts of the corporate governance code in KSA include preliminary provisions, rights of shareholders and the general assembly, disclosure and transparency related to a company’s policy, functions and responsibilities of the board of directors, and publication and coming into force involving implementation.</p> Signup and view all the answers

<p>The functions of the board of directors according to the corporate governance code include approving the strategic scheme and main aim of the firm, representing the shareholders, and supervising the implementation of plans, policies, performance, capital structure, risks, and organizational and financial structure.</p> Signup and view all the answers

<p>The criteria for forming the board of directors include having at least 3 members but not more than 11, the majority of directors being non-executive, the chairman not holding an executive position, the majority of members being fully independent, and members not acting as a member of the board of directors of more than 5 JSC at the same time.</p> Signup and view all the answers

<p>The phases of approaching to implement improved corporate governance according to CMA in KSA include publishing the corporate governance regulations, educating market participants on how to apply the regulations, and possibly making parts or all of the regulations mandatory.</p> Signup and view all the answers

<p>Corporate Social Responsibility (CSR) is when businesses voluntarily choose to behave ethically and responsibly, taking into consideration how their actions affect society and the environment.</p> Signup and view all the answers

<p>Corporate Social Responsibility (CSR) has gained attention worldwide, but it has been limited in Saudi Arabia. However, in recent years, there has been more recognition of its importance due to Saudi Arabia’s 2030 vision, supported by the Saudi Government.</p> Signup and view all the answers

<p>The benefits of Corporate Social Responsibility (CSR) for Saudi companies include enhancing corporate image, attracting investors and customers, and helping employee engagement and talent attraction.</p> Signup and view all the answers

<p>Article 278 allows the Ministry of Commerce, or CMA for public companies, to make &amp; issue the rules and steps for companies to take the CSR initiative.</p> Signup and view all the answers

<p>governance</p> Signup and view all the answers

<p>company</p> Signup and view all the answers

<p>benefit</p> Signup and view all the answers

<p>company</p> Signup and view all the answers

<p>fiduciary</p> Signup and view all the answers

<p>incorporating</p> Signup and view all the answers

<p>benefit</p> Signup and view all the answers

<p>company</p> Signup and view all the answers

<p>success</p> Signup and view all the answers

<p>company</p> Signup and view all the answers

<p>company</p> Signup and view all the answers

<ul> <li>Its the agency in charge of issuing regulations and instructions and insuring that all regulations and instructions are implemented properly. - The role of CMA is to regulate and develop Saudi companies by providing appropriate rules and regulations that contribute to increase investment and enhancing transparency and disclosure standards and to protect investors and dealers. - It's managed by a board that includes 5 members appointed by the prime minister. - These members are not allowed to engage in any commercial activities. Duties of the CMA: § To develop and regulate the Saudi Stock Market (Tadawul) and enhance appropriate standards and transactions. § To create greater security by protecting investors and the public from unfair practices which include fraud and manipulation. § To increase the efficiency of the market and transparency in transactions of securities. § To reduce the risks of transactions by developing suitable measures and standards. § To monitor all activities and transactions on the Saudi market. * Corporate governance was established by the board of CMA in 2006 and amended in 2010. * Saudi listed companies are required to disclose in the annual report the provisions that had been implemented and those which hadn’t been implemented and to explain the reasons for noncompliance. The code (corporate governance) main parts: É 1- Preliminary provisions, explaining and defining some terms associated with regulations. 2- highlights the rights of Shareholders and the General assembly. 3- reveals the disclosure and transparency related to a company’s policy. 4- introduces the board of director’s functions and responsibilities. 5- includes publication and coming into force and involves implementation. * Among corporate governance regulations, the board of directors and its committees are both considered as the first line of defense against incompetent management. Functions of the board of directors according to the code: - Approving the strategic scheme and main aim of the firm and supervising their implementation, which includes: 1- plans. 2- policies. 3- performance. 4- capital structure. 5- risks. 6- organizational and financial structure. - Represents the shareholders, even if a company sets up committees or delegate some of its powers to a 3rd party. Formation of the board of directors criteria: 1- Should contain at least 3 members and not more than 11. 2- The majority of the directors should be non-executive. 3- The chairman of the board of directors must not be conjoined with any executive position such as CEO. 4- The majority of the members should be fully independent. 5- The member of the board of directors shouldn’t act as a member of board of directors of more than 5 JSC at the same time. CMA’s phases of approaching to implement improved corporate governance: Phase One: publishing the CGR. Phase Two: educate market participants on how to apply the regulation. Phase Three: revision of the CGR, and possibly making parts or all of the regulation mandatory. We’re currently in phase two. What is Corporate Social Responsibility (CSR) – Corporate Social Responsibility (CSR) is when businesses voluntary choose to behave ethically and responsibly, taking into consideration how their actions affect society and the environment. Is CSR relevant in Saudi. – It has gained attention worldwide, but it’s limited in Saudi - Saudi companies in the oil and finance fields have been hesitant to adopt Corporate Social Responsibility (CSR) practices, but in recent years there has been more recognition of its importance and it’s because of Saudi Arabia’s 2030 vision, which is supported by the Saudi Government. The government has been promoting and highlighting social responsibility as fundamental aspects of the nation’s progress. - The government has made rules and guides to help businesses carry out CSR, the support helps them invest in sustainable businesses Benefits of CSR for Saudi companies – 1. Enhanced the corporate image: it makes their reputation better. When companies do things that are ethical and good for society, customers, investors, and people in general often see them in a better way, this can make people loyal to the brand &amp; trust it more 2. Attracted investors &amp; customers: Attracting Investors and Customers especially those who care about ethics and sustainability, to grow their customer base 3. Helped employee engagement and talent attraction: Employees usually feel good about working for companies that help society and the environment Article 278 – allows the Ministry of Commerce, or CMA for public companies, to make &amp; issue the rules and steps for companies to take the CSR initiative. These rules are issued based on a decision by the council of ministers.</li> </ul> Signup and view all the answers