Corporate Governance Duties Quiz

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Questions and Answers

What is one of the key responsibilities of the individual ensuring compliance with regulations?

Addresses compliance issues that may be under investigation. (correct)

Oversees the financial reporting process.

Ensures directors are compensated adequately.

Sanctions board members for attendance violations.

Which task is specifically mentioned regarding the Chairman's role in meeting agendas?

Ensures discussions focus solely on financial outcomes.

Limits input from directors to avoid conflicts.

Focuses the agenda on strategic matters and key governance concerns. (correct)

Guarantees that the meeting is conducted within a strict time limit.

What is a duty of the Chairman concerning the Board's performance?

Focuses solely on individual director performance.

Delegates performance evaluations to department heads.

Evaluates the performance of the Board at least once a year. (correct)

Conducts performance evaluations every six months.

What type of conviction leads to a permanent disqualification as a director?

Conviction involving the purchase or sale of securities. Signup and view all the answers

How does the Chairman facilitate discussions among the Board?

By fostering an environment conducive to constructive debate. Signup and view all the answers

What is a responsibility of the compliance officer regarding board member training?

Confirms that board members attend required regulatory trainings. Signup and view all the answers

For what reason might a director be temporarily disqualified?

Pending litigation regarding a professional conduct issue. Signup and view all the answers

What type of information should the Board receive to make sound decisions?

Timely, relevant, and concise information that is insightful. Signup and view all the answers

What is the primary purpose of the Internal Audit Charter?

To formalize the role of Internal Audit and the audit plan Signup and view all the answers

Which of the following is NOT a responsibility of the Internal Audit Department?

Overseeing financial investment decisions Signup and view all the answers

Who should the Internal Auditor report directly to?

The Audit Committee Signup and view all the answers

What should be in place to prevent fraud and irregularities in the company?

Well-designed internal control procedures Signup and view all the answers

What should be disclosed in the corporation's Annual Report if non-audit work is permitted?

The non-audit fees paid to the External Auditor Signup and view all the answers

Why is it important to discuss the nature and scope of the audit with the External Auditor?

To secure proper coverage and minimize duplication of efforts Signup and view all the answers

What criteria should the Audit Committee evaluate regarding the External Auditor?

The non-audit work undertaken and associated fees Signup and view all the answers

What role does the Audit Committee play in relation to the Internal Audit Department?

They approve the terms for outsourcing internal audit services Signup and view all the answers

What is one of the primary duties of the Corporate Secretary regarding Board meetings?

Prepare an annual schedule of Board and committee meetings Signup and view all the answers

Which of the following is NOT a responsibility of the Corporate Secretary?

Monitors corporate compliance with governance rules Signup and view all the answers

What must the Corporate Secretary ensure regarding the agenda of Board meetings?

It is communicated at least five working days in advance Signup and view all the answers

Which responsibility does the Compliance Officer have regarding new directors?

Conducts orientation on the company’s business and structure Signup and view all the answers

How should the Corporate Secretary work with the Board and stakeholders?

By fairly and objectively contributing to the flow of information Signup and view all the answers

What is required of the Corporate Secretary during Board meetings?

Attending all meetings unless justified by certain causes Signup and view all the answers

What does the Compliance Officer do if violations are found?

Reports violations to the Board and recommends disciplinary action Signup and view all the answers

Which of the following is a key duty of the Corporate Secretary related to records?

Safekeeps and preserves the integrity of minutes and official records Signup and view all the answers

What is one reason an individual may be permanently disqualified from being elected as a director?

Conviction of an offense punishable by imprisonment for more than six years Signup and view all the answers

Which condition could lead to the temporary disqualification of a director?

Missing 50% of Board meetings without a valid reason Signup and view all the answers

What is the maximum beneficial equity ownership an independent director can have in a corporation to remain qualified?

Two percent (2%) of its subscribed capital stock Signup and view all the answers

Which of the following conditions does NOT qualify as a ground for temporary disqualification of a director?

Owning 0.5% of company shares Signup and view all the answers

What must occur for a dismissed director to be reinstated as a candidate in future elections?

Clearing of involvement in the cause of dismissal Signup and view all the answers

Which of the following is NOT included in the recommended contents of the Related Party Transactions (RPT) Policy?

Adoption of growth strategies Signup and view all the answers

In which circumstance may the disqualification of an independent director be lifted?

If ownership is reduced to within the 2% limit Signup and view all the answers

What is a necessary component of the Audit Committee's duties according to the guidelines?

Oversight of compliance with financial reporting standards Signup and view all the answers

What is the purpose of establishing a risk register in the risk management function?

To define and prioritize residual risks Signup and view all the answers

Which of the following is NOT a key factor in identifying and analyzing risks in the risk management strategy?

Employee performance metrics Signup and view all the answers

What is one responsibility of the Chief Risk Officer (CRO) related to risk management progress?

Communicating top risks to the Board Risk Oversight Committee Signup and view all the answers

What is meant by 'residual risks' in the context of risk management?

Risks that remain after mitigation efforts Signup and view all the answers

Which action is involved in the CRO's collaboration with the CEO?

Updating and recommending ERM policies to the Board Signup and view all the answers

Which of the following describes pre-emptive rights of shareholders?

Right to purchase additional shares before new issues Signup and view all the answers

What is one of the key responsibilities of the risk management function regarding significant risk exposures?

Reporting findings to the Board Risk Oversight Committee Signup and view all the answers

What does effective monitoring and evaluation in risk management processes involve?

Reviewing existing risk measures for effectiveness Signup and view all the answers

What is one of the primary roles of the CEO in a corporation?

Implements the corporation’s strategic plan Signup and view all the answers

Which of the following is NOT a function of the Lead Director?

Evaluating the performance of the CEO Signup and view all the answers

What is a characteristic of an effective internal control system?

Comprehensive communication protocols Signup and view all the answers

Which activity is part of an effective enterprise risk management framework?

Mitigation and monitoring of risk Signup and view all the answers

How does the CEO contribute to corporate culture?

By building and motivating a positive corporate culture Signup and view all the answers

Which statement accurately describes the responsibilities of internal audit functions?

Monitors activities and corrects deficiencies Signup and view all the answers

What is an essential task of the CEO in relation to the Board of Directors?

Communicate timely information to the Board Signup and view all the answers

Which of the following best describes the role of the Lead Director in corporate governance?

Facilitates communication between the Chairman and other directors Signup and view all the answers

Study Notes

Recommendation 1.5 - Duties and Responsibilities of the Corporate Secretary

Assists the Board and committees in conducting meetings, preparing schedules, and setting agendas
Maintains meeting minutes and other official records
Keeps up-to-date on relevant laws, regulations, industry developments, and corporate operations, advising the Board
Works fairly with the Board, Management and shareholders, facilitating information flow
Advises on establishing board committees and their terms
Notifies Board members of meeting agendas at least five business days in advance
Attends Board meetings, except for justifiable reasons
Oversees the by-laws' drafting, ensuring regulatory compliance
Performs other duties as mandated by the SEC

Recommendation 1.6 - Duties and Responsibilities of the Compliance Officer

Ensures new directors are properly oriented on company matters
Monitors and ensures compliance with laws, regulations, and governance issuances by the corporation
Reports any violations to the Board, recommending disciplinary actions
Maintains the integrity and accuracy of regulatory submissions
Appears before the SEC when required
Collaborates with other departments on compliance issues
Identifies and resolves compliance issues
Ensures board member training
Performs other duties as mandated by the SEC

Recommendation 2.3 - Roles and Responsibilities of the Chairman

Ensures the meeting agenda focuses on strategic matters, risk appetite, governance concerns, and impactful issues
Guarantees the Board receives accurate, timely, and relevant information
Facilitates constructive debate amongst directors
Ensures sufficient questioning of management reports
Assures director training and continuing education
Ensures annual Board performance evaluation

Recommendation 2.6 - Permanent and Temporary Disqualifications of a Director

Any person convicted of a crime involving securities purchase/sale, underwriter/broker/dealer misconduct, or fiduciary relationship with a financial institution
Any person permanently enjoined by a court or administrative body from securities-related activities or acting as a director/officer of a specified institution
Any person convicted of a crime that involves moral turpitude, fraud, or other fraudulent acts
Any person who willfully violated or aided in violating securities laws, regulations or orders
Any person who is judicially declared insolvent
Any person found guilty by a foreign financial regulatory body of similar misconduct

Recommendation 2.7 - Contents of the RPT Policy

Defines related parties
Outlines RPT policy coverage
Provides guidelines to ensure arm's length dealings
Identifies and manages potential conflicts of interest
Sets materiality thresholds
Outlines internal limits for exposures
Includes whistleblower mechanisms
Describes restitution for abusive related party transactions

Recommendation 3.2 - Duties and Responsibilities of the Audit Committee

Recommends and approves the Internal Audit Charter (IA Charter)
Monitors internal controls, financial reporting integrity, asset security, and regulatory compliance through the IA Department
Oversees the IA Department and recommends leadership appointments
Oversees external auditor work scope and fees, avoiding conflicts with primary audit duties
Reviews and approves interim and annual financial statements
Reviews internal and external auditor reports and recommendations to the Board
Addresses any compliance issues and related party concerns in conjunction with the related committee when applicable

Recommendation 3.3 - Duties and Responsibilities of the Corporate Governance Committee

Oversees the implementation and periodic review of the corporate governance framework
Evaluates the Board's and committee's performance annually, creating action plans for improvement
Ensures the results of the Board evaluation are shared for improvements

Recommendation 3.4 - Duties and Responsibilities of the Board Risk Oversight Committee

Develops a well-defined enterprise risk management plan
Oversees the Management Risk Oversight Committee, reviewing and discussing risk exposures
Evaluates the risk management plan's effectiveness and relevance
Advises the Board on risk appetite and tolerance levels
Reviews risk levels yearly, adjusting as circumstances change
Assesses the probability and impact of identified risks
Oversees Management's risk management activities
Reports to the Board on risk exposures, mitigation plans, and recommendations

Continuously monitors related parties and transactions, adjusting reports as needed
Evaluates related party transactions (RPTs) to ensure fair terms and conditions, avoiding misallocation of company resources or reputation risk
Ensures proper disclosure and appropriate regulatory reporting on RPTs
Reports to the Board on RPT status and aggregate exposures
Oversees the RPT review process and policies

Recommendation 5.2 - Qualifications of an Independent Director

Not a senior officer or employee of the covered company unless ownership changed
Not a director within the last three years of the covered company, its subsidiaries or affiliates
Not a chairman emeritus, ex-officio director, member of any advisory board or other similar position related to the covered company within the last 3 years
Not an owner exceeding 2% of the covered company's shares
No relative is a director, officer, or substantial shareholder of the covered company
Not acting as a nominee for a director
Not a securities broker-dealer or professional advisor of the covered company
Not affiliated with any non-profit funded by the covered company
Not employed as an executive officer of another company where covered company executives are directors

Recommendation 5.4 - Roles and Responsibilities of the CEO

Defines strategic direction and develops the implementation plan
Communicates and enacts the corporation's vision, mission, and values
Oversees operations and manages resources via the strategic plan
Understands the industry and market, and stays updated
Manages executive officers
Manages resources carefully
Keeps the Board informed
Develops staff morale

Recommendation 5.5 - Functions of the Lead Director

Serves as an intermediary between the Chairman and other directors
Chairs meetings of non-executive directors
Contributes to performance evaluation of the Chairman when required

Recommendation 12.1 - ICS and ERMF

Effective internal control system
Management control culture, risk recognition, ongoing monitoring, and information communication
Includes activities like identification, evaluation and mitigation of enterprise risk management

Recommendation 12.2 - Functions of Internal Audit

Provides risk-based assurance services to the Board
Reviews the effectiveness of governance and control
Performs regular and special audits of the company's policies
Provides consulting services to support governance and control

Recommendation 12.3 - Responsibilities of CAE

Reviews the internal audit charter for approval
Develops a risk-based audit plan
Communicates plans, resource needs, and significant changes to management
Works to add value to the organization
Reports to the Audit Committee and communicates findings

Recommendation 12.4 - Activities of Risk Management Function

Defines a risk management strategy, identifies and analyzes risks, and develops a risk register
Establishes risk categories and criteria
Creates risk mitigation plans
Establishes appropriate communication channels with oversight committees
Regularly monitors and evaluates procedures

Recommendation 12.5 - Functions of the CRO

Supervises ERM process development and implementation
Communicates top risks and strategies to the Board
Collaborates with the CEO on strategies
Provides insights on risk measures, risk management processes, and compliance with established policies

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Description

Test your knowledge on the key responsibilities of corporate secretaries and compliance officers. This quiz covers essential tasks such as meeting management, compliance monitoring, and advisory roles within a corporate structure. Perfect for students and professionals in corporate governance!