1What should non executive directors (NEDS) not be 6
Employed by company in the last 5 years
Have a material interest in the company for the last 5 years
Participate in shares / performance related pay / pensions
Have close family ties to senior directors or employees
Serve as NED for more than 9 years
Hold cross directorship (2 or more directors sit on the board at the same 3rd party company) or have significant links to other directors through involvement in other organisations
2Whatvare the features of directors remuneration in corporate governance (5)
Sufficient to attract, retain & motivate but not excessive
Significant proportion should be linked to performance
Align interest - make them shareholder
No director should influence or set own salary
Unethical to pay poor performance
3What are the systems of corporate governance
Principals based
Rules based
4What are the benefits of corporate governance (6)
Reduce risk
Stimulates performance
Improves access to capital markets - good governance = more trust
Enhances marketability of goods and services
Improves leadership
Demonstrates transparency and social accountability
5What can result from disciplinary action against a CIMA member (3)
Fines
Suspension of membership
Withdrawal of membership
6give 6 examples of what the minimum acceptable ethics could include
Paying staff decent wages & pensions
Providing good working conditions
Paying suppliers within agreed terms
Sourcing suppliers carefully
Using sustainable or renewable sources
Being open & honest with customers
7What are the steps for ethical conflict resolution (4)
Check facts - document the issue
Escalate internally
Escalate externally - auditors/industry regulator/seek legal advice
Refuse to remain associated with the conflict - remove yourself from the situaltion / refuse to be associated with a report / resign
8What 5 things could a sociable responsible company consider
Environmental impact of production or consumption
Health impact for consumers of products
Fair treatment of employees
Animal welfare
Safety of products & production process's
9What is the conceptual framework approach to dealing
Identify - threats / issues
Evaluate - how serious is it
Mitigate / address issues - what can I do
10What are the fundamental ethical principals for CIMA (5)
Objectivity
Professional competence and due care
Professional behaviour
Integrity
Confidentiality
11What are the threats to objectivity?
Self interest
Self review
Familiarity
Intimidation
Advocacy
12What is an acceptable method of remuneration for a NED
Fee's that reflect the time commitment and the responsibilities of the role ie fixed daily rate for days they work for the company
13In the UK corporate governance code what are the features of effectiveness (4)
Formal, rigorous transparent appointment
Induction, cpd, board performance
Timely information
Retirement by rotation - re-election at regular intervals
14In the UK corporate governance code what are the features of accountability & audit (5)
Balanced & understandable assessment of company's current & future prospects
Sound system of control - internal audit
Risk based approach
Independent external auditors
Audit committee
15What is a stakeholder
A group or individual who has an interest in what the organisation does, or an expectation of the organisation
16What are the 6 principals of the OECD (organisation for economic cooperation and development) framework
Effective corporate governance framework
Shareholders right of ownership
Fair treatment for shareholders
Stakeholders role and rights
Disclosure and transparency
Responsibilities of the board
17What are the symptoms indicating poor corporate governance (8)
Domination by a single individual
Lack of board involvement
Ineffective internal control
Poor supervision
Lack of independent scrutiny
Poor communication with shareholders
Emphasis on short term profitability
Misleading accounts
18What is the agency problem
When the directors are running the company in their own interests rather than the company / shareholders
19What has the UK corporate governance code issued principals in relation to (5)
Leadership
Effectiveness
Accountability
Remuneration
Relations with shareholders
20In the UK corporate governance code what are the features of relationships with shareholders (1)
Use of AGM (annual general meeting
21What has the UK corporate governance code set out guidelines on (7)
Use of AGM
Board
Chairman & CEO
Non executive directors (NEDS)
Nomination committee
Remuneration committee
Audit committee
22What is corporate governance
The system by which companies are directed and controlled
23What is the purpose of corporate governance
To control the board of a listed company to ensure that they act in the best interests of that company
24In the UK corporate governance code what are the features of leadership (4)
Effective board responsible for the long term success of the company
Separate chairman / CEO
50% non executive directors
Committees for nomination, remuneration & audit
25What is the Sarbanes oxley act 2002 (Sox)
The US corporate governance code
26What are the Sarbanes Oxley key points (5)
Auditor independence
Audit committee
Internal control report
Increased financial disclosures (including all balance sheet financing)
US stock exchange regulations