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CIMA Fundamentals of Ethics - Corporate Governance and Business Law Sample Questions:

1. 'Remuneration' is one of the main principles in the Corporate Governance Code. Which of the following is NOT best practice under the 'Remuneration' principle?

A) There should be a formal and transparent procedure for developing policy on executive remuneration
B) Remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but should not be excessive
C) Remuneration should be structured in order to link a significant proportion of the rewards to corporate and individual performance
D) The board of directors are able to set the remuneration of non-executive directors

2. B is employed by Zed plc and has suffered an occupational injury.
Which of the following is correct?
Zed plc may be liable to B for:
i. breach of an implied term in B's contract of employment
ii. breach of the duty to take care in the tort of negligence
iii. breach of statutory duty

A) (ii) only
B) (i) only
C) (i), (ii) and (iii)
D) (iii) only

3. If a business trades as "Exe and Co (Office Furniture)" which of the following is CORRECT?
(i) The business could be owned by a partnership
(ii) The business could be owned by a sole trader
(iii) The business could be owned by a private company limited by shares

A) (i) only
B) (i) and (ii) only
C) (i), (ii) and (iii)
D) (iii) only

4. Which of the following types of committee is NOT required by the UK Corporate Governance Code?

A) Remuneration Committee
B) Appointments Committee
C) Audit Committee
D) Risk Management Committee

5. A company wants to let its employees know that fraud will not be tolerated. It also wants to inform them of the consequences of committing fraud.
Which of the following would best achieve this?

A) A fraud response plan
B) A public relations plan
C) A fraud policy statement
D) Outlining clear disciplinary procedures

Solutions: