2.0 Corporate Governance

Question 1

2.01 Fiduciary Duty

Answer 1

To act loyally and in the best interest of the corporation.

Question 2

2.01 What does NASDAQ stand for?

Answer 2

National Association of Securities Dealers Automated Quotations.

Question 3

2.01 What are the requirements related to the boards of directors?

Answer 3

1. Independence
2. Not independent if the director is a recent employee or affiliate of the company, a former partner or employee of the external auditor or if a family member was recently an officer of the entity (5 years for NYSE, 3 years for NASDAQ)
3. Non-management required to meet on a daily basis
4. Directors must adopt and publish a code of conduct
5. Maintain independent audit committee
6. Entity must id relationships that automatically indicate that a director is not independent.

Question 4

2.01 What are the 3 committees that a publicly-held company is required to maintain?

Answer 4

1. Nominating Committee - determine who is suitable for service on the board of directors
2. Audit Committee - required to be made up of independent directors and at least one member of the audit committee is required to be a financial expert
3. Compensation Committee - independent directors responsible for establishing compensation policies for directors and executives

Question 5

2.07 What is the purpose of ERM?

Answer 5

Enterprise Risk Management purpose is to find the balance between minimizing or managing risk and maximizing the return and opportunities that can be provided to stakeholders.