2019 Exam Part A Flashcards
The uk corp gov code 2018 states that FTSE 350 companies should carry out an externally facilitated board evaluation annually. T or F?
False
Explain the purpose of the Equator principles (3)
To assist financial institutions in assessing and managing the environmental and social risks associated with projects that they are proposing to finance
Provide a framework for minimum due diligence and monitoring standards
Assist in focusing the attention of financial institutions on environmental social and community standards and responsibilities
Examples of the ways in which the company secretary can check whether the Board is focused on the company conducting its business ethically (3)
Adoption by the board of a code of ethics for the company which are published internally for employees and externally on the website
Including references to and monitoring of ethical values in board papers and minutes
Ethical conduct being rewarded in the remuneration policies and practices of the company for directors and employees
Which of the following responsibilities should be included in the statement of responsibilities if a SID?
A - acting as interim chair in the event of the resignation of the chair
B - arranging to meet with the other non-executive directors without the chair being present
C
D
B
Describe the purpose and benefits of integrated reporting (5)
Presents a company’s social and environmental performance in a way which is integrated with its financial performance
Shows how the company’s strategy, governance, performance and prospects, in the context of external environment, lead to the creation of value in the short, medium and long term
Enhances transparency and accountability in relation to sustainability issues and csr: integrated reporting take into account the risks and opportunities created by sustainability issues and the most important non financial metrics if the company
Promotes integrated thinking, that helps a company understand relationships and dependencies between its business and social capital and how that affects the company’s ability I create and preserve value
Shows how the company responds to stakeholder issues in its decisions and actions and explaining its relationships and engagement with stakeholders
Explain the agency theory in the context of shareholder value approach to corporate governance (4)
An agent-principal relationship exists when an agent represent the principal and is expected to promote the best interests of the principal above their own interests
In the context of a company, the agency theory of ogvernance is that shareholders are the principal and director and managers are the agent. This is under the shareholder value theory of governance , with the managers principal task as agent being to promote value for the shareholders
The agent-principal relationship can be said to exist in companies where there is a separation of ownership and control
Outline four key features of an effective induction programme for a new director (4)
An induction programme should be a formal, organised programme for each new director
Induction programme should always be tailored to the needs of the individual director - the cosec should consult with the director about their needs before creating the programme
The programme should provide the director with an understanding of the nature of the company, its business and markets
Should cover the company’s employees and other key stakeholders
Should include meetings with key management and advisors, site visits to the company’s bus eases and meetings with non-management and formal training sessions
Cover directors duties and the corporate governance framework
Describe the directors’ duty of skill and care under the s174 of the CA2006 (5)
S174 sets out the directors duty to act with reasonable skill, care and diligence in the performance of their duties (1)
Says that this means the care, skill and diligence that would be exercised by a reasonably diligent person with
- general knowledge, skill and experience that may reasonably be expected if a person carrying out the functions carried out by the director (1)
-the general knowledge, skill and experience that the director has(1)
This means that there are two thresholds that a director must meet. First is based on an objective test, which is the minimum knowledge and skills that all directors are expected to have (1). Second is based on a subjective test, which takes into account the specific knowledge and skills that the particular director has and which can create a more demanding standard (but not a lower standard than the objective test) for that director (1)
