Chapter 7: Applications of the legislative and regulatory framework

Question 1

The purpose of a trust

Answer 1

• means of segregating assets for the protection of beneficiaries, thus insulating them from the consequences of the settlor’s bankruptcy.
• to provide a mechanism for the collective representation and protection of members of a group of people linked by a common interest

Question 2

Corporate governance

Answer 2

A term used to refer to the high-level framework within which managerial decisions are made in a company.

Question 3

The aim of good corporate governance

Answer 3

That the company should be managed in order to best meet appropriate requirements of its stakeholders such as the shareholders, employees, pensioners, customers, suppliers and others who may be affected by the company’s operations while not having any contractual relationship with the company at any time.

Question 4

King II Report:

7 Pillars of good corporate governance

Answer 4

• Discipline
• Transparency
• Independence
• Accountability
• Responsibility
• Fairness
• Social Responsibility

Question 5

King II Report:
7 Pillars of good corporate governance

Discipline

Answer 5

Corporate discipline is a commitment by a company’s senior management to adhere to behaviour that is universally recognised and accepted to be correct and proper.

Question 6

King II Report:
7 Pillars of good corporate governance

Transparency

Answer 6

Transparency is the ease with which an outsider is able to make meaningful analysis of a company’s actions, its economic fundamentals and the non-financial aspects pertinent to that business.