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

1. Timmy has just taken over as the managing director of a well-known manufacturing company.
He really wants to do a good job an ensure that the company maintains its positive reputation.
Baring in mind the five key principles of corporate governance, which of the following should Timmy do to ensure he does a good job?
Select ALL that apply.

A) Ensure that the company's board is as small as possible - a big board makes the decision-making process far too complicated.
B) Ensure that an AGM is held during each financial quarter so that any issues that have risen during the last three months are brought to attention.
C) Ensure the company discloses both financial and non-financial information during its annual report.
D) Ensure that she duly holds AGMs so that any relevant issues can be discussed.
E) Ensure the company discloses financial information only during its annual report.
F) Ensure that the company's board are all experienced and knowledgable about the company and the manufacturing industry.

2. Which of the following is NOT one of the fundamental principles of CIMA's Code of Ethics?

A) Professional behavior
B) Integrity
C) Materiality
D) Objectivity

3. According to CIMA, governance and social responsibility policies are:

A) In conflict with an organization's values
B) Rooted in an organization's values and code of ethics
C) Not related to each other
D) Not related to an organization's code of ethics

4. (i) In general a person is assumed to know of a clause of which he has been given reasonable notice at or before the time of the contract.
(ii) In general a person cannot rely on a clause brought to the other party's attention after the contract has been concluded.
(iii) In general a person cannot be bound by a clause written in small print.
Choose one of the following.

A) Only (i) and (iii) are correct.
B) Only (ii) and (iii) are correct.
C) (i), (ii) and (iii) are correct.
D) Only (i) and (ii) are correct.

5. Which of the following is correct?
(i) The first directors are appointed upon the incorporation of the company.
(ii) A director is a person who occupies the position of director by whatever name called.
(iii) A shadow director is a person in accordance with whose directions or instructions the directors of the company are accustomed to act.

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

Solutions: