Examination Paper of Corporate Governance
IIBM Institute of Business Management 1
IIBM Institute of Business Management
Examination Paper MM. 100
Corporate Governance
1. ________A group of persons chosen to govern the affairs of a corporation or other large institution.
a .Memorandum of Association
b. Nomination Committee
c. Board of Directors
d. Shareholders
2. BIFR stands for_______
a. Board of India and Financial Reconstruction
b. Board of Industrial and Financial Reconstruction
c. Board of Industrial and Finance Reconstruction
d. None of the above
3. ________is a review in which an auditor analyzes and verifies various records and processes relating to a
company?s quality program.
a. Cost Audit
b. Quality Audit
c. Internal Audit
d. None of the above
4. Which of the following comes under in Justification?
a. Long Run Viability
b. Better Environment
c. Public Image
d. All of the above
5. USEPA stands for_______
6. The existence of a single producer or seller which is producing or selling a product which has no close
substitutes is called_______
a. Externalities
b. Price control
c. Monopoly
d. None of the above
7. SEBI stands for______
Examination Paper of Corporate Governance
IIBM Institute of Business Management 2
a. Securities and exchange Board of India
b. Stock and exchange Board of India
c. Self-regulatory and exchange Board of India
d. None of the above
8. Which of the following issue is not come under in corporate Governance?
a. Correct Preparation
b. Internal Control
c. oversight and management risk
d. Compensation of CEO and other Directors
9. Shareholder are required to inform the company in writing of any change in their address quoting their
folio number is known as______
a. Change of address
b. Transposition of shares
c. None receipt of Dividend
d. All of the above
10. Which of the following comes under External corporate Governance controls?
a. Competition
b. Managerial labour market
c. Debt Covenants
d. All of the above
Part Two:
1. What are the scopes of corporate governance?
2. Discuss the basic rights of shareholders?
3. List the type of “Auditors”.
4. Write a short note on corporate social responsibility.
Caselet 1
Real Juice Company
The company is in the business of producing and marketing fruit juices. Ritu joshi and Rohit Jain were
looking at the ad copy and turning it over and over again in their mind. The copy read, “The best fitness plan
for you real fruit, honest juice and no sugar. This was the main copy line. The more Ritu joshi repeated this
END OF SECTION A
Examination Paper of Corporate Governance
IIBM Institute of Business Management 3
line in her mind the uneasier she became. Something is wrong in the copy, she said to Rohit jain, the
marketing head. We cannot say best for health when we know for sure that the juice contain preservatives
and food color.
Rohit jain said, I don?t see if anything is wrong in this. With food colors and preservatives added we couldn?t
say it is best. This is what is wrong m replied Ritu.
Rohit said, but this is hyperbole and permitted by law. There is nothing wrong in saying this. Have you not
almost noticed all detergent brands say for best wash or whitest wash? This is simply a way of putting your
.....
money on such claims.
“Yes, Real juice passes the legal test fine, but ethically it won?t be correct,” said Ritu joshi. “Please
understand. Here you are not making a claim,” said Amit soni.
Amit soni said,” comparative advertising is healthy but the advertiser must be clear about ...
there are people whose opinion consumer?s view as being correct. Otherwise why use the instructor as
endorser.”
Question:
1. Analyze the issues in the case.
2. Why should advertiser bother about ethics if the ads measure up to legal parameters
Caselet 2
Over the course of Microsoft?s history, the board has developed corporate governance practices to help it
fulfill its responsibilities to shareholders to oversee the work of management and the company?s business
results. The governance practices are memorialized in these guidelines to assure that the board will have the
necessary authority and practices in place to review and evaluate the company?s business operation as
Examination Paper of Corporate Governance
IIBM Institute of Business Management 4
needed and to make decision that are independent of the company?s management. The guidelines are also
intended to align the interests of directors and management with those of Microsoft?s shareholders.
The guidelines are subject to future refinement or changes as the board may find necessary or advisable for
Microsoft in order to achieve these objectives.
Board composition and selection: independent Directors
1. Board Size: The board believes 8 to 10 is an appropriate size based on the company?s present
circumstances. The board periodically evaluates whether a larger or smaller slate of directors would
be preferable
2. Selection of Board members: All members are elected annually by the company?s shareholders,
except as noted below with respect to vacancies.
The board may fill vacancies in existing or new directors? positions.
3) Board membership criteria: The governance and nominating committee works with the board on
........n of the board and CEO, taking into account suggestions from
other members of the board, will set the agenda for each board meeting, and will distribute the
agenda in advance to each director.
10) Advance distribution of material: All information relevant to board?s understanding of matters to
be discussed at an upcoming board meeting should be distributed in writing or electronically to all
members in advance.
11) Access to employees: The board should have access to company employees in order to ensure that
directors can ask all questions and glean all information necessary to fulfill their duties.
12) Executive session of independent directors: The independent directors of the company will meet
regularly o executive session, i.e., with no management directors or management present, at least
three times each fiscal year.
Performance Evaluation: Succession Planning
13) Annual CEO Evaluation: The chair of the governance and nominating committee leads the
independent directors in conducting a review at least annually of the performance of the CEO and
communicates the result of the review to the CEO.
14) Succession Planning: As part of the annual officer evaluation process, the compensation committee
works with the CEO to plan for CEO succession, as well as to develop plan for interim succession
for the CEO in the event of an unexpected occurrences.
15) Board self-evaluation: The governance and nominating committee is responsible for conducting an
annual evaluation of the performance of the full board and reports its conclusion to the board.
Compensation
Examination Paper of Corporate Governance
IIBM Institute of Business Management 5
16) Board compensation review: Company management should report to the board on an annual basis
as to how the company?s director compensation practices compare with those of other large public
corporations.
17) Directors’ stock ownership: The board believes that, in order to align the interests of directors and
shareholders, directors should have a significant financial stake in the company.
Committees
18) Number and types of committees: The board has 5 committees- an Audit committee, a
compensation committee, governance and nominating committee, a finance committee, and an
antitrust compliance committee. The board may add new committees or remove existing committees
as it deems advisable in the fulfillment of its primary responsibilities.
a. Audit committee
b. Compensation committee
c. Governance and Nominating committee
d. Finance committee
19) Composition of committee: Committee chairperson. The audit, compensation, governance and
nominating and antitrust compliance committees consist solely of independent directors.
20) Committee Meetings and Agenda: The chairperson of each committee is responsible for
developing, together with relevant company managers, the committee?s general agenda and
objectives and for setting the specific agenda for committee meeting.
Miscellaneous
21) Review of governance guidelines: The practices memorialized in these guidelines have developed
over a period of years. The board expects to review these guidelines at least every two years as
appropriate.
Questions:
1. List the number and types of committees.
2. Discuss the Performance evaluation planning in brief.
Section C: Applied Theory (30 Marks)
1. Define corporate governance; explain the principles of corporate governance?
2. Distinguish between the Anglo-American Model and the German Model.
S-2-300813
END OF SECTION B
END OF SECTION C
IIBM Institute of Business Management 1
IIBM Institute of Business Management
Examination Paper MM. 100
Corporate Governance
1. ________A group of persons chosen to govern the affairs of a corporation or other large institution.
a .Memorandum of Association
b. Nomination Committee
c. Board of Directors
d. Shareholders
2. BIFR stands for_______
a. Board of India and Financial Reconstruction
b. Board of Industrial and Financial Reconstruction
c. Board of Industrial and Finance Reconstruction
d. None of the above
3. ________is a review in which an auditor analyzes and verifies various records and processes relating to a
company?s quality program.
a. Cost Audit
b. Quality Audit
c. Internal Audit
d. None of the above
4. Which of the following comes under in Justification?
a. Long Run Viability
b. Better Environment
c. Public Image
d. All of the above
5. USEPA stands for_______
6. The existence of a single producer or seller which is producing or selling a product which has no close
substitutes is called_______
a. Externalities
b. Price control
c. Monopoly
d. None of the above
7. SEBI stands for______
Examination Paper of Corporate Governance
IIBM Institute of Business Management 2
a. Securities and exchange Board of India
b. Stock and exchange Board of India
c. Self-regulatory and exchange Board of India
d. None of the above
8. Which of the following issue is not come under in corporate Governance?
a. Correct Preparation
b. Internal Control
c. oversight and management risk
d. Compensation of CEO and other Directors
9. Shareholder are required to inform the company in writing of any change in their address quoting their
folio number is known as______
a. Change of address
b. Transposition of shares
c. None receipt of Dividend
d. All of the above
10. Which of the following comes under External corporate Governance controls?
a. Competition
b. Managerial labour market
c. Debt Covenants
d. All of the above
Part Two:
1. What are the scopes of corporate governance?
2. Discuss the basic rights of shareholders?
3. List the type of “Auditors”.
4. Write a short note on corporate social responsibility.
Caselet 1
Real Juice Company
The company is in the business of producing and marketing fruit juices. Ritu joshi and Rohit Jain were
looking at the ad copy and turning it over and over again in their mind. The copy read, “The best fitness plan
for you real fruit, honest juice and no sugar. This was the main copy line. The more Ritu joshi repeated this
END OF SECTION A
Examination Paper of Corporate Governance
IIBM Institute of Business Management 3
line in her mind the uneasier she became. Something is wrong in the copy, she said to Rohit jain, the
marketing head. We cannot say best for health when we know for sure that the juice contain preservatives
and food color.
Rohit jain said, I don?t see if anything is wrong in this. With food colors and preservatives added we couldn?t
say it is best. This is what is wrong m replied Ritu.
Rohit said, but this is hyperbole and permitted by law. There is nothing wrong in saying this. Have you not
almost noticed all detergent brands say for best wash or whitest wash? This is simply a way of putting your
.....
money on such claims.
“Yes, Real juice passes the legal test fine, but ethically it won?t be correct,” said Ritu joshi. “Please
understand. Here you are not making a claim,” said Amit soni.
Amit soni said,” comparative advertising is healthy but the advertiser must be clear about ...
there are people whose opinion consumer?s view as being correct. Otherwise why use the instructor as
endorser.”
Question:
1. Analyze the issues in the case.
2. Why should advertiser bother about ethics if the ads measure up to legal parameters
Caselet 2
Over the course of Microsoft?s history, the board has developed corporate governance practices to help it
fulfill its responsibilities to shareholders to oversee the work of management and the company?s business
results. The governance practices are memorialized in these guidelines to assure that the board will have the
necessary authority and practices in place to review and evaluate the company?s business operation as
Examination Paper of Corporate Governance
IIBM Institute of Business Management 4
needed and to make decision that are independent of the company?s management. The guidelines are also
intended to align the interests of directors and management with those of Microsoft?s shareholders.
The guidelines are subject to future refinement or changes as the board may find necessary or advisable for
Microsoft in order to achieve these objectives.
Board composition and selection: independent Directors
1. Board Size: The board believes 8 to 10 is an appropriate size based on the company?s present
circumstances. The board periodically evaluates whether a larger or smaller slate of directors would
be preferable
2. Selection of Board members: All members are elected annually by the company?s shareholders,
except as noted below with respect to vacancies.
The board may fill vacancies in existing or new directors? positions.
3) Board membership criteria: The governance and nominating committee works with the board on
........n of the board and CEO, taking into account suggestions from
other members of the board, will set the agenda for each board meeting, and will distribute the
agenda in advance to each director.
10) Advance distribution of material: All information relevant to board?s understanding of matters to
be discussed at an upcoming board meeting should be distributed in writing or electronically to all
members in advance.
11) Access to employees: The board should have access to company employees in order to ensure that
directors can ask all questions and glean all information necessary to fulfill their duties.
12) Executive session of independent directors: The independent directors of the company will meet
regularly o executive session, i.e., with no management directors or management present, at least
three times each fiscal year.
Performance Evaluation: Succession Planning
13) Annual CEO Evaluation: The chair of the governance and nominating committee leads the
independent directors in conducting a review at least annually of the performance of the CEO and
communicates the result of the review to the CEO.
14) Succession Planning: As part of the annual officer evaluation process, the compensation committee
works with the CEO to plan for CEO succession, as well as to develop plan for interim succession
for the CEO in the event of an unexpected occurrences.
15) Board self-evaluation: The governance and nominating committee is responsible for conducting an
annual evaluation of the performance of the full board and reports its conclusion to the board.
Compensation
Examination Paper of Corporate Governance
IIBM Institute of Business Management 5
16) Board compensation review: Company management should report to the board on an annual basis
as to how the company?s director compensation practices compare with those of other large public
corporations.
17) Directors’ stock ownership: The board believes that, in order to align the interests of directors and
shareholders, directors should have a significant financial stake in the company.
Committees
18) Number and types of committees: The board has 5 committees- an Audit committee, a
compensation committee, governance and nominating committee, a finance committee, and an
antitrust compliance committee. The board may add new committees or remove existing committees
as it deems advisable in the fulfillment of its primary responsibilities.
a. Audit committee
b. Compensation committee
c. Governance and Nominating committee
d. Finance committee
19) Composition of committee: Committee chairperson. The audit, compensation, governance and
nominating and antitrust compliance committees consist solely of independent directors.
20) Committee Meetings and Agenda: The chairperson of each committee is responsible for
developing, together with relevant company managers, the committee?s general agenda and
objectives and for setting the specific agenda for committee meeting.
Miscellaneous
21) Review of governance guidelines: The practices memorialized in these guidelines have developed
over a period of years. The board expects to review these guidelines at least every two years as
appropriate.
Questions:
1. List the number and types of committees.
2. Discuss the Performance evaluation planning in brief.
Section C: Applied Theory (30 Marks)
1. Define corporate governance; explain the principles of corporate governance?
2. Distinguish between the Anglo-American Model and the German Model.
S-2-300813
END OF SECTION B
END OF SECTION C
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