1- INTRODUCTION TO CORPORATE GOVERNANCE

Question 1

_____ refers to a process whereby elements in society wield power, authority and influence and enact policies and decisions concerning public life and social upliftment.

Answer 1

governance

Question 2

It means the process of decision-making and the process by which decisions are implemented (or not implemented) through the exercise of power or authority by leaders of the country and / or organizations.

Answer 2

Governance

Question 3

CHARACTERISTICS OF GOOD GOVERNANCE

Answer 3

1. Participation
2. Accountability
3. Effectiveness & Efficiency
4. Equity & Inclusiveness
5. Consensus Oriented
6. Responsiveness
7. Transparency
8. Rule of Law

Question 4

Participation by both men and women is a key cornerstone of good governance. Participation could be either direct or through legitimate institutions or representatives. It is
important to point out that representative democracy does not necessarily mean that
the concern of the most vulnerable in society would not be taken into consideration in decision making. Participation needs to be informed and organized.
This means freedom of association and
expression on one hand and an organized civil society on the other hand.

Answer 4

Participation

Question 5

Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial
enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.

Answer 5

Rule of Law

Question 6

_____ means that decisions and their enforcement are done in a manner that follows rules and regulations. It means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media.

Answer 6

Transparency

Question 7

Good governance requires that institutions and processes try to serve the needs all stakeholders within a reasonable
timefram

Answer 7

Responsiveness

Question 8

Good governance requires mediation of the different interests in society to reach a broad consensus on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the
development. goals of such This can only result from an understanding of the historical, cultural and social contexts of a given society or community

Answer 8

Consensus Oriented

Question 9

Ensures that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well being.

Answer 9

Equity &
Inclusiveness

Question 10

Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment.

Answer 10

Effectiveness & Efficiency

Question 11

Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. Who is accountable to whom varies depending on whether
decisions or actions taken are internal or external to an organization or institution. In general, an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.

Answer 11

Accountability

Question 12

________ is defined as the system of rules, practices and processes by which business corporations are directed and controlled. It basically involves balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.

Answer 12

Corporate governance

Question 13

PURPOSE OF CORPORATE GOVERNANCE

The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver long-term success of the company. In simple terms, the fundamental aim of corporate governance is to enhance shareholders” value and protect the interests of other stakeholders by improving the corporate performance and accountability. It is also about what the board of directors of a company does, how it sets the values of the business firm.

Question 14

OBJECTIVES OF CORPORATE GOVERNANCE

Answer 14

1. Fair and Equitable Treatment of Shareholders
2. Self-Assessment
3. Increase Shareholders’ Wealth
4. Transparency and Full Disclosure

Question 15

A corporate governance structure ensures equitable and fair treatment of all shareholders of the company. In some organizations, a group of high-ner-worth individual and institutions who have a substantial proportion of their portfolios invested in the company, remain active through occupation of top-level positions that enable them to guard their interest. However, all shareholders deserve equitable treatment and this equity is safeguarded by a good govenance structure in any organization.

Answer 15

Fair and Equitable Treatment of Shareholders

Question 16

Corporate governance enables firms to assess their behavior and actions before they scrutinized
regulatory agencies. Business establishments with a strong corporate governance system are better able to limit exposure to regulatory risks and fines. An active and independent board can successfully point out deficiencies or loopholes in the company operations and help solve issues intemally on a timely basis.

Answer 16

Self-Assessment

Question 17

Another corporate governance’s main objective is to protect the long-term interests of the sharcholders. Firms with strong corporate governance structure are seen to have higher valuation attached to their shares by businessmen. This only reflects the positive perception that good corporate governance induces potential investors to decide to invest in a compan

Answer 17

Increase Shareholders’ Wealth

Question 18

Good corporate governance aims at ensuring a higher degree of transparency in an organization by encouraging full disclosure of transactions in the company accounts.

Answer 18

Transparency and Full Disclosure

Question 19

BASIC PRINCIPLES OF EFFECTIVE CORPORATE GOVERNANCE

Answer 19

1. Transparency and Full Disclosure
2. Accountability
3. Corporate Control

Question 20

Is the board telling us what is going on?

Answer 20

Transparency and Full Disclosure

Question 21

Is the board taking responsibiity?

Answer 21

Accountability

Question 22

Is the board doing the night thing?

Answer 22

Corporate Control

Question 23

• Does the board
meet the information needs of investment
communities?

Answer 23

Transparency and Full Disclosure

Question 24

• Does the board clarify its role and that of management?

Answer 24

Accountability

Question 25

• Has the board built long-term sustainable growth in shareholders' value for the corporation?

Answer 25

Corporate Control

Question 26

Principles of Good Corporate Governance 1. A company should lay solid foundation for management and oversight. It should recognize and publish the respective roles and responsibilities of board and management.

Answer 26

Formalize and disclose the functions reserved to the board and those delegated to management.

Question 27

Principles of Good Corporate Governance 2. Structure the board to add value. Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.

Answer 27

2-a. A board should have independent directors. 2-b. The roles of chairperson and chief executive officer should not be exercised by the same individual. 2-b. The board should establish a nomination committee

Question 28

Principles of Good Corporate Governance 3. Promote ethical and responsible decision. making. Actively promote ethical and responsible decision-making.

Answer 28

3-a. Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or • equivalent) and any other key executives as to: • The practices necessary to maintain confidence in the company's integrity, and • The responsibility and accountability of individuals for reporting and investigating reports of unethical practices 3-b. Disclose the policy concerning trading in company securities by directors, officers and employees.

Question 29

Principles of Good Corporate Governance 4. Safeguard integrity in financial reporting. Have a structure to independently verify and safeguard. the integrity of the company's financial reporting.

Answer 29

4-a. Require the chief executive of (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company's financial reports presenta true and fair view, in all material respects, of the company's financial condition and operational results and are in accordance with relevant 4-b. The board should establish an audit 4-c. Structure the audit committee so that it Only non-executive or independent directors; An independent chairperson, who is not chairperson of the • At least three (3) members,

Question 30

Principles of Good Corporate Governance 5. Make timely and balanced disclosure. Promote timely and balanced disclosure of all material matters concerning the company.

Answer 30

5-a. Establish written policies and compliance with IFS. procedures designed to ensure 5-b. Listing Rule disclosure requirements and to ensure accountability at a senior management level for compliance.

Question 31

Principles of Good Corporate Governance 6. Respect the rights of shareholders and facilitate the effective exercise of those rights.

Answer 31

6-a. Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings. 6-b. Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the audit.

Question 32

Principles of Good Corporate Governance 7. Recognize and manage risk. Establish a sound system of risk oversight and management and internal control.

Answer 32

7-a. The board or appropriate board committee should establish policies on risk oversight and management. 2-a. The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that: • The statement given in accordance with best practice recommendation 4-a (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board; and The company's risk management and internal compliance and control system is operating efficiently in all material respects.

Question 33

Principles of Good Corporate Governance 8. Encourage enhanced performance. Fairly review and actively encourage enhanced board and management effectiveness.

Answer 33

8-a. Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives.

Question 34

Principles of Good Corporate Governance 9. Remunerate fairly and responsibly. Ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.

Answer 34

9-a. Provide disclosure in relation to the company's remuneration policies to enable investors to understand: The costs and benefits of those policies; and • The link between remuneration paid to directors and key executives and corporate performance. 9b. The board should establish a remuneration committee. 9-c. Clearly distinguish the structure of non-executive director's remuneration from that of executives. 9-d. Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.

Question 35

Principles of Good Corporate Governance 10. Recognize the legitimate interests of stakeholders. Recognize legal and other obligations to all legitimate stakeholders.

Answer 35

10-a. Establish and disclose a code of conduct to guide compliance with legat and other obligations to legitimate stakeholders.

Question 36

• Does it safeguard integrity in financial reporting?

Answer 36

Transparency and Full Disclosure

Question 37

• Does the board have sound disclosure policies and practices?

Answer 37

Transparency and Full Disclosure

Question 38

• Does it make timely and balanced disclosure?

Answer 38

Transparency and Full Disclosure

Question 39

Can an outsider meaningfully analyze the organization's actions and performance?

Answer 39

Transparency and Full Disclosure

Question 40

• Does it promote objective, ethical and responsible decision making?

Answer 40

Accountability

Question 41

• Does it lay solid foundations for management oversight?

Answer 41

Accountability

Question 42

* Does the composition mix of board membership ensure appropriate range and mix of expertise, diversity, knowledge and added value?

Answer 42

Accountability

Question 43

• Is the organization's senior ofTicial committed to widely accepted standards of correct and proper behavior?

Answer 43

Accountability

Question 44

• Does it create an environment to take risk?

Answer 44

Corporate Control

Question 45

> Does it encourage enhanced performance?

Answer 45

Corporate Control

Question 46

> Does it recognize and manage risk?

Answer 46

Corporate Control

Question 47

> Does it remunerate fairly and responsibly?

Answer 47

Corporate Control

Question 48

• Does it recognize the legitimate interests of stakeholders?

Answer 48

Corporate Control

Question 49

Are conflicts of interest avoided such that the organization's best interests prevail at all times?

Answer 49

Corporate Control