Chapter 6 Multiple choice questions

Are all listed companies in the UK required to comply with the Principles and Provisions found in the UK Corporate Governance Code?

Yes

No

Which ONE of the following would not be described as an institutional investor?

Banks

Pension funds

Insurance companies

Employees holding shares through an employee share scheme

What is meant by the 'separation of ownership and control?'

That the owners of companies have become separated from those who control companies.

That the law should seek to keep the owners and controllers of company apart in order to avoid an over-concentration of power.

That owners and controllers of companies should not act in concert to defeat resolutions.

That those who control the company should be separate to those who own it.

The UK Stewardship Code operates on a comply or explain basis: true or false?

True

False

As a matter of law, are directors generally entitled to be paid for their services?

Yes

No

Which ONE of the following statements is untrue?

Companies with a premium listing should set up a remuneration committee consisting of independent non-executive directors.

The remuneration of the non-executive directors should be determined by the executives.

The model articles provide that directors should not be permitted to determine their own levels of remuneration.

Remuneration committees should consist of at least three directors, although in smaller companies, this may be reduced to two.

Regarding the disclosure and approval of remuneration, which ONE of the following statements is true?

If the members reject the policy section of the remuneration report, then the company must act.

The Directors' Remuneration Report Regulations 2002 provide that quoted companies must prepare a directors' remuneration report.

The UK Corporate Governance Code provides members with the opportunity to approve the company's remuneration report.

Only the directors of listed companies need disclose details of their remuneration in their annual accounts.

The binding vote on remuneration policy must take place every year.

Which ONE of the following is not a valid difference between executive and non-executive directors?

Executive directors work full-time, whereas non-executive directors work part-time.

Executive directors tend to be paid considerably more than non-executive directors.

Executive directors are involved in the management of the company, whereas non-executive directors are not expected to be involved in management.

Non-executive directors should be independent, whereas the executives will usually not be.

Which ONE of the following is not a Principle or Provision of the UK Corporate Governance Code?

The board should identify, in the annual report, which non-executive directors are considered to be independent.

The chair should be independent on appointment.

The roles of chair and chief executive should not be carried out by the same person.

The circumstances listed in Provision 10 will result in a non-executive director not being independent.

Which corporate governance report focused specifically on non-executive directors?

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