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

1. X Ltd has entered into a number of contracts with Y Ltd. In which of the following situations could the directors be held personally liable for the debts contracted with Y Ltd?
(i) X Ltd has continued to trade at a time when insolvency appeared inevitable (ii) X Ltd has become insolvent and is unable to pay its debts to Y Ltd (iii) X Ltd has contracted for a purpose not specified in its articles of association

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

2. Which of the following are included in CIMA's practical proposals for better reporting of corporate governance?
1. The Chief Executive should communicate information regarding the performance of individual directors to the shareholders
2. The company should explain how the information needs of the shareholders have been met during the year
3. The Chairman's views on good governance and the culture of the board should be communicated

A) 1 and 2 only
B) 1,2 and 3
C) 1 only
D) 2 and 3 only

3. Which of the following is incorrect?

A) Subsequent directors are appointed according to the rules set down in the company's Memorandum of Association.
B) A shadow director is a person in accordance with whose directions or instructions the directors of the company are accustomed to act.
C) A director is a person who occupies the position of director by whatever name called.
D) The first directors are appointed upon the incorporation of the company.

4. Which of the following statements is incorrect?

A) A term may be implied into a contract on the basis of a trade custom.
B) A term will be implied into a contract wherever a court considers that it would be reasonable to do so.
C) A term may be implied into a contract on the basis of previous dealings between the parties.
D) A term may be implied into a contract by statute.

5. Which of the following are listed among the IFAC's drivers for sustainable organisational success?
Select ALL that apply.

A) Integrity and ethical behaviour
B) Rights and equitable treatment of shareholders
C) Integrated governance, risk and control
D) Financial management
E) Innovation and adaptability
F) Customer and stakeholder focus
G) Operational excellence
H) Effective and transparent communication
I) People and talent management
J) Interests of other stakeholders
K) Role and responsibilities of the board
L) Effective leadership and strategy
M) Disclosure and transparency

Solutions: