Principles of Corporate Governance (1.3.2)

• What is corporate governance?

  The system by which companies are directed and controlled.
• What is the purpose of corporate governance?

  To ensure the accountability of a company’s leadership and promote long-term shareholder value.
• Why is corporate governance crucial in finance?

  It maintains investor confidence, minimizes risks, and ensures transparency.
• How does corporate governance benefit shareholders?

  By promoting long-term value and ensuring that leadership acts in their best interests.
• What does leadership in corporate governance refer to?

  How a company’s board of directors and senior management direct and guide the organization.
• What is "Tone at the Top" in corporate governance?

  Strong leadership at the board and executive levels that sets the company’s ethical standards and commitment to transparency.
• What is the role of leadership in defining a company’s direction?

  Leadership defines the company’s vision, mission, and values, which guide decision-making and behavior throughout the organization
• How does leadership contribute to stakeholder communication?

  Leadership ensures clear and consistent communication with shareholders, employees, and other stakeholders.
• How does leadership influence ethical behavior in a company?

  Leadership sets the tone for ethical behavior, shaping the company’s culture and guiding its actions.
• What is the board of directors' role in corporate governance?

  The board provides leadership, setting ethical standards, and guiding the organization’s direction.
• Why is leadership’s role in defining the company’s vision important?

  The vision, mission, and values form the foundation for all decision-making and organizational behavior.
• Why is clear communication with stakeholders important in corporate governance?

  It ensures transparency and builds trust among shareholders, employees, and other stakeholders.
• What is the role of internal audit in corporate governance?

  It reviews the effectiveness of risk management and internal control processes.
• What is the function of a risk committee in some companies?

  To oversee the identification and mitigation of risks.
• What role does the board play in internal controls?

  The board oversees the implementation of internal controls to prevent fraud and manage risks.
• What is the purpose of internal controls in corporate governance?

  To ensure accurate financial reporting, efficient operations, and compliance with laws and regulations.
• What is the board’s responsibility regarding risk management?

  Establishing a risk management framework to monitor and manage risks related to operations, finance, compliance, and strategy.
• What is essential for effective board governance?

  The board should have an appropriate balance of skills, knowledge, experience, and diversity.
• Why is diversity important in board composition?

  It brings different perspectives and improves decision-making.
• What is a key principle regarding board independence?

  A significant proportion of the board should be independent non-executive directors for unbiased oversight.
• What skills and experience should directors possess?

  Necessary industry knowledge, financial literacy, and governance experience to guide the company.
• How should the appointment of directors be conducted?

  It should follow a transparent process.
• What is the role of the nomination committee in board appointments?

  It oversees the appointment of new directors and often comprises non-executive directors (NEDs).
• Why is succession planning important for boards?

  To ensure a robust plan is in place for both executive and non-executive roles.
• Why is independent auditing essential in corporate governance?

  To ensure the accuracy of financial statements and assess the company's internal controls.
• What does the audit committee oversee?

  The company’s financial reporting, internal audits, and the relationship with external auditors.
• What is the role of external auditors?

  To review the company’s financial statements and ensure compliance with regulatory requirements.
• How does diversity on the board influence decision-making?

  It enhances the quality of decisions by incorporating various perspectives.
• What role do independent non-executive directors (NEDs) play?

  They provide unbiased oversight and contribute to board independence.
• Why is governance experience vital for directors?

  It helps guide the company through effective decision-making and strategic planning.
• Why should the appointment process for directors be transparent?

  To promote accountability and ensure qualified candidates are selected.
• What should robust succession planning address?

  The continuity of leadership for both executive and non-executive positions.
• What does the internal audit function evaluate?

  The effectiveness of risk management and internal control processes.
• What is one of the primary duties of the audit committee?

  To oversee the accuracy and integrity of the company’s financial reporting.
• What are key principles of board composition?

  • Diversity
  • Independence
  • Skills and Expertise
• What does the process for appointments consist of?

  • Nomination Committee
  • Succession Planning
• Who are Executive Directors?

  Members of the board who are also part of the company’s management team.
• What are the primary responsibilities of Executive Directors?

  Managing day-to-day operations, implementing board strategies, and ensuring financial and operational goals are met.
• What is the role of Non-Executive Directors (NEDs)?


  Provide oversight and independent judgment. No management responsibilities.
• How do NEDs hold the executive team accountable?

  By evaluating performance and offering an external perspective on strategies and risks.