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1. Examination Paper of Corporate Governance
IIBM Institute of Business Management
Examination Paper MM. 100
Corporate Governance
Section A: Objective Type & Short Questions (30 Marks)
 This section consists of Multiple Choice & Short Note Types questions. 
 Answer all the questions. 
 Part one carries 1 mark each & Part Two carries 5 marks each. 
Part One:
Multiple Choices:
1. ________Agroup 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______
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2. Examination Paper of Corporate Governance
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.
END OF SECTION A
Section B: Caselets (40 Marks)
 This section consists of Caselets. 
 Answer all the questions. 
 Each caselet carries 20 marks. 
 Detailed information should form the part of your answer (Word limit 150 to 200 words) 
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
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3. Examination Paper of Corporate Governance
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
claim of brand‟s superiority. We are not talking about detergent washes and fabrics it is a health and fitness
fruit juice. We could not say something like‟, a great way to plan your fitness programme‟ or something like
that. We are saying real fruit, honest juice, and no sugar‟ … not a word about food color and preservatives‟.
Any consumer can contest our claim.”
Rohit Jain though for a moment then said, “let us get the legal opinion from our lawyer, Amit soni, to be on
the safe guard.
Amit listened to what Ritu had to say then said, “Companies use advertising to provide information to
consumers and offer alternatives in a competitive market situation. Advertising is false when it says A=B and
that is not true. But the ad is misleading; it falls under the category of unfair trade practice.” Loudly reading
the ad copy, Amit said‟” hyperbole such as best, newest most effective way, are permissible and consumers
are unlikely to take such claims with ant seriousness. When a brand says its air-conditioner is best or most
efficient, consumers know that this is just a manner of speech and do not truly believe and put their 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 the claims to be
made. In this case, you are saying that Teal juice is good because it comes in cans and bottled drinks are not
as good. This is a direct attack on bottled drinks. Advertiser does not disclose all the parameters they have
considered in their conclusion of „best‟. They may select some major ones or may cheese to highlight the
trivial ones and ignore the major ones. These things happen every day and are not strictly provided under the
law. There must be prima facie evidence of damage or misrepresentation to establish a case of unfair trade
practice.” “so, we are legally safe,” said Rohit jain. “We will reword this campaign, but our other campaigns
have passed to muster.”
Ritu joshi felt differently, she said, “legally we may safe,but we have to also take an ethical view.”
We must not forget that our primary platform is health and fitness. This convenience angle is also crating and
impression of „good for health‟. I believe that as responsible advertisers, we have to be more concerned
about the ethical aspects than merely the legal angle. This is where we come to the line between what is legal
and what is ethical. We may be legally right but our act could be unethical if the word or pictures in the ad
could lead the consumer to believe something that is not true. The aura of the fitness instructor used as
endorser creates an impression that the information is coming to consumers from an environment where
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
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4. Examination Paper of Corporate Governance
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
the annual basis to determine the appropriate characteristics, skills and experience for the board as a
whole and its individual board members, the board takes into accounts many factor including general
understanding of marketing, finance and other discipline relevant to the success of a large publicity –
traded company in today‟s business environment; understanding of Microsoft‟s business on a
technical level.
4) Board Composition: Mix of management and independent directors. The board believes that,
except during periods of temporary vacancies,a majority of its directors must be independents.
5) Term Limits: Director who have served on the board for an extended period of time are able to
provide valuable insight into the operation and future of the company based on their experience with
an understanding of the company‟s history, policies and objectives.
6) Retirement Policy: The board believes that 75 is an appropriate retirement age for outside directors.
7) Directors with significant job changes: The board believes that any director who retires from his
or her present employment, or who materially changes his or her position, should tender resignation
to the board.
8) Selection of CEO and Chairman: The board selects the company‟s CEO and Chairman in the
manner that it determines to be in the best interests of the company‟s shareholders.
Board meetings: involvement ofSenior Management
9) Board meeting-agenda: The Chairman 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
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5. Examination Paper of Corporate Governance
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.
END OF SECTION B
Section C: Applied Theory (30 Marks)
 This section consists of Long Questions. 
 Answer all the questions. 
 Each question carry 15 marks each. 
 Detailed information should from the part of your Answer (Word limit 200 to 250 words) 

1. Define corporate governance; explain the principles of corporate governance?
2. Distinguish between the Anglo-American Model and the German Model.
END OF SECTION C
S-2-300813
IIBM Institute of Business Management 5