True or false v02

Monitoring the application of corporate governance codes encompasses a variety of activities involving the observance and analysis of the practical application of code provisions and it can be divided into three types of checks: availability, accuracy and informative value check.*

False

Since 2006 the existence of audit committees has made its way into European hard law via the obligation to establish an audit committee in private companies across the Union.

False

According to the EU regulation (Directive 2006/43/EC) the statutory auditor should be appointed by the board of directors upon recommendation of the audit committee.

False

According to the European Corporate Governance Forum on Risk Management internal control, there is a need to introduce a legal obligation for boards to certify the effectiveness of the internal controls at EU level.

False

According to the European legislation, audit committees shall comprise, strictly, non-executive board members, and at least one of the members who would both be dependent and have financial expertise.

False

According to the Swedish corporate governance code audit committee should evaluate the auditing work and inform the company's nomination committee about the results of the evaluation.*

False

According to the content and structure of the European corporate governance codes, corporate governance codes are similar in application but different in content.

False

According to the corporate governance codes in EU level, the definition of independence is similar between Member States.

False

According to the remuneration policies in the EU level, it is recommended that share-based remunerations schemes should be subjected to the approval of remuneration committee.

False

All EU countries implementation of their respective corporate governance code is equal for all companies, regardless of the size of the company.

False

Corporate governance has a single widely accepted theoretical base and a commonly accepted paradigm.

False

EU rules on capital requirements for credit institutions and investment firms aim to put in place a comprehensive and risk-sensitive framework and to foster enhanced risk management amongst financial institutions. For performance from 1 Jan 2014 onwards, the variable component of the total remuneration shall not exceed 200 % of the fixed component of the total remuneration of material risk takers. Exceptionally, and under certain conditions, shareholder can increase this maximum ratio to 400 %

False

In a number of members states corporate governance codes mandate employees' right to elect their own representatives to the board without the general meeting having any control of that decision as soon as the company reaches a certain size in terms of employee headcount.

False

In countries with civil system there is less codification (than in countries with common law system) and weaker protection of rights.

False

In order to promote equity investment throughout the Union and to facilitate the exercise of rights related to shares, the Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement establishes a high degree of transparency with regard to charges, including prices and fees, for the services provided by auditors.

False

In terms of regulating corporate governance issues, USA is similar to the European countries as it also has a definite corporate governance code.

False

In the UK, institutional investors are obligated by law to exercise their voting rights in the investee companies.

False

Incentive contracts for manager completely solve the agency problem.

False

Stewardship theory take account of a wider group of constituents rather than focus only on investors and managers

False

The Commission Recommendation on the role of nonexecutive or supervisory directors of listed companies and on the committees of the (supervisory) board, 2005/162/EC dated February 15th, 2005, contains as one pillar that the creation of board committees should only comprise independent non-executive directors.

False

The Corporate governance theory consist of a nexus of theories.

False

The Directive 2014/95/EU on disclosure of nonfinancial and diversity information by certain large undertakings and groups (amending the Accounting Directive 2013/34/EU) requires companies listed on the stock market to disclose in their management report, information on policies, risks and outcomes as regards environmental matters, social and employee aspects, respect for human rights, anticorruption and bribery issues, and female diversity in their board of directors. Regarding shareholder identification the Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement states that listed companies should have the right to identify their shareholders in order to be able to communicate with them directly.

False

The Dow Jones Sustainable Indices uses criteria based on three areas: human rights, stakeholders' relations and the environmental impact of company's activities.

False

The OECD Principles of Corporate Governance (1999) focus on privately held companies but there is an encouragement for other business forms, such as state-owned or family-owned enterprises, to utilize these Principles.

False

The aim of the Commission Recommendation on the role of nonexecutive or supervisory directors of listed companies and on the committees of the (supervisory) board, 2005/162/EC dated February 15th, 2005, was to provide a framework of check and balances so that companies and their management accountable both to their owners and to society at large.

False

The breach of requirement to make governance statements publicly available may result in losing shareholders' trust but may not lead to the imposition of formal administrative penalties by public enforcement bodies even if providing the governance statement is heavily recommended by these bodies.

False

The concept of independence of board members has been defined on the EU level and all EU countries apply the same definition of independence in their regulation of corporate governance issues.

False

The corporate governance theory consists of a nexus of theories

False

The corporate structure of a company specifies the economic distribution of human rights and responsibilities among different participants in the corporation.

False

The current Shareholder Rights Directive provides guidance that allows to establish which corporate governance code should applied by companies with multiple listing in several countries

False

The new Shareholder Rights Directive released in 2017 requires companies to submit their remuneration policy to shareholders for a vote every four years. Executive remuneration can only be awarded or paid if it based on an approved remuneration policy.

False

The new rules on auditing offer the possibility for 1 % of the shareholders to initiate action to dismiss the undertaking's statutory auditor or audit firm.

False

The requirements of the new audit framework (amending Directive 2006/43/EC on statutory audits and the new Regulation on Statutory Audit) only applies to public-interest entities and includes measures such as strengthening the independence of statutory auditors, making the audit report more informative, and improving audit supervision throughout the EU.

False

The role of statutory auditors is to certify companies' financial statements, i.e. to provide stakeholders such as investors and shareholders with a rough opinion companies' account.

False

According to the EU regulations (Directive 2006/46/EC) statutory auditors are required to check that companies have produces the corporate governance statement.

True

According to the study on monitoring and enforcement practices in corporate governance in the member states, the two types of the monitoring are : 1. Market-wide monitoring and 2. Company specific monitoring.

True

According to the types of board structure, in dual board structure, the mandate of the supervisory board is to oversee the activities of the management board.

True

All EU countries have in place provisions that allow to decide which country's corporate governance code should apply a company with multiple, complex listings.

True

Although the comply or explain approach has already been in place in many EU members, the Directive 2006/46/EC makes the use of this approach mandatory.

True

Between 1963 and 2006 there was a decline in the proportion of shares held directly by individuals in the UK and a corresponding increase in institutional and overseas investors.

True

Corporate governance in Swedish companies listed on a regulated market is regulated by generally accepted practices.

True

Diversity in the ownership structure influences the monitoring and enforcing corporate governance codes.

True

Due to the monitoring and enforcement of corporate governance codes, adherence to comply or explain approach may prove costlier (either in Financial or Reputational terms) than breaching this mechanism.

True

Due to the statutory auditor's regulations, national transposition measures concerning statutory auditors are pretty uniform across Member States.

True

Greenbury Report (1995) provided comprehensive recommendations regarding disclosure of directors' remunerations packages.

True

In Europe, corporate governance codes have emerged in two phases: in the first phase in early 1990s some countries adopted corporate governance guidelines, in the second phase in the 2000s European countries developed their own governance codes based on comply or explain basis

True

In European corporate governance history, the Cadbury Report (1992) was the first set of corporate governance guidelines proposed to be applied on a comply-or-explain basis.

True

In member states that only allow dual board structure for listed companies supervisory boards comprise, per se, only non-executive board members

True

In most of the EU countries update systems for corporate governance are a legal construct further facilitate by some informal mechanisms*

True

In order to be able to hold the management to account, shareholders need information and rights to challenge pay, particularly when it is not justified by long-term performance.

True

In the EU countries, the auditor does not engage in monitoring the accuracy and informative value of the corporate governance statement.

True

In the UK, the institutional investors comprise mainly pension funds and insurance companies.

True

Lehman executives regularly use cosmetic accounting gimmicks - know as Rep 105 - at the end of each quarter to make its finance appear less shaky than they really were.

True

Market-Wide monitors in all EU countries perform the informative value check of corporate governance statements.*

True

New legislation (amending Directive 2006/43/EC on statutory audits and the new Regulation on Statutory Audit) is to improve the quality of statutory audit across the EU and has entered into force since June 2014.

True

Only approved auditors can undertake statutory audits.

True

Owner-manager entrepreneurial firms are not considered to be family business

True

Regarding board structure and compositions, apart from one-tier and two-tier board, there is another sort of board structure that utilizes both unitary and dual board structure that is called hybrid board structure

True

Regarding board structure and compositions, apart from one-tier and two-tier board, there is another sort of board structure that utilizes both unitary and dual board structure that is called hybrid board structure.

True

Regarding shareholder identification the Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement states that listed companies should have the right to identify their shareholders in order to be able to communicate with them directly.

True

Remuneration and nomination committees are still deeply rooted in national corporate governance codes rather than national or European legislation.

True

Remuneration is a key aspect of corporate governance where conflicts of interest may arise and a strong control right for shareholders can significantly improve the accountability of boards. Unlike in other areas of Corporate Governance for which soft-law measures remain appropriate, the European Commission's efforts to improve governance on pay through soft-law measures (three Recommendations on directors' remuneration, in 2004, 2005 and 2009) have not led to significant improvement in this area. It was therefore necessary to proceed with a more prescriptive approach involving binding rules on remuneration

True

Sarbanes - Oxley Act (2002) requires that listed companies must have an audit committee comprised only of independent members.

True

Statutory auditors fulfill an important societal role. Its importance is reflected in the legal requirement for certain companies to have a statutory audit.

True

The Cadbury Report recommended a Code of Best Practice with which the boards of all listed companies registered in the UK should comply, and utilized "comply or explain"

True

The EU Directive on the Exercise of Shareholder's Rights (2007) abolishes a practice referred to as share blocking.

True

The EU regulation (Directive 2006/46/EC) provides guidance that allows to establish which corporate governance code should be applied by companies with multiple listing in several countries

True

The Swedish corporate governance code is integrated with the operation of company law.

True

The UK Combined Code 1998 combines Cadbury Report 1992, Greenbury Report 1995 and the Hampel Report 1998

True

The advantage of family owned firms is that they may be less driven by the short-term demands of the market

True

The agency relationship can have a number of disadvantages relating to the opportunism or self - interest of the principles

True

The author of Swedish corporate governance code is the Swedish Corporate Governance Board.

True

The definition of an independent director has become stricter over time, and takes into account background, experience and length of tenure of the individual.

True

The definition of public-interest entities is the same as under the Accounting Directive (2013/34/EU). Public-interest entities (PIEs) are defined as listed companies, credit institutions and insurance undertakings. In addition, Member States can designate as PIEs other undertakings that are of significant public relevance, because of the nature of their business, their size or the number of their employees.

True

The development of the corporate governance codes around the world have often been driven by a financial scandal, corporate collapse or similar crisis.

True

The monitoring of informative value of companies' corporate governance statement is widespread practice among the marker-wide monitors in the EU.

True

The new audit framework 2014 should help to reinforce auditors' independence

True

The senior independent director should provide an additional communication channel to shareholders

True

To address the issue of directors' remuneration instead of formal harmonization, the EU Commission has chosen to encourage the convergence of practices and regulations in the EU Member States by introducing non-binding recommendations

True

Transfer pricing mechanisms can be misused by managers for expropriation of company's money.

True

Under UK legislation corporations are required to state their policy on social, environmental, and ethical issues.

True