GOV

PRELIM
1. The G20 membership comprises a mix of the world's largest advanced and emerging economies. The
following are its member countries, except
a. Saudi Arabia c. Indonesia
b. South Africa d. Malaysia

2. Statement 1: An independent director who had already served for a cumulative of nine years in a company
could no longer be qualified to be nominated and elected in any position on that same company
Statement 2: Re-election of an independent director after serving for nine cumulative years' needs
shareholder's approval

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE

3. Which of the following is a specific duty of a director?

I. Devote time and attention necessary to property and effectively perform his duties and
responsibilities.
II. After deciding on any matter brought before the Board of Directors, he should thoroughly evaluate
the issues, ask questions, and seek clarifications.

a. I only c. Both I and II

b. II only d. Neither I nor II

4. Any member of the Board of Directors could permanently be disqualified if he

a. Is rumored to be insolvent
b. is absent in more than fifty percent of all regular and special meetings of the Board during his
incumbency
c. committed an estafa but judgment is not yet final
d. is convicted by final judgment of an offense punishable by law for nine years

5. Which of the following is not a duty of the Chairman of the Board of Directors?

a. Ensures that the Board sufficiently challenges and inquires on reports submitted and representations
made by Management.
b. Guarantees that the Board receives accurate, timely, relevant, insightful, concise, and clear information
to enable it to make sound decisions.
c. Provides the Board with timely information and interfaces between the Board and the employees.
d. Assures the availability of proper orientation for first-time directors and continuing training opportunities
for all directors

6. Which of the following statements is not incorrect?

a. A person could act as a secretary and a

b. president at the same time. b. A person could act as a treasurer and a president at the same time.
c. In case of a one person corporation, the single stockholder could act as the corporate secretary.
d. In case of a one person corporation, the single stockholder could act as the corporate treasurer.

7. Statement 1: One of the duties of a corporate treasurer is to review the investment activities of the
corporation.
Statement 2: A corporate treasurer takes part in the day-to-day operations of the corporation.

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE
8. Which of the following instances that the Board need not designate a lead director?
I. In cases where the Chairman is not independent
II. In cases where the Chairman and CEO positions are held by one person

a. I only c. Both I and II

b. II only d. Neither I nor II

9. A corporation's CEO or president need not be

a. of legal age
b. a natural person
c. a resident of the Philippines
d. a shareholder of the corporation

10. Which of the following statements does not refer to a corporate secretary's responsibility?

a. Responsible for the safekeeping and preservation of the official records of the corporation.
b. Inform members of the Board at least ten working days in advance, in accordance with the by-laws, of
the agenda of their meetings.
c. Advises the Board and the Chairman on all relevant issues as they arise
d. Oversee the drafting of the by-laws and ensures that they conform with regulatory requirements.

11. The following disclosure requirements met that of an Anglo-US model, which is not?

a. All shareholders holding more than 5% of the corporation's total share capital.
b. Quarterly disclosure of corporate financial data.
c. Aggregate compensation data for the top five highest paid executive officers, who are to be named
d. Substantial background information on each nominee to the board of directors, including name,
occupation, relationship with the company, and ownership of stock in the corporation.

12. The following disclosures are present and are similar on each of the three corporate governance model,
which is not

a. Names of individuals and/or companies proposed as auditors.

b. Proposed amendments to the articles of association.
c. Data on the corporation's capital structure.
d. Frequency of reporting corporate financial information.

13. Statement 1: The board of directors of most corporations that follow the Anglo-US model includes both the
"insiders" and “outsiders.”
Statement 2: The key players in an Anglo-US model includes: the management, the Board of Directors, and
the stakeholders,

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE

14. Which is not a disadvantage of the same person serving as both the Chairman of the Board and Chief
Executive Officer of the corporation at the same time?

a. Concentration of power in the hands of one person.

b. The board of directors' regard for the interests of outside shareholders.
c. Concentration of power in a small group of persons
d. Management and/or the board of directors' attempts to retain power over a long period of time, without
regard for the interest of other players entrenchment.
15. Which of the following statement refers to the Japanese model of corporate governance?

a. Shareholders may attend the annual general meeting, vote by proxy, or vote by mail.
b. Banks and corporate shareholders are the key players.
c. This model is governed by a two-tiered board structure.
d. There is a separation of ownership in control in most publicly held corporations

16. Statement 1: Shareholders under a Japanese model must either attend the meeting in person, or to be
represented in person by their custodian bank.
Statement 2: Majority of US corporations hold their annual meetings on the same day each year, making
it difficult for institutional investors to coordinate voting and making it impossible for them to attend more
than one meeting in person.

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE

17. Which of the following statements is/are-incorrect?

I. Under a German model of corporate governance, no one can serve simultaneously on a
corporation's management and supervisory board.
II. The management board (Vorstand) is responsible for daily management of the company and is
composed solely of 'insiders':

a. I only c. Both I and II

b. II only d. Neither I nor I

18. Which of the following is not a unique feature of the German model?

a. On supervisory boards, inclusion of labor/employee representatives is mandatory.

b. The German model prescribes two-tiered board structure consisting of the management and the
supervisory one.
c. The size of the management board is set by the law and cannot be changed by the shareholders.
d. Voting right restrictions are legal.

19. Which of the following statement is/are not incorrect?

I. Banks and corporations are dominant shareholders in Germany.

II. In a Japanese model, non-routine corporate actions that require shareholder approval includes
capital authorizations and payment of retirement bonuses to directors and auditors.

a. I only c. Both I and II

b. II only d. Neither I nor II

20. Statement 1: One element common to German and Japanese model is the strong relationship between a
corporation and its main bank.
Statement 2: The interests of shareholders and management always coincide.

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE

21. The following are routine corporate actions that require shareholder's approval, which is the exception?

a. Election of directors; appointment of auditors

b. Payment of dividends and allocation of reserves
c. Ratification of the acts of the management board for the previous fiscal year
d. Mergers, takeovers, and restructurings
22. The following are disclosures required for Japanese corporations, except

a. Information on proposed mergers and restructurings.

b. Semi-annual disclosure of financial data.
c. Disclosure of the corporation's five largest shareholders.
d. Background information on each nominee to the board of directors, including name, occupation,
relationship with the corporation, and ownership of stock in the corporation.

23. Which of the following refers to other common corporate actions which requires shareholder approval?
I. Change in the size and/or composition of the board of directors
II. Increase of the aggregate compensation ceiling for directors and auditors

a. I only c. Both I and II

b. II only d. Neither I nor II

24. Statement 1: Good governance is about making "correct decisions", not about the best possible ways for
making those decisions.
Statement 2: An essential characteristics of good governance is transparency, which is the willingness to
accept responsibility or to account for one's action.

a. TRUE, TRUE c. FALSE, TRUE

b. TRUE, FALSE d. FALSE, FALSE

25. Which of the following statement is/are incorrect?

I. The national government is an avenue where the civil society groups at the community level can
participate meaningfully in the decision-making process.
II. The state is the principal actor of government to facilitate participation and provide an enabling
environment to other elements of the society.

a. I only c. Both I and II

b. II only d. Neither I nor II

26. The state does the following to improve government efficiency and responsiveness, which is the exception?

a. Attracting qualified, competent, honest and realistically paid individuals into public service.
b. Protecting professional civil servants from political interference in carrying out their responsibilities.
c. Establishing a civil service system that relies on patronage-based recruitment and promotion, and
incentive-based compensation.
d. Establishing a civil service system that is flexible enough to facilitate communication between the public
and private sectors.

27. Redistributing authority, responsibility, and finances for public services among different government levels is
done by the state to
a. Empower the people and democratize the political system
b. Decentralize the administrative system
c. Reduce gaps between rich and poor
d. Create a conducive economic environment

28. Respecting traditional structures of authority as well as traditional mechanisms for resolving conflicts and
managing common property in society is done by the state to

a. Empower the people and democratize the political system

b. Decentralize the administrative system
c. Reduce gaps between rich and poor
d. Create a conducive economic environment
29. Serve as the engine of the society

a. The State c. The Civil Society

b. The Business Sector d. The Community

30. The following are roles performed by the civil society, except
I. Mobilizes various groups or organizations in the community to participate in planning and
decision- making process.
II. It provides voice to the “inarticulate and the unarticulated” ones.

a. I only c. Both I and II

b. II only d. Neither I nor II

31. A characteristics of good governance which includes freedom of association and expression but in an
informed and organized way.

a. Participation c. Accountability
b. Consensus-oriented d. Transparency

32. 32. Which of the following statement refers to transparency?

a. Decision-makers in government, the private sector and civil society organizations are accountable to the
public and to their institutional stakeholders.
b. Decisions taken and their enforcement are done in a manner that follows rules and regulations.
c. Institutions and processes try to serve all stakeholders within a reasonable timeframe.
d. Processes and institutions produce results that meet the needs of the community while making the best
use of available people, time and resources at their disposal.

33. According to this financial institution, sustainable development can only take place if a predictable and
transparent framework of rules and institutions exist for the conduct of private and public businesses.

a. United Nations Development Programme c. Institute of Governance

b. Asian Development Bank d. World Bank

34. The Asian Development Bank Identified four basic elements of good governance. One of it refers to the
existence of laws, regulations and policies to regulate society, and their fair and consistent application. It
requires the state and its agencies to be bound by and answerable to the legal system in the same way as
private individuals and enterprises.

a. Participation c. Accountability
b. Predictability d. Transparency

35. Which of the following is not a concept of transparency?

a. Information should be available to the general public and government rules and regulations should be
clear.
b. Rules and procedures should be simple, straightforward, and easy to apply.
c. People should be able to see clearly how and why a decision was made.
d. Public policies should be consistent.

36. Which of the following statement is/are incorrect?

I. According to the UNDP, good governance has eight major characteristics. It is participatory,
consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and
inclusive and follows the rule of law.
II. Consensus can be achieved by obtaining an understanding of the historical, cultural and social
contexts of a given society or community.
 a. I only c. Both I and II
b. II only d. Neither I nor II

37. The World Bank's governance work aims to improve efficiency of public institutions, particularly in the
following areas, except

a. Public expenditure management c. Civil Service Reform

b. Democratic governance d. Public enterprises reform

38. Which of the following statement is/are correct regarding shareholder proposals in Germany?
I. Shareholder counterproposal opposes the proposal made by the management and/or the
supervisory board in an existing agenda item and presents an alternative.
II. Shareholder proposal include proposals made already included in the original agenda.

a. I only c. Both I and II

b. II only d. Neither I nor II

39. The primary conductor of corporate governance

a. Board of Directors c. Chief Executive Officer

b. Management d. Chairman of the Board

40. Which of the following could be qualify as an independent director?

a. Owner of less than two percent of the outstanding shares of the covered company.
b. Nominee or representative of any director of the covered company.
c. A spouse of a director of the covered company.
d. Employed as an executive officer of another company where executives of the covered company serve
also as directors.