Restoration Age Augustan Age Romantic Age MCQ Quiz - Objective Question with Answer for Restoration Age Augustan Age Romantic Age - Download Free PDF

The correct answer is Corporate Governance

Key Points

• Kumar Mangalam Birla Committee focused on Corporate Governance:
  • The passage clearly states that SEBI set up the committee to promote and raise the standards of good corporate governance.
  • The committee's objective was to develop a code tailored to the Indian corporate environment, ensuring accountability, transparency, and investor protection within corporate structures.
  • Corporate governance involves a set of systems, principles, and processes by which companies are directed and controlled to enhance stakeholder trust and long-term value.
  • For financial enterprises, sound corporate governance ensures operational integrity, promotes investor confidence, and mitigates risk by improving oversight and decision-making structures.

Additional Information

• Investors' Protection:
  • Although investor protection is an indirect goal, the report's direct and central theme was governance frameworks, not specific laws or measures focused solely on protecting investors’ rights.
• Investors and Shareholders Awareness:
  • This is inaccurate because the committee's mandate was not about conducting awareness campaigns or educational efforts for investors, but about improving the governance mechanisms within companies.
• SEBI Guidelines on Market Operations:
  • This option refers to the broader regulatory functions of SEBI concerning market conduct, trading mechanisms, etc. The Birla Committee’s focus was limited to governance issues within companies, not operational market guidelines.

The correct answer is Two categories

Key Points

• Kumar Mangalam Birla Committee's recommendations are divided into two categories:
  • The passage states that the recommendations are categorized into mandatory and non-mandatory guidelines.
  • Mandatory recommendations are binding for listed companies with paid-up capital of ₹3 crore and above, focusing on board composition, audit committees, board meetings, and limits on committee memberships.
  • Non-mandatory recommendations are intended for all listed private and public sector companies, aiming to promote good governance practices but without enforcement obligations.
  • This two-tier structure allows flexibility for smaller firms while ensuring essential governance standards are maintained for larger ones in financial enterprises.

Additional Information

• Three categories:
  • No mention in the passage of recommendations being split into three distinct categories.
  • This would be inaccurate as the text clearly highlights only mandatory and non-mandatory types.
• Four categories:
  • Incorrect assumption. The committee does not subdivide recommendations further into four sections such as audit, board structure, shareholders’ rights, etc.
• Five categories:
  • This is incorrect as there is no evidence or mention in the text supporting five separate recommendation types. The bifurcation is clearly limited to two.

The correct answer is A, B and D

Key Points

• Non-mandatory recommendations were to apply to listed private companies, listed public sector companies, and professionals associated:
  • The passage clearly mentions that these recommendations apply to listed private and public sector companies, along with their directors, management, employees, and professionals associated with them.
  • This ensures that voluntary compliance with governance standards is encouraged not just among large public entities, but also across smaller or privately held listed firms.
  • For financial enterprises, professionals such as auditors, compliance officers, and governance advisors are critical in applying such recommendations and fostering transparency and accountability.
  • Applying these recommendations to a broader range of participants ensures a culture of corporate ethics, especially vital in sectors dealing with public funds and investments.

Additional Information

• Shareholders are not included under non-mandatory recommendations:
  • The passage does not state that shareholders are part of the target audience for non-mandatory recommendations.
  • Shareholders benefit from corporate governance practices, but the application of these recommendations is focused on the internal structure of companies and associated professionals.
  • Therefore, including shareholders in the list is incorrect, making any answer option containing “C” invalid.
• The recommendations aim to improve internal governance rather than investor behavior:
  • While good governance indirectly protects investors, the non-mandatory code is about improving the conduct and structure within corporations, not imposing standards on shareholders themselves.

The correct answer is Auditor of the company must have experience of 10 years

Key Points

• Auditor of the company must have experience of 10 years:
  • This is not mentioned as a mandatory recommendation by the Kumar Mangalam Birla Committee in the passage.
  • The committee focused on board structure, audit committee composition, and meeting frequency, not specific auditor qualifications or years of experience.
  • In the context of financial enterprises, while auditor experience is important for accuracy and compliance, this criterion was not part of SEBI’s mandated governance reforms.
  • Mandatory guidelines emphasize oversight and independence over tenure-based eligibility, promoting transparency and investor confidence through board governance mechanisms rather than focusing on professional experience thresholds.

Additional Information

• Audit committee should contain 3 independent directors with one having financial and accounting knowledge:
  • This is a correct mandatory recommendation according to the committee. It ensures financial expertise and independence in internal control, especially relevant for financial institutions where audit transparency is critical.
• The Board should hold at least 4 meetings in a year with maximum gap of 4 months between 2 meetings to review operational plans:
  • Also a correct mandatory recommendation. Regular board meetings ensure continuous oversight and timely decision-making, vital in fast-changing financial markets.
• Director shall not be a member of more than 10 committees and shall not act as chairman of more than 5 committees across all companies:
  • This is part of the mandatory norms to avoid overcommitment and ensure effective participation. It is crucial in financial enterprises where governance and risk management responsibilities are complex and demanding.

The correct answer is Auditor of the company must have experience of 10 years

Key Points

• Auditor of the company must have experience of 10 years:
  • This is not mentioned as a mandatory recommendation by the Kumar Mangalam Birla Committee in the passage.
  • The committee focused on board structure, audit committee composition, and meeting frequency, not specific auditor qualifications or years of experience.
  • In the context of financial enterprises, while auditor experience is important for accuracy and compliance, this criterion was not part of SEBI’s mandated governance reforms.
  • Mandatory guidelines emphasize oversight and independence over tenure-based eligibility, promoting transparency and investor confidence through board governance mechanisms rather than focusing on professional experience thresholds.

Additional Information

• Audit committee should contain 3 independent directors with one having financial and accounting knowledge:
  • This is a correct mandatory recommendation according to the committee. It ensures financial expertise and independence in internal control, especially relevant for financial institutions where audit transparency is critical.
• The Board should hold at least 4 meetings in a year with maximum gap of 4 months between 2 meetings to review operational plans:
  • Also a correct mandatory recommendation. Regular board meetings ensure continuous oversight and timely decision-making, vital in fast-changing financial markets.
• Director shall not be a member of more than 10 committees and shall not act as chairman of more than 5 committees across all companies:
  • This is part of the mandatory norms to avoid overcommitment and ensure effective participation. It is crucial in financial enterprises where governance and risk management responsibilities are complex and demanding.

The correct answer is Corporate Governance

Key Points

• Kumar Mangalam Birla Committee focused on Corporate Governance:
  • The passage clearly states that SEBI set up the committee to promote and raise the standards of good corporate governance.
  • The committee's objective was to develop a code tailored to the Indian corporate environment, ensuring accountability, transparency, and investor protection within corporate structures.
  • Corporate governance involves a set of systems, principles, and processes by which companies are directed and controlled to enhance stakeholder trust and long-term value.
  • For financial enterprises, sound corporate governance ensures operational integrity, promotes investor confidence, and mitigates risk by improving oversight and decision-making structures.

Additional Information

• Investors' Protection:
  • Although investor protection is an indirect goal, the report's direct and central theme was governance frameworks, not specific laws or measures focused solely on protecting investors’ rights.
• Investors and Shareholders Awareness:
  • This is inaccurate because the committee's mandate was not about conducting awareness campaigns or educational efforts for investors, but about improving the governance mechanisms within companies.
• SEBI Guidelines on Market Operations:
  • This option refers to the broader regulatory functions of SEBI concerning market conduct, trading mechanisms, etc. The Birla Committee’s focus was limited to governance issues within companies, not operational market guidelines.

The correct answer is Two categories

Key Points

• Kumar Mangalam Birla Committee's recommendations are divided into two categories:
  • The passage states that the recommendations are categorized into mandatory and non-mandatory guidelines.
  • Mandatory recommendations are binding for listed companies with paid-up capital of ₹3 crore and above, focusing on board composition, audit committees, board meetings, and limits on committee memberships.
  • Non-mandatory recommendations are intended for all listed private and public sector companies, aiming to promote good governance practices but without enforcement obligations.
  • This two-tier structure allows flexibility for smaller firms while ensuring essential governance standards are maintained for larger ones in financial enterprises.

Additional Information

• Three categories:
  • No mention in the passage of recommendations being split into three distinct categories.
  • This would be inaccurate as the text clearly highlights only mandatory and non-mandatory types.
• Four categories:
  • Incorrect assumption. The committee does not subdivide recommendations further into four sections such as audit, board structure, shareholders’ rights, etc.
• Five categories:
  • This is incorrect as there is no evidence or mention in the text supporting five separate recommendation types. The bifurcation is clearly limited to two.

The correct answer is A, B and D

Key Points

• Non-mandatory recommendations were to apply to listed private companies, listed public sector companies, and professionals associated:
  • The passage clearly mentions that these recommendations apply to listed private and public sector companies, along with their directors, management, employees, and professionals associated with them.
  • This ensures that voluntary compliance with governance standards is encouraged not just among large public entities, but also across smaller or privately held listed firms.
  • For financial enterprises, professionals such as auditors, compliance officers, and governance advisors are critical in applying such recommendations and fostering transparency and accountability.
  • Applying these recommendations to a broader range of participants ensures a culture of corporate ethics, especially vital in sectors dealing with public funds and investments.

Additional Information

• Shareholders are not included under non-mandatory recommendations:
  • The passage does not state that shareholders are part of the target audience for non-mandatory recommendations.
  • Shareholders benefit from corporate governance practices, but the application of these recommendations is focused on the internal structure of companies and associated professionals.
  • Therefore, including shareholders in the list is incorrect, making any answer option containing “C” invalid.
• The recommendations aim to improve internal governance rather than investor behavior:
  • While good governance indirectly protects investors, the non-mandatory code is about improving the conduct and structure within corporations, not imposing standards on shareholders themselves.

The correct answer is Auditor of the company must have experience of 10 years

Key Points

• Auditor of the company must have experience of 10 years:
  • This is not mentioned as a mandatory recommendation by the Kumar Mangalam Birla Committee in the passage.
  • The committee focused on board structure, audit committee composition, and meeting frequency, not specific auditor qualifications or years of experience.
  • In the context of financial enterprises, while auditor experience is important for accuracy and compliance, this criterion was not part of SEBI’s mandated governance reforms.
  • Mandatory guidelines emphasize oversight and independence over tenure-based eligibility, promoting transparency and investor confidence through board governance mechanisms rather than focusing on professional experience thresholds.

Additional Information

• Audit committee should contain 3 independent directors with one having financial and accounting knowledge:
  • This is a correct mandatory recommendation according to the committee. It ensures financial expertise and independence in internal control, especially relevant for financial institutions where audit transparency is critical.
• The Board should hold at least 4 meetings in a year with maximum gap of 4 months between 2 meetings to review operational plans:
  • Also a correct mandatory recommendation. Regular board meetings ensure continuous oversight and timely decision-making, vital in fast-changing financial markets.
• Director shall not be a member of more than 10 committees and shall not act as chairman of more than 5 committees across all companies:
  • This is part of the mandatory norms to avoid overcommitment and ensure effective participation. It is crucial in financial enterprises where governance and risk management responsibilities are complex and demanding.

The correct answer is Existing company boards will be restructured

Key Points

• Existing company boards will be restructured:
  • The passage clearly states that the committee recognized that complying with the recommendations would involve restructuring the existing boards of companies.
  • This restructuring includes changes such as increasing the number of independent directors, forming audit committees, and adhering to board meeting requirements.
  • For financial enterprises, restructuring improves governance mechanisms, which in turn enhances transparency, reduces risks of mismanagement, and boosts investor confidence.
  • It ensures that companies are managed in a more accountable and professionally sound manner, aligning their interests with those of stakeholders.

Additional Information

• Foreign company can be listed on Indian stock exchanges:
  • This is incorrect. The passage does not mention anything about foreign companies or cross-border listings. It focuses solely on improving governance in Indian listed companies.
• There will be only two categories of companies:
  • While the committee made both mandatory and non-mandatory recommendations, the passage does not classify companies into only two distinct legal categories. The focus is more on governance norms than company categorization.
• Directors will have to be re-elected:
  • This is not mentioned in the recommendations. The committee’s guidelines relate more to composition and functioning of the board rather than election processes for directors.

The correct answer is Corporate Governance

Key Points

• Kumar Mangalam Birla Committee focused on Corporate Governance:
  • The passage clearly states that SEBI set up the committee to promote and raise the standards of good corporate governance.
  • The committee's objective was to develop a code tailored to the Indian corporate environment, ensuring accountability, transparency, and investor protection within corporate structures.
  • Corporate governance involves a set of systems, principles, and processes by which companies are directed and controlled to enhance stakeholder trust and long-term value.
  • For financial enterprises, sound corporate governance ensures operational integrity, promotes investor confidence, and mitigates risk by improving oversight and decision-making structures.

Additional Information

• Investors' Protection:
  • Although investor protection is an indirect goal, the report's direct and central theme was governance frameworks, not specific laws or measures focused solely on protecting investors’ rights.
• Investors and Shareholders Awareness:
  • This is inaccurate because the committee's mandate was not about conducting awareness campaigns or educational efforts for investors, but about improving the governance mechanisms within companies.
• SEBI Guidelines on Market Operations:
  • This option refers to the broader regulatory functions of SEBI concerning market conduct, trading mechanisms, etc. The Birla Committee’s focus was limited to governance issues within companies, not operational market guidelines.

The correct answer is Two categories

Key Points

• Kumar Mangalam Birla Committee's recommendations are divided into two categories:
  • The passage states that the recommendations are categorized into mandatory and non-mandatory guidelines.
  • Mandatory recommendations are binding for listed companies with paid-up capital of ₹3 crore and above, focusing on board composition, audit committees, board meetings, and limits on committee memberships.
  • Non-mandatory recommendations are intended for all listed private and public sector companies, aiming to promote good governance practices but without enforcement obligations.
  • This two-tier structure allows flexibility for smaller firms while ensuring essential governance standards are maintained for larger ones in financial enterprises.

Additional Information

• Three categories:
  • No mention in the passage of recommendations being split into three distinct categories.
  • This would be inaccurate as the text clearly highlights only mandatory and non-mandatory types.
• Four categories:
  • Incorrect assumption. The committee does not subdivide recommendations further into four sections such as audit, board structure, shareholders’ rights, etc.
• Five categories:
  • This is incorrect as there is no evidence or mention in the text supporting five separate recommendation types. The bifurcation is clearly limited to two.

The correct answer is A, B and D

Key Points

• Non-mandatory recommendations were to apply to listed private companies, listed public sector companies, and professionals associated:
  • The passage clearly mentions that these recommendations apply to listed private and public sector companies, along with their directors, management, employees, and professionals associated with them.
  • This ensures that voluntary compliance with governance standards is encouraged not just among large public entities, but also across smaller or privately held listed firms.
  • For financial enterprises, professionals such as auditors, compliance officers, and governance advisors are critical in applying such recommendations and fostering transparency and accountability.
  • Applying these recommendations to a broader range of participants ensures a culture of corporate ethics, especially vital in sectors dealing with public funds and investments.

Additional Information

• Shareholders are not included under non-mandatory recommendations:
  • The passage does not state that shareholders are part of the target audience for non-mandatory recommendations.
  • Shareholders benefit from corporate governance practices, but the application of these recommendations is focused on the internal structure of companies and associated professionals.
  • Therefore, including shareholders in the list is incorrect, making any answer option containing “C” invalid.
• The recommendations aim to improve internal governance rather than investor behavior:
  • While good governance indirectly protects investors, the non-mandatory code is about improving the conduct and structure within corporations, not imposing standards on shareholders themselves.