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Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

Question 41

Zed Bank plc has agreed to allow Exe Ltd an overdraft of £50,000 subject to a fixed and floating charge over almost all of the company's assets. In addition, the directors of Exe Ltd have been required to personally guarantee the overdraft.

Which of the following is correct?

(i) The directors could face bankruptcy if they are called upon to honour the guarantee.

(ii) In this case the directors do not enjoy limited liability as they are liable on the guarantee if the company cannot pay.

(iii) The directors could only be required to honor the guarantee if the company's assets proved insufficient to meet the overdraft.

Options:

(i) only

(i) and (ii) only

(iii) only

(i), (ii) and (iii)

Question 42

How many fundamental principles are identified by the CIMA Code of Ethics?

Options:

Three

Four

Five

Six

Question 43

Which of the following is INCORRECT in relation to a claim for wrongful dismissal?

Options:

A claim for wrongful dismissal is barred after 3 months.

There is no requirement for a qualifying period of continuous employment.

Damages for wrongful dismissal may be awarded by an employment tribunal.

Evidence of serious misconduct discovered after the employment has ceased is admissible as part of the employers' defence.

Question 44

Which THREE of the following are disadvantages of rules-based approaches to ethical standards?

Rules-based approaches:

Options:

are inflexible and expensive

motivate compliance through value and judgment

are subject to precise definitions of wording and hence become contentious

have subjective standards which may cause confusion.

require objective enforcement by an independent party.

are inconsistently applied due to the need for judgment.

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Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

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