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E&G exam practice question 1

 

Ethics and Governance exam practice question

Select the answer you believe is correct then scroll down to see the correct answer and explanation.

 

The shareholding of ZY Ltd can basically be summarised into two groups. The first group comprises shareholding by senior executives who together hold 80 per cent of ZY Ltd shares. The second group comprises 5000 individual shareholders who together hold the remaining 20 per cent of the shares.

If the individual shareholders are not happy with the remuneration packages of the directors, how can they activate the two-strikes rule?

 

  1250 of the individual shareholders need to vote ‘No’ to the remuneration report.
  2500 of the individual shareholders need to vote ‘No’ to the remuneration report.
  5000 of the individual shareholders need to vote ‘No’ to the remuneration report.
  The two-strike rule can never be activated by the individual shareholders since they hold only 20 per cent of voting rights.

 

[SCROLL DOWN TO SEE THE ANSWER]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The correct answer is the first option.

Explanation.

Option 1 is correct because 25 per cent of ‘eligible shareholder’ need to vote ‘no’ to the remuneration report. The senior executives have a conflict because of their key management positions and thus, they are not permitted to vote. So, 25 per  cent of 5000 shareholders is 1250.

 

November 11, 2016

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