Regulatory Compliance & Governance Flashcards
7 cards from real CIRO practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance & Governance flashcards as text
Under NYSE listing rules, which board committee must be composed entirely of independent directors?
Answer: Audit, Compensation, and Nominating/Governance Committees
NYSE rules require that the audit, compensation, and nominating/corporate governance committees consist entirely of independent directors.
A material weakness in internal controls over financial reporting (ICFR) disclosed under SOX Section 404 typically requires the company to:
Answer: Disclose the weakness in the annual report and describe remediation steps
Companies must disclose material weaknesses in their 10-K and describe management's remediation plan; restatement is only required if financials were misstated.
Under SEC Rule 144, which condition allows an affiliate to sell restricted or control securities without registration?
Answer: Filing a Form 144 with the SEC for sales exceeding 5,000 shares or $50,000
Affiliates must file Form 144 concurrently with sales exceeding 5,000 shares or $50,000 in value within a three-month period.
A company adopts a shareholder rights plan (poison pill). From an IR governance perspective, best practice is to:
Answer: Submit the plan for shareholder ratification and disclose its terms clearly
Governance best practice and investor expectations call for shareholder ratification and full transparent disclosure of poison pill terms.
The SEC's Regulation S-K Item 303 requires companies to include in their annual and quarterly reports:
Answer: Management's Discussion and Analysis (MD&A) of financial condition and results of operations
Item 303 of Regulation S-K mandates Management's Discussion and Analysis, providing narrative context around the financial statements.
When presenting non-GAAP financial measures in press releases and investor materials, SEC rules require companies to:
Answer: Provide a reconciliation to the most directly comparable GAAP measure
SEC guidance requires that non-GAAP measures be reconciled to the most directly comparable GAAP measure with equal or greater prominence given to the GAAP figure.
Under the SEC's clawback rules adopted pursuant to Dodd-Frank (effective 2023), listed companies must recover executive incentive compensation when:
Answer: A financial restatement reduces the metric on which the incentive compensation was based
The 2023 SEC clawback rules require recovery of excess incentive compensation received by current or former executives when a restatement reduces the financial metric used to calculate the award.