Corporate governance refers to a system of managing a company’s internal controls and processes so that conflicts of interest between the company’s internal and external shareholders are minimised, C is correct; corporate governance practices vary in different countries and jurisdictions, and even within countries, different systems of corporate governance may co-exist, A is wrong to say that it follows a set of globally harmonised standards, A is incorrect to say that it follows a set of globally harmonised standards, and the systems of corporate governance adopted by most countries usually reflect either shareholder theory or stakeholder theory, B is wrong.

Corporate governance is a system for managing a company’s internal controls and processes, A is correct; it is not necessary for the majority shareholder to have a role defined through corporate governance; rather, the majority shareholder exerts influence and/or control through the voting mechanisms associated with its shareholding, B is incorrect; and the primary purpose of corporate governance is to manage conflicts of interest between management and outside shareholders, not between shareholders, C is incorrect.

Customers spend money to buy goods and services from the firm, so a deterioration in the firm’s financial position is unlikely to affect customers, B is correct; suppliers are concerned about the firm’s ability to generate enough cash flow to pay off its debts, A is incorrect; and management and employees are concerned about the firm’s ability to survive (e.g., whether it will be able to pay them their salaries on time and in full), C is incorrect.

The interests of shareholders and management may differ in terms of risk tolerance, as shareholders have a higher risk tolerance because their specific corporate risks can be dispersed through diversified portfolio investments, while management usually prefers to avoid risks in order to protect its employment status, A is correct; multiple share classes) conflicts exist between controlling shareholders and minority shareholders, not between shareholders and management, B is wrong; C is not a principal-agent relationship conflict.

Cumulative voting (cumulative voting) allows shareholders to allocate all of their votes to a specific candidate without having to distribute the votes equally among all the candidates, and by casting all of the votes for a single candidate, they have the opportunity to obtain a higher level of representation on the board of directors than is permitted by statutory voting, so it favours minority shareholders, C is correct; statutory voting (statutory voting) favours controlling shareholders, A is incorrect; voting by proxy (代理投票) means that the owner of a share authorises another person to vote on his or her behalf at a general meeting of shareholders, B is incorrect.

Election of directors is considered an ordinary resolution and therefore requires only a simple majority vote, B is correct; Voting on a merger and Amendments to bylaws both require a supermajority vote, A and C are incorrect. Voting on a merger and amendments to bylaws require a supermajority vote.

Usually related transactions require a vote of the board of directors (or shareholders’ meeting), except for directors who hold a related interest, B is correct; it is the board of directors (The Board), not management, that ensures compliance with all applicable laws and regulations, A is incorrect; and the use of variable incentive plans in executive compensation should be increased, not decreased, C is incorrect.

Employee representatives on the supervisory board are usually elected by the employees, B is correct, A is wrong; employee representatives are usually part of the supervisory board (supervisory board), not the management board (members of the management board), C is wrong.

The board of directors usually needs to ensure that the company has an appropriate enterprise risk management system, B is correct; the board of directors is to set the strategic direction (Guides strategic direction), the management implementation of strategy (Implementation of strategy), A is wrong; the board of directors can not only consider the interest of shareholders, C is wrong.

The board is responsible for making decisions that are in the best interests of the company and its shareholders; management performance is assessed through the implementation of the strategy set by the board, and in order to ensure that the strategy is strongly executed, the board must have the power to select and terminate senior management; some independent members should have at least industry expertise; and outside directors should provide oversight within the company.