100+ Free AICD CDC / GAICD Practice Questions

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AICD Foundations of Directorship Assessment

Practice Questions100 questions

2026 Statistics

Key Facts: AICD CDC / GAICD Exam

100

Practice Questions

OpenExamPrep

Official Questions

AICD

65%

Pass Mark

AICD

1.0 hr

Time Limit

AICD

The GAICD Company Directors Course exam is a 30-question multiple-choice test on directors' legal duties, financial literacy, and risk oversight. It requires a 65% passing score. This prep includes 100 practice questions.

Sample AICD CDC / GAICD Practice Questions

Try these sample questions to test your AICD CDC / GAICD exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which section of the Corporations Act 2001 (Cth) outlines the primary statutory duty of care and diligence for directors and other officers?

A.Section 180

B.Section 181

C.Section 182

D.Section 184

Explanation: Section 180(1) of the Corporations Act 2001 (Cth) mandates that a director or officer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise in their position. Section 181 relates to good faith and proper purpose, Section 182 covers the misuse of position, and Section 184 details criminal offenses for breach of duties.

2Under Section 180(2) of the Corporations Act 2001 (Cth), the Business Judgment Rule serves as a defense for which of the following statutory duties?

A.Duty of good faith

B.Duty of care and diligence

C.Duty to prevent insolvent trading

D.Duty not to misuse information

Explanation: The Business Judgment Rule in Section 180(2) operates specifically as a defense against a breach of the duty of care and diligence under Section 180(1). It does not apply to other duties such as good faith (s181), preventing insolvent trading (s588G), or misusing position/information (s182/s183).

3Section 181 of the Corporations Act 2001 (Cth) requires directors to exercise their powers and discharge their duties in good faith in the best interests of the corporation and for what other purpose?

A.To maximize shareholder short-term profits

B.For any purpose approved by management

C.For a proper purpose

D.To prioritize creditor repayment above all else

Explanation: Section 181 requires directors to act in good faith in the best interests of the corporation and for a proper purpose. Determining a 'proper purpose' involves examining the objective reason for which the board power was granted. Board actions must not be designed to entrench directors or serve personal motives.

4Which of the following activities is a direct breach of the duty not to misuse position under Section 182 of the Corporations Act 2001 (Cth)?

A.Voting to approve an executive remuneration package that aligns with market benchmarks

B.Delegating day-to-day management responsibilities to the Chief Executive Officer

C.Formulating a long-term strategic plan that fails to meet financial forecasts

D.Using your title as a director to secure a contract for a separate business in which you hold a significant shareholding without disclosure

Explanation: Section 182 prohibits a director or officer from improperly using their position to gain an advantage for themselves or someone else, or to cause detriment to the corporation. Securing a contract for a separate personal business without disclosure is a classic example of misuse of position. Voting on benchmarked remuneration, delegating to the CEO, and strategic failure do not constitute a misuse of position under s182.

5The statutory duty prohibiting the improper use of information under Section 183 of the Corporations Act 2001 (Cth) applies to which of the following groups?

A.Current directors, former directors, officers, and employees

B.Only current board directors

C.Only current executive directors and the CEO

D.Only directors and the company secretary

Explanation: Section 183 explicitly applies to a person who obtains information because they are, or have been, a director, officer, or employee of the corporation. The duty survives their departure from the company, meaning former directors and employees are still legally bound not to improperly use that information to gain an advantage or cause detriment to the corporation.

6Under what circumstances can a breach of the duty of good faith (Section 181) lead to criminal prosecution of a director under Section 184?

A.If the breach resulted in any financial loss to the company

B.If the director was reckless or intentionally dishonest

C.If the breach was due to a simple administrative oversight

D.If the shareholders vote to prosecute the director at an AGM

Explanation: Under Section 184 of the Corporations Act, a director commits a criminal offense if they breach Section 181 (good faith and proper purpose) and are reckless or intentionally dishonest. Financial loss is not a prerequisite for criminal liability, and simple administrative oversights or shareholder votes cannot initiate or prevent criminal prosecutions under the Act.

7Under Section 588G of the Corporations Act 2001 (Cth), a director has a positive duty to prevent insolvent trading. Solvency is legally defined in Section 95A as the ability of a company to do what?

A.Maintain a positive net asset position on its balance sheet

B.Generate net operating cash inflows in consecutive quarters

C.Pay all its debts as and when they become due and payable

D.Ensure its current assets exceed its current liabilities

Explanation: Under Section 95A of the Corporations Act, a company is solvent if, and only if, it is able to pay all its debts as and when they become due and payable. A company may have a negative net asset position (balance sheet insolvency) but still be solvent if it has access to cash or credit to pay its debts on time (cash flow solvency), which is the primary legal test.

8The 'Safe Harbour' provisions under Section 588GA protect directors from personal liability for insolvent trading if they take which of the following actions?

A.Appoint an external voluntary administrator within 24 hours of suspected insolvency

B.Secure a personal bank guarantee to cover all outstanding trade debts

C.Cease all trading operations immediately and terminate all employees

D.Develop a course of action reasonably likely to lead to a better outcome for the company than immediate administration or liquidation

Explanation: Section 588GA (Safe Harbour) protects directors from personal liability for insolvent trading if, after suspecting insolvency, they begin to develop and implement a course of action that is reasonably likely to lead to a better outcome for the company than the immediate appointment of an administrator or liquidator. This encourages directors to actively restructure the company rather than rushing into premature liquidation.

9Which of the following is an established statutory defense against an insolvent trading claim under Section 588H of the Corporations Act 2001 (Cth)?

A.The director had reasonable grounds to expect, and did expect, that the company was solvent and would remain solvent

B.The director was unaware of the financial details because they delegated financial oversight to the CFO

C.The director was out of the country on a personal vacation for the entire duration of the trading period

D.The director relied on verbal assurances from a major customer that an outstanding invoice would be paid

Explanation: Section 588H(2) provides a defense if the director had reasonable grounds to expect, and did expect, that the company was solvent and would remain solvent even if it incurred the debt. Relying on delegation (CFO) without oversight, being absent without a valid medical/other reason, or relying on mere verbal customer assurances does not establish a valid statutory defense.

10Under Section 191 of the Corporations Act 2001 (Cth), a director of a proprietary company who has a material personal interest in a matter that relates to the affairs of the company must do what?

A.Resign from the board immediately to avoid a conflict of interest

B.Give the other directors notice of the interest as soon as practicable

C.Obtain written approval from ASIC before participating in board discussion

D.Publicly disclose the interest in a local newspaper

Explanation: Section 191 requires a director who has a material personal interest in a matter relating to the company's affairs to disclose it to the other directors at a board meeting as soon as practicable. The notice must detail the nature and extent of the interest. Resignation, ASIC approval, or newspaper publication are not required by this section.

About the AICD CDC / GAICD Exam

The AICD Company Directors Course Exam (GAICD) is the premier board governance assessment in Australia. Part 1 consists of a 30-question multiple-choice exam. It assesses a director's understanding of duties and responsibilities under the Corporations Act 2001 (such as duty of care and diligence, good faith, avoiding insolvent trading), corporate governance frameworks (board composition, roles and board-management relationships), financial literacy (reading balance sheets, income statements, cash flows, and calculating key financial ratios), and strategy formulation and risk oversight.

Assessment

Closed-book online multiple-choice quiz administered via the AICD portal, followed by a written case study assignment and exam.

Time Limit

1.0 hour

Passing Score

65%

Exam Fee

Included in course fees or approx. $500 - $800 AUD for standalone reassessment (Australian Institute of Company Directors (AICD))

AICD CDC / GAICD Exam Content Outline

30%

Directors' Duties & Legal Framework

Corporations Act 2001 duties, care and diligence, good faith, conflicts of interest, insolvent trading, and civil/criminal liabilities

25%

Corporate Governance Framework

Board roles, director vs executive powers, board committees, shareholder rights, and ASX principles

25%

Financial Literacy for Directors

Analyzing balance sheets, P&L statements, cash flows, solvency indicators, audit processes, and financial disclosures

20%

Strategy & Risk Oversight

Board's role in strategy, establishing risk appetites, enterprise risk management, and crisis control

How to Pass the AICD CDC / GAICD Exam

What You Need to Know

Passing score: 65%
Assessment: Closed-book online multiple-choice quiz administered via the AICD portal, followed by a written case study assignment and exam.
Time limit: 1.0 hour
Exam fee: Included in course fees or approx. $500 - $800 AUD for standalone reassessment

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

AICD CDC / GAICD Study Tips from Top Performers

1Understand Section 180 of the Corporations Act: learn the Business Judgment Rule and the four criteria required to invoke it as a defense against breach of duty of care

2Master solvency indicators: directors have a positive duty under Section 588G to prevent insolvent trading. Learn how to identify warning signs such as chronic cash flow shortages and unpaid taxes

3Practice ratio analysis: know how to calculate and interpret the Current Ratio, Quick Ratio, Debt-to-Equity, and interest cover ratios from a director's perspective

Frequently Asked Questions

What is the GAICD credential?

GAICD stands for Graduate of the Australian Institute of Company Directors. It is awarded to candidates who successfully complete the Company Directors Course and pass all parts of the assessments.

How is the GAICD assessed?

Assessment is in three parts: a 30-question online multiple-choice quiz (65% pass mark), a written assignment based on a case study, and a short-answer exam.