1

Question 1

Reasons for lifting veil via statute (4)

Answer 1

a) director is disqualified
b) plc trades w/o trading certificate
c) fraudulent trading
d) wrongful trading

Question 2

Reasons for court lifting the veil

Answer 2

a) produce tax liability
b) give compensation
c) prevent evasion of duty
d) reveal member’s national identity
e) breakdown of quasi-partnership
f) prevent evasion of contractual obligations
g) reveal national identity

Question 3

Wrongful trading

Answer 3

continuing to trade an insolvent company w/o taking all reasonable steps to minimise creditor losses

Question 4

Fraudulent trading

Answer 4

continuing to trade an insolvent company with intent to defraud

Question 5

Quasi-partnership

Answer 5

recognition that a company has been formed due to the close association between its individuals.

• indivs expect to have full involvement in mgt of co;
• some degree of control over new members;
• should have their own special set of rules.

Question 6

When MUST the court disqualify director

Answer 6

• been a director in a co that has become insolvent

- conduct shows them to be unfit to manage co

Question 7

Wrongful trading: punishment + liability

Answer 7

• civil liability occurs on winding up

- directors may be liable to contribute to assets of co

Question 8

Fraudulent trading: punishment + liability

Answer 8

• fine + up to 10yrs
• criminal liab if co not wound up
• civil liab (and maybe criminal) if co wound up

Question 9

Number of directors for public and private cos

Answer 9

Public: 2

Private 1

Question 10

Reduction of capital for public and private cos

Answer 10

Public: need special resolution confirmed by court
Private: need special resolution + directors solvency statements

Question 11

Memorandum of association (3)

Answer 11

Historic record of initial subscribers

a) wish to form a company
b) agree to become members
c) agree to each take at least one share (but only if share cap)

Question 12

Application for registration (5)

Answer 12

a) company name
b) address
c) members’ liability
d) company type
e) domicile

Question 13

Consequence of PLC trading w/o necessary docs

Answer 13

• transactions are valid BUT
• company and directors punishable by fine
• after 12m, co may be compulsorily wound up + veil of incorp lifted