c7 questions Flashcards
B false
A statement of guarantee is only appropriate for a company limited by guarantee. Instead, Richard
should submit a statement of capital and initial shareholdings.
Yes C
A statement of proposed company officers is required in the application.
Are the following statements true or false?
Where a public limited company fails to obtain a trading certificate, a member-director may be
personally liable as a result. This is one example of statute lifting the corporate veil.
True A
False B
A company is always liable without limit for its own debts.
True C
False
Richard is applying to register a new company called Original Ideas Ltd, which has a share capital of
£100 (100 shares at £1 nominal value).
Requirements
As part of the application, does Richard need to submit a statement of guarantee?
Yes A
No B
As part of the application, does Richard need to submit a statement of proposed company officers?
Yes C
No D
B false
A statement of guarantee is only appropriate for a company limited by guarantee. Instead, Richard
should submit a statement of capital and initial shareholdings.
Yes C
A statement of proposed company officers is required in the application.
Are the following statements true or false?
Where a public limited company fails to obtain a trading certificate, a member-director may be
personally liable as a result. This is one example of statute lifting the corporate veil.
True A
False B
A company is always liable without limit for its own debts.
True C
False
A
Similarly, where directors are also members, provisions such as those in respect of fraudulent trading
and wrongful trading lift the veil between the company and its members to impose a liability for the
company’s wrongful acts.
C true
9 Which of the following statements is correct only in respect of a public limited company?
A The company may exclude rights of pre-emption.
B The company may reduce its share capital subject to obtaining a special resolution and
providing a directors’ declaration of solvency.
C Shares must be at least one quarter paid up on allotment.
D The company may redeem its shares out of its own share capital, subject to its articles of
association
C
other answers relate to private companies
Are the following statements true or false?
When a company applies for registration, a copy of its proposed articles of association must supplied to the Registrar of Companies.
True A
False B
A certificate of incorporation is conclusive evidence that a company is registered in accordance with
the Companies Act 2006.
True C
False D
B
In the event that none is provided, model articles prescribed by the Secretary of State will apply.
True
Are the following statements true or false?
A company’s articles of association can be altered by the passing of an ordinary resolution unless there is a provision for entrenchment, in which case a special resolution is required.
True A
False B
A company may provide that a provision for entrenchment cannot be repealed.
True C
False D
B Alteration requires a special resolution (in accordance with the Companies Act 2006) but unanimous agreement or court order is required to alter a provision for entrenchment.
D Nor can it provide that a provision for entrenchment cannot be amended.
Josephine was one of two directors (who were also members) of Tone-Up Ltd, a supplier of health and fitness products. She did the administrative work in relation to setting up the company. She included a provision in its articles that Tone-Up Ltd would always employ her as its company secretary on a salary of £12,000 p.a. She also had a separate contract appointing her as company secretary, but it made no mention of remuneration or termination. After a year, Tone-Up Ltd appointed John as company secretary and Josephine sued the company for breach of contract
because the articles had been contravened and, she argued, the articles have contractual effect.
Requirements
Can Josephine rely on the articles to compel Tone-Up Ltd to pay her £12,000 p.a. in the absence of a term in her contract, during her period of office as company secretary?
Yes A
No B
Can Josephine rely on the contractual effect of the articles to seek redress for breach of contract?
Yes C
No D
A On the basis that the articles can be implied into her contract of employment.
D No because her claim is not made in her capacity as member (but rather as company secretary) and the articles bind the company and its members as if each member had contracted to observe its provisions.
A company’s confirmation statement must contain all of the following options except one.
Requirement
Which is the exception?
A Prescribed particulars of the directors and any company secretary
B Details of resolutions passed by the company
C Details of people with significant control
D A description of the type of company and its principal business activities
2 Under the Companies Act 2006 essential requirements for registration as a private company limited
by shares by the Registrar of Companies include the submission of:
Requirements
The memorandum of association
Yes A
No B
A section 761 trading certificate
Yes C
No D
A
A memorandum of association needs to be submitted on application for incorporation of a company.
D
A trading certificate is only required for a public company, not a private company
A properly appointed company secretary usually has the authority to:
Requirements
Sign contracts connected with the administrative side of a company’s affairs, such as employing staff
and ordering cars
True A
False B
Sign contracts connected with the purchase of property on behalf of a company
True C
False D
A - A company secretary normally has the authority to deal with all administrative matters. The exact scope of their authority will usually depend on the size and nature of the company.
D - A company secretary does not normally have authority to deal with the purchase of property or borrowing.
Albert entered into a pre-incorporation contract on behalf of Stir Ltd.
By whom and against whom may the contract be enforced?
A By and against the company only
B By and against Albert only
C By the company and against Albert
D Against the company and by Albert
B By and against Albert only - A pre-incorporation contract is not enforceable by or against the company (that is not incorporated at the time)
Craig is the company secretary of Lotsaland Ltd. He regularly negotiates contracts for the company for the acquisition of small development plots and then passes the file on to the managing director, Malcolm, who enters into the contract on behalf of the company. Feeling under pressure to secure a particularly good deal on a site during Malcolm’s sabbatical, Craig enters into a contract for Lotsaland Ltd to borrow £15,000 so that it can secure the deal. When Malcolm returns, he is not happy with the borrowing arrangement made by Craig.
Which of the following best describes the legal position?
A Lotsaland Ltd is bound because Craig has ostensible authority to enter into the contract.
B Lotsaland Ltd is bound because Craig has the implied actual authority of a company secretary.
C Lotsaland Ltd is not bound by the borrowing contract, because the lender should have checked whether Craig had sufficient authority.
D Lotsaland Ltd is not bound because Craig lacked sufficient authority.
D Lotsaland Ltd is not bound because Craig lacked sufficient authority - Borrowing is not within the implied usual authority of a company secretary, nor did he have express or ostensible authority
With regard to the statutory books and records of a registered company limited by shares, answer the following.
Requirements
Is a company required to keep a register of its directors’ residential addresses?
Yes A
No B
Is a company required to keep a register of debenture holders?
Yes C
No
A - However, they must not be made available for public inspection.
D - It is not compulsory, but if the company does keep such a register, it must comply with the legislative provisions as to its availability for inspection.
Powell is applying to register a new company First Step Ltd. He is currently preparing the statement
of capital and initial shareholdings but is unsure of what he needs to include.
Requirements
Does Powell need to include the details of individual classes of share?
Yes A
No B
Does Powell need to include information on whether rights of pre-emption apply to each class of
share?
Yes C
No D
