Companies - Members

Question 1

What type of shares have a right to be paid the stated preference before dividends can be paid to ordinary shareholders?

Answer 1

Preference shares

Question 2

The preference on what type of shares is carried forward if not paid in any particular year?

Answer 2

Cumulative preferred shares

Question 3

What type of resolution is required for approval of a dividend by the shareholders (once the board of director decides there’s profits available)?

Answer 3

Ordinary resolution

Question 4

When is a dividend unlawful?

Answer 4

If it’s paid out of funds other than profits available for the purpose

Question 5

If a dividend is unlawful, the directors may be held _________ liable for approving the dividend.

However, any shareholder who received the dividend knowing it was unlawfully declared must _____ the dividend (or the portion of it that is unlawful).

Answer 5

personally, return

Question 6

What is a derivative claim?

Answer 6

A claim brought by a member of a company on behalf of the company for a wrong done to it

e.g where they believe a director has/is about to breach a duty owed to the company

Question 7

A court will dismiss a prima facie case for relief under a derivate claim, unless it finds the claim will promote the _____ _______ of the company

Answer 7

best interests

Question 8

Any damages recovered under a derivative claim belong to the _______, but they may indemnify the __________ for expenses

Answer 8

company, shareholder

Question 9

What can a minority shareholder do if they feel a company’s affairs are being carried out in a way that’s unfairly prejudicial to that shareholder?

Answer 9

Petition the court for a remedy

Question 10

What is the usual remedy for a minority shareholder claim?

Answer 10

Force majority shareholders to buy minority’s interest at fair value

Question 11

Can any shareholder apply to have a solvent company wound up? If so, when?

Answer 11

Yes - if the shareholder can show it’s equitable and just to do so

Question 12

How long after a director leaves must shareholders hold service contracts, to give the shareholders a right to inspect them?

Answer 12

1 year

Question 13

Does a shareholder have a right to inspect the company books and records (e.g. register of members)? If so, when?

Answer 13

Yes - if they have a proper purpose