FLK 1 Mock Exam Questions Flashcards
Can a private company have only one director?
Yes
The Companies Act 2006 allows a private company to have only one director, providing that director is a natural person.
Do non participating shares trigger pre-emption rights?
No since they have fixed income rights (capped)
Therefore, there is no need to disapply pre-emption rights. However, the shareholders must approve the rights attaching to the new class of shares and give the directors the authority to allot them.
What is a cumulative preference share?
If the dividend is not paid it will accumulate (hence the name), and the shareholder will have the right to be paid any missed dividends as well as the current dividend.
When buying back shares, whether out of distributable profits and/or capital, for how long must the contract be available for inspection for before any general meeting?
The contract must be available for inspection no fewer than 15 days before the meeting.
If a written resolution is being used, it should be attached to the resolution.
What is the difference between borrowing and issuing shares, in return for the money, that the directors should be aware of from a tax perspective?
The interest payable on the loan by the company will be tax deductible but the payment of dividends to shareholder will not. correct
What are the requirements which must be satisfied in order to ensure that the board meeting of the company has been validly called?
The notice must include the date, time and where the meeting will take place.
The notice must indicate how the parties will communicate with each other if they are not all going to be in the same place.
How long does a company have to file a special resolution?
Filed with the Registrar of Companies within 15 days of being passed
How long does a company have to file SH01 post-allotment of shares?
Within one month of the allotment
Can a floating charge holder appoint an administrator?
Yes
A floating charge-holder may appoint an administrator by filing a notice of appointment with the court.
Can creditors owed more than £750 apply to a court for an administration order?
Yes
One or more creditors of a company may apply to court for an administration order in respect of a company.
This is not subject to any requirement for their debt to be secured.
When a floating charge is given within two years of winding up, when is it invalid?
Invalid save to the extent of consideration given to the company at or after the creation of the charge, and interest on all such consideration.
In other words, if (A) £5000 is existing debt; (B) £10,000 is given in exchange for a security over all company assets; and (C) £10,000 later given in exchange for a different security, it is valid over £20,000 (B and C) but not (A) - the fact that (B) was a security over existing debt, does not forbid it being valid over the additional £10,000/
How can a creditor have a sole trader declared bankrupt?
First, be owed a debt of at least £5,000, (liquidated sum and unsecured)
Second, serve a statutory demand on the debtor to prove they are unable to pay a debt
What are the two ways a company can reduce its corporation tax payable on its taxable profits as a result of its purchase of machinery?
A company may use the AIA to set off 100% of the purchase price of qualifying assets up to the annual maximum of £1,000,000.
Qualifying expenditure beyond the maximum can then be the subject of a writing-down allowance of up to 18%.
If a sole trader has two businesses, how many VAT returns do they have?
A person can only have one VAT registration, irrespective of number of businesses run.
Exception: a company organised into several divisions may seek registration for each division. Does not apply to sole traders
If a company has a VAT Taxable Turnover of more than £1,350,000 when must they make VAT returns and pay?
Submit VAT return every three months.
VAT must be paid within a month from the end of the three-month period
When asking whether loss of forseeable, what question are we placing into the minds of the parties?
What the parties had in contemplation taking into account the transaction and what a reasonable person would have thought their responsibility was.
In an MCQ construe more narromly - do not think ‘what was probable’ but ‘what was within contemplation’
When negotiating contractual interpretation, what should the solicitor’s first argument be?
The solicitor should first argue an interpretation of the clause based upon the contra proferentem rule.
If there is uncertainty about the meaning of a clause, such certainty should be resolved against the party relying on the clause.
If a party wishes to change service address (e.g. to their solicitor) how must this be done?
They must give authority in writing.
If they fail to give it in writing, you should serve it at the address given in the claim form and inform the party’s solicitors in writing.
If a party makes a request for information that seems unreasonable and unecessary, how should you respond?
Contact should be made with the defendant’s solicitor with a view to refining the request, and any consequential response to it, to matters which are reasonably necessary and proportionate to the value of the claim.
When giving standard directions, what element of detail is required in addition to the acts and dates?
Time of day is given by when the relevant act must be performed.
In personal injury interim applications (e.g. interim payment) where should the medical report be?
Any documents in support of the application should be exhibited to the written evidence in support of the application.
If a solicitor serves a request for further information, but realises they cannot wait the entire 21 day period (e.g. holiday) can they do anything?
They can issue an applicationn for an order requiring information by the other party.
However, the application notice must be served on the defendant.
How can a Norwich Pharmacal Order be made?
Issue and serve a claim form against the third party
Make an application for disclosure against a non-party (otherwise known as a Norwich Pharmacal order).
Simply, it is necessary for a claim to be commended agaisnt the party against whom the order is being sought against.
What is the limitation period for enforcing a Tomlin Order
6 Years from the Date of Breach
How does Part 36 Offers relate to appeals?
A Part 36 offer has consequences only for the costs of the proceedings in respect of which it is made (e.g. not an appeal)
Therefore, if required, a a separate Part 36 offer must be made, for the appeal.
If a party fails to issue witness summons and has no witnesses, what will the court likely do?
Proceed with the trial and make such order, if any, as is appropriate for costs at its conclusion.
How is an Act of Parliament normally be cited by a solicitor?
By reference to their short title as specified in the Act
What is a conjoined case?
Cases where a court is hearing two separate appeals at the same time because they involve a similar point of law.
What is the exception to the rule that a solicitor needs higher rights to represent in the crown court?
A solicitor who represented a client in the original trial has the right of audience in the Crown Court during the appeal proceedings without needing the Higher Rights of Audience qualification.
This is because they have been involved in the case from the outset, and the rules allow them to continue representing the client at the appeal stage in the Crown Court.
What is a Puisne Judge?
Puisne judges are the lowest rank of the superior court judges - High Court judges!
If an MP uses parlimentary priviledge to reveal information that could be (a) defamatory; and seperately other information that is (b) in contempt of court, if the press reported both (a) and (b) would they be liable?
The MP is protected from both defemation and contempt of court under parliementary priviledge.
However, the press only has the benefit of qualified parliamentary privilege which applies only to defamation but not to proceedings for contempt.
Where a court is considering whether to grant relief which may affect the Convention right to freedom of expression, where no steps have been taken to notify the respondent (e.g. without notice injunction hearing) what must the court be satisfied of per s.12 HRA?
The court must be satisfied that there are compelling reasons why the respondent must not be notified and, in order to restrain publication before trial, the court must be satisfied that the applicant is likely to establish that publication should not be allowed.
If a solicitor is charged with a criminal offence, convicted or cautioned, what must they do?
Solicitors are required to promptly notify the SRA directly and to his Money Laundering Officer/Compliance Officer.
If a slicitor is working for an unauthorised business, can a client subject to fraud by the solicitor claim on the SRA Compensation Fund (SCF)?
No
Whilst a solicitor is entitled to work for a business not authorised by the SRA, a claim cannot be made on the fund.
If you rely on an ‘authorised person’ exclusion for FSMA, what must you do regarding any commission or financial benefit recieved?
Account to the client for the commission and continue to work for the client.
This means holding the commission to the client’s order which could include, offsetting the amount against the client’s bill or providing it directly to the client.
When can a passport be used as ID for CDD?
It must be a valid current passport.
Can the courts make adverse cost orders against funders of unsuccessful litigants?
Yes
The court has discretion to make such an order
However, where funder ‘has no control over or interest in’ the litigation’, they should be in no worse position than a solicitor acting under a CFA and an adverse costs order would be very unlikely.
What court order is needed for a settlement going beyonf the scope of the dispute?
Tomlin Order
Can parties agree (without application) to extend court order deadline (e.g. filing a cost budget 21 days before CMC)?
Yes. Ask the other party to agree that the deadline be
Parties can agree to extend deadlines by up to 28 days provided always that any such extension does not put at risk any hearing date.
Whilst applying to court for an extension of time is possible, if the other parties consent can be obtained, this is a more certain and much less costly way to proceed.
If a party only wants disclosure relating to limited issues what should be done?
Request that the court order disclosure in relation to different issues in stages.
If documents are destroyed in the course of business, for an MCQ do we say that they are no longer in the parties control?
No. The fact that they were destroyed in the ordinary course of business is not relevant to whether they need to be disclosed.
They still need to be disclosed, even if inspection would be impossible due to destruction.
In an MCQ where D has a house and sufficient funds in the bank, what method of enforcement is most approproate and why?
Applying for a third party debt order over the defendant’s bank account is the best advice
This is because, whilstt applying for a charging order is possible, it unlikely to lead to payment in the near future – since payment is not forced until the property is sold. You cannot force sale.
Where a lower court refuses an application for permission to appeal in a civil case, too whom can a further request for permission to appeal be made?
A further application may be made to the appeal court.
The destination of an appeal from a decision of a Circuit Judge in the County Court is a High Court Judge
Remember, ‘appeal court’ isn’t necessarily the Court of Appeal on first appeals - it goes in order of the judge.
If company A contracts with B to organise a party and instructs them to contract with company C, if B enters into the contract with C ‘on behalf of the accountancy firm’, if C breaches it, can A sue and why?
Yes, since B is acting as As agent
If all the requirements of agency are made, none of the other ways of circumventing the doctrine of privity of contract offer the best advice on the facts.
Will a demand for extra money to correct a pricing miscalculation be viewed as a demand made in good faith for the purposes of duress?
No
Even if the contractor provides a practical benefit, it will be paid under duress since a demand for extra money to correct a pricing miscalculation will not be viewed as a demand made in good faith for the purposes of duress.
When is a contract entered into with someone lacking mental capacity invalid?
A contract is binding unless the person claiming incapacity can establish…
- They did not understand what they were doing and
- The other party knew that to be the case
For frustration, what is the ‘cap’ on recovering expenses paid?
Expenses may be off set against the advance payment but no more than the advance payment may be recovered in expenses
For example, if A pays B an advance of £2000, and B incures £3,000 expenses. B can only recover/offset £2,000.
If there is an apperance of a real possibility of bias (e.g. friends with the decision maker) what type of bias is this?
Indirect Bias
It does not matter that the individual was one of a three-person panel – that is enough to give rise to this ‘real possibility’.
Can you challenge the lawfulness of a statutory instrument?
A statutory instrument (SI) is a form of secondary or delegated legislation, and it is capable of challenge in court, unlike primary legislation which cannot be directly challenged, given the central importance of parliamentary sovereignty.
If the Administrative Court does not feel that the SI has been made in accordance with the original ‘parent’ Act, the remedy would be for the court to quash the SI.
Although not binding, what efect would an obiter uKSC comment have on a lower court?
The Justice’s obiter statement is likely to have significant persuasive effect in relation to the current case, especially if it related to a closely connected legal issue, but it will not be binding.
Can you pay/accept a referral fee for a PI client?
If not, must you cease to act?
LASPO prohibits solicitors from referring or receiving referrals in respect of a claimant’s claim for damages in respect of personal injury or death
You would therefore not be able to accept the instructions and pay the Referral Fee.
You could however accept the instructions and not pay the referral fee to the other firm, if this was agreed with the other firm.
If a legal clinic ‘defends clients on debt claims’ must they be SRA authorised?
Yes - ‘defend’ implies litigation.
The law centre must be authorised by the SRA because the conduct of litigation is a reserved legal activity.
If you have a client from a foreign non-high risk country (e.g. France) must you still conduct enhanced CDD?
No
If there is…
- Nothing on the facts to suggest this client presents a high risk of money laundering,
- The client is not from a high risk country
- The transaction is not complex.
- You have identified how the client is funding
then standard CDD is SUFFICIENT.
If you will be using unamended Model Articles, what is required to be filed at CH for incorporation?
- Application for registration (Form IN01);
- Memorandum
- incorporation fee for Companies House.
It is not necessary to deliver a copy of the unamended Model Articles to Companies House.
If all shareholders want to approve a directors loan, should you hold a GM on short notice?
No.
If approval is sought at a GM, a written memorandum needs to be displayed at the registered office for 15 days ending with the date of the GM. A short notice GM is therefore not beneficial since it would only save one day.
The quickest way to obtain the shareholder approval is therefore to use a written resolution, since the memorandum may be attached to the written resolution and the 15-day display requirement is not applicable.
