SET 2 Flashcards
Following a successful pitch by an entrepreneur, a client is keen to invest in a new business. He has been offered a number of shares in the entrepreneur’s company and wishes to understand the significance of becoming a shareholder in a small private company.
A)He will be an adviser to the company on key decisions and be paid a salary.
B)He will be an adviser to the company on key decisions and rewarded by way of dividends
C)He will be one of the owners of the company involved in the day to day running of the company and paid a salary.
D)He will be one of the owners of the company involved in the day to day running of the company and paid a salary.
E)He will be one of the owners of the company rewarded by way of a dividend if profits allow but with no ability to influence the day-to-day running of the company.
E
What is the primary remedy to shareholders for unfair prejudice?
A)dissolution of the company
B)removal from the board of directors
C)reinstatement in the board of directors
D)an exit from the company at the shares’ nominal price
E)an exit from the company at a fair price
E
In order to be listed at the London Stock Exchange, a business needs first to register as a:
A)private limited company
B)public limited company
C)unlimited company
D)community interest company
E)British company
B
A company director who has engaged in persistent breaches of companies legislation runs the risk of being:
A)disqualified B)removed from her position C)in breach of her duties D)personally liable to the company E)all options are correct
E
The articles of association of a company authorise the directors to enter into contracts up to the value of £100k with higher amounts subject to authorisation by the board of directors. Director A has signed a contract of a value exceeding this amount.
Which statement best describes the company’s position?
A)The company is not liable to honour the contract, but the director is
B)The company is not liable to honour the contract and neither is the director
C)The company is liable to honour the contract and the director bears no liability to the company for any resulting losses
D)The company is liable to honour the contract and the director bears liability to the company for any resulting losses
E)The company is only liable to honour the contract if the third party had enquired as to the powers of the director before signing
D
In which of the following areas did company legislation bring a major change in 1985?
A)ultra vires rule B)changing the articles of association C)updating company registration information D)shareholder rights E)shareholder duties
A
Under which circumstances will a parent company become liable for the acts of a subsidiary?
A)when it directly controls the actions of the subsidiary
B)when it indirectly controls the actions of the subsidiary
C)when it owns a majority stake in the subsidiary
D)when it owns a minority stake in the subsidiary
E)When the directors of one sit on the board of the other
A
Where is Corporate Social Responsibility (CSR) represented in the Companies Act 2006?
A)s.172 B)s.168 C)s.177 D)s.40 E)s.994
A
Yorgos and George co-own a consultancy service and are looking for ways to formalise their relationship, but do not need additional features, like limited liability. Which of the following would be the best vehicle for them to continue their business?
A)a partnership B)a private limited company C)a public limited company D)a community interest company a sole trader
A
what is the correct priority of recovery of funds in insolvency?
A)fixed charge holders, followed by floating charge holders, followed by unsecured creditors
B)floating charge holders, followed by fixed charge holders, followed by unsecured creditors
C)unsecured creditors, followed by the Revenue
D)shareholders followed by unsecured creditors
E)charge holders followed by employee wages demands
A
Which of the following arguments was successful in lifting the corporate veil in Adams v Cape Industries [1990] Ch 433?
A)agency B)single economic unit C)fraud D)equity E)none
E
A company whose members undertake to contribute a specified amount on a winding up is a
A)charitable company B)limited liability partnership C)company limited by guarantee D)company limited by shares E)unlimited company
C
A retail partnership has three partners. The Partnership Agreement requires contracts with a value in excess of £10,000 to be signed by two partners. One partner signs a contract for stock for the partnership for £12,000. He does not refer this to his fellow partners. The partnership is refusing to pay the supplier.
Is anyone liable to pay the supplier and, if so, who and how much?
A)No-one is liable to pay the supplier.
B)The partnership is liable to pay the supplier £10,000.
C)The partnership is liable to pay the supplier £12,000.
D)The partner who signed the contract is personally liable to pay the supplier £12,000.
E)The company is only liable to honour the contract if the third party had enquired as to the powers of the director before signing
C
Which of the following cases establishes the principle that a retention of title clause could extent to the proceeds of a sale, even when the original goods are no longer present?
A)Borden (UK) Ltd v. Scottish Timber Products Ltd [1981] Ch 25
B)Re Andrabell Ltd [1984] 3 All ER 407
C)Hendy Lennox (Industrial Engines) Ltd v. Grahame Puttick Ltd [1984] 1 WLR 485
D)Aluminium Industrie Vaassen BV v. Romalpa Aluminium Ltd [1976] 1 WLR 676
E)Compaq Computer Ltd v. Abercorn Group Ltd [1991] BCC 484
D
The Secretary of State has the right to ask a company to change its name in all but one of the following circumstances. Which one is that?
A)the company has a name similar to another
B)the company has supplied misleading information
C)the company’s exemption from using ltd has expired
D)the Secretary disapproves of the choice of name
E)the use of the selected name would cause confusion
D
