Diagnostic test - Company Law Concentrate 6e Student Resources

Chapter 1. Which business structures are known as 'bodies corporate?'

The company and the sole proprietorship.

The company and the partnership.

The company and the limited liability partnership.

The partnership and the limited liability partnership.

The company, the partnership and the limited liability partnership.

Chapter 1. Which ONE of the following statements is not true?

Sole proprietors are not permitted to take on employees.

Sole proprietors can be subject to certain provisions in the Companies Act 2006.

Sole proprietors are personally liable for the debts and liabilities of the sole proprietorship.

The sole proprietor owns all the assets of the business and is entitled to all of the profits that the business generates.

Sole proprietors are self-employed.

A sole proprietor who is not a professional is known as a 'sole trader.'

Chapter 2. Which two types of business structure are created via a process of incorporation?

Companies and sole proprietorships.

Partnerships and limited liability partnerships.

Companies and limited liability partnerships.

Companies and partnerships.

Chapter 2. Do the provisions of the Companies Act 2006 apply to all incorporated companies?

Yes

No

Chapter 3. Are companies incorporated under the Companies Act 2006 required to have a memorandum of association?

Yes

No

Chapter 3. Under the Companies Act 2006, in which document would you find the objects of a company?

The articles of association.

The memorandum of association.

Chapter 4. Every company must appoint at least one director. True or False?

True

False

Chapter 4. The power to manage a company is initially vested in whom?

The directors

The majority shareholders

The members

The persons who provide the most capital

Chapter 5. Which ONE of the following statements is true?

Only persons who have purchased shares can become members.

A person can be a shareholder, but may not necessarily be a member.

A public company has shareholders whereas a private company has members.

There is no difference at all – a shareholder is always a member and vice versa.

Chapter 5. Members exercise considerable decision-making power via the passing of resolutions. Which ONE of the following is not a power exercisable by passing a resolution of the members?

Authorizing a private company to enter into a credit transaction with one of its directors.

The removal of a director.

The alteration of the articles.

Converting from a private company to a public company.

Converting from an unlimited company to a private limited company.

Chapter 6. Are all listed companies in the UK required to comply with the Principles and Provisions found in the UK Corporate Governance Code?

Yes

No

Chapter 6. Which ONE of the following would not be described as an institutional investor?

Banks

Pension funds

Insurance companies

Employees holding shares through an employee share scheme

Chapter 7. What is a share's 'nominal value?'

The maximum value that the share can be sold for.

A fixed amount that represents the notional value of the share's worth.

The current market value of the share.

The maximum value that can be paid for a share.

Chapter 7. What is a company's 'issued share capital?'

The total nominal value of shares that have actually been issued.

The total nominal value of shares that may be issued by a company.

The total market value of shares that have actually been allotted.

The difference between the total nominal value of shares that have been allotted and the total nominal value of shares that can be allotted.

Chapter 8. What is the 'proper claimant' principle?

Where a company is acting within its powers, the courts will not interfere in matters of internal management unless the company itself commences proceedings.

If a procedural irregularity is committed, a member cannot commence proceedings if the irregularity can be ratified by a simple majority of the members.

Only the company can commence proceedings for wrongs committed against it.

Members can only enforce the rights of the company if they have acted in a proper, just and reasonable manner.

Chapter 8. Which ONE of the following is the only true exception to the rule in Foss v Harbottle?

Where the act complained of is illegal.

Where the act complained of is ultra vires.

Where the act infringes the personal rights of a member.

Where the act could only be done or sanctioned by the passing of a special resolution.

Where the act constitutes a fraud on the minority.

Chapter 9. The three objectives of administration are collectively referred to as 'the purpose of administration.' What is the first objective?

To achieve a better result for the company's creditors as a whole than would be likely if the company were wound up.

To realise property in order to make a distribution to one or more secured creditors.

To rescue the company as a going concern.

To rescue the business of the company.

Chapter 9. During the period of administration, unless permission has been obtained from the administrator or the court, no creditor can take steps to enforce his security over the company's property. True or false?

True

False