Chapter 3 Multiple choice questions

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

Yes

No

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

The articles of association.

The memorandum of association.

. Regarding the statutory set of model articles, which ONE of the following statements is NOT true?

If a promoter does not register any articles, the model articles will act as the company's articles.

Only companies incorporated under the Companies Act 2006 may be governed by the new model articles.

The model articles do not cover unlimited companies and such companies must register their own articles.

Even if a promoter does register its own set of articles, the model articles will form part of the company's articles, unless the registered articles modify or exclude them.

. Regarding the constitution's status as a statutory contract, which ONE of the following statements is NOT true?

The courts will not rectify the statutory contract if it contains a mistake.

The statutory contract is not defeasible on the grounds of misrepresentation, undue influence or duress.

The terms of the statutory contract can be altered by the company against the wishes of minority shareholders party to it.

Breach of any term in the statutory contract will allow either the company or a member to sue for breach of contract.

. The statutory contract exists between which parties?

Between the company and its members only.

Between the members themselves only.

Between the company and its members, and between the members themselves.

Between the company and any outsiders with a relevant interest.

Between the company and its members, between the members themselves, and between the company and any outsiders with a relevant interest.

. Debbie is a member of BioSoft plc. The company's articles provide that she will be the company secretary for life. After six months, the other directors decide to remove her from the position of company secretary. Can Debbie enforce the article provision?

Yes

No

. In relation to a company's contractual capacity, has the ultra vires doctrine been abolished?

Yes

No

. Skynet plc has entered into a contract with British Sims Ltd, but Skynet is prohibited from entering into such a contract by its articles. Miles, a shareholder of Skynet, discovers that the contract is outside the scope of Skynet's articles. What is the likely outcome?

Miles will be able to obtain an injunction, preventing Skynet from performing the contract.

The contract between Skynet and British Sims Ltd will be void.

The contact between Skynet and British Sims will be valid, but the directors of Skynet will have breached their duties.

The contract between Skynet and British Sims will be void, but only if British Sims knew that the contract was outside the scope of Skynet's articles.

The contract between Skynet and British Sims will be valid, but only if British Sims did not know that Skynet was prohibited from entering into the contract.

. The ability to alter a company's articles is limited in several ways. Which ONE of the following is not a valid limitation?

The articles cannot be altered if the effect of the alteration was to require him to take or subscribe for more shares than the amount he had at the date of the alteration, unless he expressly agrees in writing to the change.

The company cannot make any article provision unalterable.

The ability to alter the articles is limited by the Companies Act 2006.

An alteration will not be valid if it is not exercised bona fide for the benefit of the company as a whole.

The company cannot insert provisions into the articles that have the effect of making it more difficult to alter the articles.

. Can a company's articles contain provisions that cannot be altered?

Yes.

No.

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