Diagnostic test

. 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.

. What is 'limited liability?'

Limited liability refers to how much the directors have to contribute in the event of the company becoming insolvent.

Limited liability refers to the ability of a member to limit his liability.

Limited liability refers to the directors' ability to limit their liability for acts of negligence, fraud etc.

Limited liability refers to the ability of a company to limit its liability.

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

Companies and sole proprietorships.

Ordinary partnerships and limited liability partnerships.

Companies and limited liability partnerships.

Companies and ordinary partnerships.

. A company can be created in several ways. Which ONE of the following is NOT a valid method of creating a company?

A company can be created by the Chancery Division of the High Court.

A company can be created by registering certain documents.

A company can be created by an Act of Parliament.

A company can be created by Royal Charter.

. 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 general duties of a director are owed to the members.

True

False

. If the directors exercise their powers for several purposes, how will the courts determine if the proper purpose duty has been breached?

If any of the purposes are improper, the duty will be breached.

If the majority of purposes are improper, the duty will be breached.

If the directors were aware that their exercise of the power was improper, the duty will be breached.

If the dominant purpose was improper, the duty will be breached.

. What is the notice period for the annual general meeting of a public company?

Twenty-one clear days.

Twenty-one clear days, unless the articles provide for a longer period.

Fourteen clear days.

Fourteen clear days, unless the articles provide for a longer period.

. What is a 'quorum?'

The minimum number of 'qualifying persons' required in order to validly conduct business.

A meeting that lacks a chairman.

The maximum number of persons who may attend a meeting.

A meeting that is invalid because sufficient notice has not been provided.

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

Yes

No

. The Wates Corporate Governance Principles for Lare Private Companies only apply to private companies.

Yes

No

. There are several differences between fixed charges and floating charges. Bearing this in mind, which ONE of the following statements is NOT true?

A company's ability to deal with assets subject to a fixed charge, is highly limited, whereas the company is free to deal with assets subject to a floating charge.

A company can create a subsequent floating charge over the exact same class of assets as a prior floating charge.

Fixed charges provide stronger security as, upon winding up, fixed charges rank ahead of floating charges.

Fixed charges are taken over a specific, identifiable assets, whereas floating charges are usually taken over a class of assets.

A company can create a fixed charge over assets that are subject to a floating charge.

. Which is the effect of the failure to register a charge with the registrar of companies?

A criminal offence is committed.

The directors will be in breach of their duties.

The debt will no longer be owed to the creditor.

The charge will be void against any liquidator, administrator or creditor.

. Which ONE of the following is unlikely to constitute unfairly prejudicial conduct?

The payment of excessive remuneration.

Mismanagement.

The improper transfer of assets.

Preventing the members from obtaining the best price for their shares.

Non-payment of dividends.

Exclusion from the management of a quasi-partnership company.

. Which ONE of the following is unlikely to result in the company being wound up on just and equitable grounds?

Where the directors engage in negligence.

Where the company is fraudulently promoted.

Where the company is deadlocked.

Where the company cannot fulfil the purpose for which it was set up.

Where the directors display a lack of probity.

. The court cannot sanction a restructuring plan unless every meeting of the creditors or members approves of the plan.

True

False

. Which ONE of the following statements describes the difference between a members' voluntary winding up and a creditors' voluntary winding up?

If a majority of the directors make a declaration of solvency, the winding up will be a members' voluntary winding up. If no such declaration is made, it will be a creditors' voluntary winding up.

A creditors' voluntary winding up is commenced by the creditors, whereas a members' voluntary winding up is commenced by the members.

A members' voluntary winding up is commenced by passing a special resolution, whereas a creditors' voluntary winding up does not require a special resolution.

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