Chapter 11 Self-test questions

. Does a director need to be party to a transaction in order for a breach of the s 175 duty to arise?

Yes

No

. The duty in s 175 only applies to transactions involving a director and the company.

True

False

. Does the s 175 duty apply to former directors?

Yes, in all cases

Yes, but only in relation to the exploitation of property, information or opportunity that the former director became aware of when he was a director

Yes, but only where the director resigns

No

. Identify which two of the following statements are untrue.

The directors of a public company cannot authorize a s 175 conflict

The directors cannot authorize a s 175 conflict that, under statute, requires member approval

The directors of a private company can authorize a s 175 conflict unless the articles provide otherwise

A s 175 conflict can be authorized by the members in general meeting

Authorization of a s 175 conflict cannot be retrospective

A director subject to a s 175 conflict cannot vote to authorize the conflict

Valid authorization of a s 175 conflict will also absolve a director of any other breaches of duty

. A s 176 benefit can be authorized by the board if the articles so provide.

True

False

. There are a number of differences between the s 177 duty and the duty in s 182. Which one of the following is not a valid difference?

Breach of s 182 is a criminal offence, whereas breach of s 177 is not

A s 177 declaration must be made at directors' meeting, whereas a s 182 declaration need not

Section 177 relates to proposed transactions or arrangements, whereas s 182 relates to existing transactions or arrangements

Under s 177, disclosure must be made before the transaction or arrangement is entered into. Under s 182, disclosure must be made as soon as is reasonably practicable

. If a director's service contract contains a term giving him a guaranteed term of employment of over two years, then that contract will be void if it is not approved by the members.

True

False

. A non-cash asset will be substantial if?

It is over £100,000 or exceeds 10 per cent of the company's asset value and it over £5,000

It is over £5,000

It exceeds 10 per cent of the company's asset value

It is £100,000 or over

. Identify which one of the following will not require member approval.

A public company enters into a hire purchase agreement (worth £20,000) with a director, under which the company will provide a director with specified goods

A public company agrees to pay £15,000 on behalf of a director

A company loans £40,000 to one of its directors to engage in company business

A company loans one of its directors £12,000

. A loss of office payment made by a quoted company to a person who is, or has been, a director of that company must be approved by the members.

True

False

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