Chapter 9 Self-test questions

. Article 3 of the model articles states that the directors will manage the company's business.

True.

False.

. The power to manage the company is, by default, vested in who?

The directors.

The members.

. What is the ratio of Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame?

The members have an inherent right to interfere in management, unless the articles provide otherwise.

If the directors refuse to exercise their powers of management, these powers will revert back to the members.

If the members delegate managerial powers to the directors, the members can still exercise those managerial powers.

Where the articles vest general managerial power in the directors, the members cannot interfere in management unless he articles so provide.

. What happens if the directors are unwilling or unable to exercise their managerial powers?

The company will be wound up.

The directors will commit a criminal offence.

The managerial powers will revert back to the members.

The directors will vacate office and a new board will be appointed.

. Which one of the following statements is true?

The model articles do not specify how much notice need be provided for a board meeting.

Notice of a board meeting must be provided in writing.

The model articles provide that a board meeting can only be called by a majority of the board.

A board meeting can only take place if all the directors attending are in the same place.

. Regarding the requirement of a quorum, which of the following statements are true?

Decisions of an inquorate board can be rescued if all the members agree.

The quorum for a board meeting may be fixed by the directors.

All directors present will count towards the quorum.

If the directors do not stipulate a quorum, it will be two.

If the company only has one director, the quorum will be one.

The rules relating to a quorum are found in the company's articles.

An inquorate meeting is absolutely prohibited from conducting any business.

. Regarding the directors' ability to make decisions under the model articles, which of the following statements are false.

Where the votes for and against a board resolution are equal, the resolution is lost.

The directors of a private company can make a decision without a board meeting if all the directors entitled to vote indicate to each other that they agree on a matter.

Where a company has only one director, that director can make a decision without having a board meeting.

In a public company, directors can only make decisions at board meetings.

The directors of a public company can make a decision without a board meeting via a written resolution.

The CEO is granted a casting vote.

. How long must a company keep the minutes of its board meetings?

Two years.

Three years.

Five years.

Ten years.

. Directors are free to delegate their managerial powers to others.

True.

False.

. If the directors delegate a power to another person, the directors can no longer exercise that power, unless they revoke the delegation.

True.

False.

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