Chapter 20 Multiple Choice Questions

. 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.

. What is an 'ordinary resolution?'

A resolution that is passed by 50 per cent or more of the members.

A resolution that is passed by a majority of not less than 75 percent.

A resolution that is passed if 100 per cent of the members agree.

A resolution that is passed by a simple majority.

. Regarding written resolutions, which one of the following statements is true?

The members of a private company can request a written resolution, providing they hold a minimum of 10 per cent of the total voting rights in the company.

In order to pass a written resolution, unanimity is required.

The written resolution procedure cannot be used to remove an auditor before the expiry of his office.

The written resolution procedure can be used by both public and private companies.

If the company has a share capital, each member gets one vote.

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

Twenty-one days

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

Fourteen days

Fourteen 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.

. The general rule is that, at company meetings, each member has one vote per share. True or False?

True

False

. Are all companies required to hold an annual general meeting (AGM)?

Both public and private companies are required to hold an AGM.

Both public and private companies are required to hold an AGM, but private companies can opt out of this requirement.

Only public companies are required to hold an AGM, but they an opt out of this requirement.

Only public companies are required to hold an AGM.

. There are restrictions on who can act as a director. Which one of the following is NOT a valid restriction?

A company's auditor is disqualified from acting as its director.

Generally, an individual under the age of 16 cannot be appointed as a director.

An individual with a criminal record cannot act as a director.

An undischarged bankrupt who acts as a director commits a criminal offence.

. Regarding the division of power between the board and the members, which one of the following statements is NOT true?

Where the articles vest a general power to manage the company in the directors, the members can still pass an ordinary resolution instructing the directors to act in a certain way.

The directors only have such power as is delegated to them by the members.

The power to run the company is initially vested in the members of the company.

If the directors are unable or unwilling to exercise their powers, then the general power to manage reverts back to the members.

. Regarding the disqualification of directors, which one of the following statements is true?

A director who contravenes a disqualification order can be personally liable for the debts of the company during the duration of the contravention.

Breach of a disqualification order constitutes an indictable offence.

The majority of disqualification cases concerns disqualification on the ground that the director has been convicted of an indictable offence.

Disqualification on the ground of unfitness can result in a maximum disqualification period of five years.

A director subject to a disqualification order can never take part in corporate management while the order is current.

Quiz Content