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Topic 4

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Topic 4 test
gerard fauria
Quiz by gerard fauria, updated more than 1 year ago
gerard fauria
Created by gerard fauria over 5 years ago
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Resource summary

Question 1

Question
A company's constitution makes the arrangements needed to manage the company's business through vesting power to act for the company in 2 bodies: [blank_start]directors[blank_end] (control over management) and [blank_start]shareholders[blank_end] (background ownership control). NOTE: write the bodies in PLURAL.
Answer
  • directors
  • shareholders

Question 2

Question
Directors tend to have more significant autonomy in companies where shareholders are large in number.
Answer
  • True
  • False

Question 3

Question
Which of the followings is the source of the directors' powers?
Answer
  • Constitution
  • Shareholders
  • Companies Act 2006

Question 4

Question
Directors may be trustees of those funds of the company which are under their control.
Answer
  • True
  • False

Question 5

Question
What requirement has to be fulfilled for directors to act informally?
Answer
  • The company is private
  • Directors are unanimous
  • Act for the benefit of the shareholders as a whole

Question 6

Question
After CA 2006, all companies are still required to have a memorandum of association.
Answer
  • Yes
  • No

Question 7

Question
Companies must appoint at least 1 director.
Answer
  • True
  • False

Question 8

Question
Which one of the following is NOT a power exercisable by passing a resolution of the shareholders?
Answer
  • Change the constitution's name
  • Put the company into voluntary liquidation
  • Increase the company's share capital
  • Authorize a reduction of capital
  • Authorizing a private company to enter into a credit transaction with one of its directors

Question 9

Question
What do shareholders of a public company require in order to exercise their powers?
Answer
  • Pass a resolution at a duly convened meeting or through a written resolution passed in accordance with the provisions set out in CA2006.
  • Pass a special resolution at a duly convened meeting or by unanimity in an informal process
  • Pass a resolution at a duly convened meeting.
  • Pass a written resolution following the procedures established in the company's constitution.

Question 10

Question
Shareholders' equitable duty. The burden of proof when there is an alleged breached of this duty is on the Defendant.
Answer
  • True
  • False

Question 11

Question
Courts seem to be reluctant to find a breach of the shareholders' equitable duty, especially when concerning "business judgment". In fact, this duty is likely to be satisfied if at least one of the followings applies:
Answer
  • The majority honestly believes that an alteration is for the benefit of the company.
  • The alteration does not, in any case, discriminate between majority and minority shareholders.
  • The alteration does not give enhanced voting rights to a particular class of shareholders.

Question 12

Question
A company's constitution cannot be supplemented by:
Answer
  • Constructional implied terms
  • Terms derived from extrinsic circumstances
  • Shareholders' agreements

Question 13

Question
When a class right is varied, the minority of this class can appeal to the Court if they constitute at least ... of the total shares of that class.
Answer
  • 5%
  • 10%
  • 15%
  • 20%

Question 14

Question
The ability to alter a company's articles is limited in several ways. Which one of the following is NOT a valid limitation?
Answer
  • 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.

Question 15

Question
For this case, think always of general rules. If it's not stated = does not exist/do not need to consider it. Gerard ltd is a trading company. A and B (both directors) attend a duly convened meeting and decide to nominate a new director, which is later appointed through an ordinary resolution by the shareholders. However, C (the 3rd director) claims he is against such decision and claims an injunction to the court. What is it likely to happen?
Answer
  • The Court will grant the injunction.
  • The Court will not grant the injunction.
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