Multiple choice Essay
Use a lead pencil only and fully erase any unwanted answers as the answer sheets are computer- marked You must hand In this question paper and the answer sheet at the conclusion of the test. Which of the following statements about the directors off company is true? A. The employees of a company are subject to the control of each individual director. B. Every decision by a company board is subject to the approval of the members. C. Directors may delegate their management functions. D. In all companies the members can remove a director from office by passing an ordinary resolution in a general meeting.
Which of the following is the best description of the significance of the decision in Salomon v Salomon & Co Ltd ? A. The notion of limited liability should not apply to companies owned and operated by a single person b. The concept of separate legal personality cannot be used by a sole trader to avoid liability to creditors c. A shareholder who is also involved in the management of the company is not entitled to the benefit of limited liability d. The benefits of incorporation extend to companies effectively under the control of a single person
Members of a company may agree to adopt a constitution which Includes restrictions on the company’s activities. Which of the following statements are true? A. Those restrictions only bind those who agree to them at the time, and not those who become members or officers of the company at a later time. B. An act of the company (such as forming a contract) which is contrary to those restrictions cannot be legally valid. C. An act of the company which Is contrary to those restrictions may be a breach of the statutory contract represented by the company’s constitution. D.
If hat director has not breached any of their duties as a director because the act is the act of the company not the act of the director. QUESTION FOUR Which of the following requirements does not need to be satisfied in order to convert a proprietary company into a public company? A. The Australian Securities Exchange (ASS) must approve the change of type of company. B. The Australian Securities and Investments Commission (ASIA) must alter the details of the company’s registration to reflect the change of type. C. At least 75% of the votes cast on the resolution at a general meeting must support the change of type of company.
D. The company must provide information to ASIA about the change of company type. QUESTION FIVE A large proprietary company can: A. Be listed on ASS B. Raise funds from the public provided it issues a prospectus C. Have more than 50 non-employee shareholders D. Have Just one shareholder who is also the only director QUESTION SIX BAN Pity Limited was founded on 1 June 1998. In 2001 the company’s constitution was repealed and no new constitution was adopted. The members of BAN Pity Limited are unhappy with the way one of the directors is performing and want him removed from office. Which of the following statements is true? A.
The members cannot remove the director from office but the directors can do so by ordinary resolution in a board meeting. B. The members can remove the director from office but only by special resolution in a general meeting. C. The members can remove the director from office by ordinary resolution in a general meeting. D. Since BAN Pity Limited currently has no constitution, the rules for replacing directors set out in the company’s original constitution will still apply. QUESTION SEVEN What type of decision is a decision by the company to change from a proprietary company to a public company? A. An enterprise decision.
B. A capital decision. C. A constitutional decision. D. An operational decision QUESTION EIGHT determining whether a company is a subsidiary of another company (its holding company)? A. A company will be a subsidiary if it has unlimited liability B. A company will be a subsidiary if another company holds more than one-half of its issued share capital (excluding non-voting shares) C. A company will be a subsidiary if it has three or more subsidiaries of its own. D. A company will be a subsidiary if another company has the power to determine the outcome of its operating and financial decisions. QUESTION NINE
If a public company has no constitution, which of the following decisions does not require the consent of the members? A. A decision to modify the constitution. B. A decision to commence legal proceedings against a director. C. A decision to remove a director from office. D. A decision to approve the appointment of an auditor. QUESTION TEN Unless the company’s constitution specifies otherwise, corporate actions that vary or cancel rights attaching to a class of shares generally require the passing of two special resolutions, one at a general members’ meeting and another at a meeting of the members whose rights are affected.
Which of the following would be least likely to be deemed to be a variation of class rights? A. A resolution where rights attaching to some of the shares in a class are varied. B. A resolution to divide a class of shares into two separate classes such that after the division the rights attaching to all those shares are not the same. C. A resolution to issue new preference shares ranking equally with existing preference shares. D. A resolution that affects the value of the shares in a particular class.
Chem.. Owns a taxi cab which is driven by Line. Line and Chem.. Agree that Chem.. Will receive half the takings. B. Peter, Sandy, Margo, Michael and several other people form a non-profit tennis club. The club committee organisms social functions for the purpose of raising funds. C. Charles, Melissa, John and Sarah form a syndicate to purchase a large block of land, build an apartment block and sell the units. D. Tony sells electrical appliances for Retro Appliances. He is paid according to a share of the profits made by the business.Richard’s nephews worked the farm and made improvements which increased the alee of the farm.
In what circumstances is the farm most likely to be treated as partnership property? A. The farm was in Richards name only and was not included in the partnership accounts as an asset of the partnership B. The farm was in Richards name only but had occasionally been treated in the partnership accounts as an asset of the partnership C. The farm was in the name of Richard and his nephews as Joint owners and was treated as a partnership asset in the partnership accounts D. The farm was in the name of a family company and Richard and his nephews were the directors and shareholders of the company