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Legal Management MCQs

Butterberry Limited is a company making yoghurts and other dairy products. It has been in existence for 12 years and has four shareholders who are als...

Nick and Andi's
All the directors'
All the members'
Butterberry Limitedâ€™s

Nina is the sole shareholder and director of Tarvin Limited. She owns 100 Â£1 shares, all of which are fully paid. The company goes into insolvent l...

Nothing
Â£250,000
Â£100
Â£200,000

Tangent Limited operates from premises which it leases. The directors have not personally guaranteed Tangent Limited's obligations under the leas...

True
False

Which of the following business entities does NOT have separate legal personality?

Halcyon Holidays plc, a company listed on AIM.
Barry Jenkinson Ltd, a private limited company whose sole shareholder is Barry Jenkinson.
Acomb Foxwood Solicitors LLP, a firm of solicitors owned and run by Arvind Acomb and Frances Foxwood.
Hunca Munca Pets, an unincorporated business carried on by Lucinda Laws and Jane James with a view of profit.

Which ONE of the following CORRECTLY describes the principle of "piercing the veil of incorporation"?

The recognition by the law of an entity as having a separate legal existence and therefore being an appropriate subject of legal rights and responsibilities.
The recognition by the law that a person or number of persons forming a body corporate with separate legal personality are not liable for the debts and obligations of that body corporate, or are only liable to a specified extent.
The disregarding of the separate personality of the company when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades, or whose enforcement he deliberately frustrates, by interposing a company under his control.
The identification of property as owned beneficially by the owner of a company by virtue of the particular circumstances in which the legal title to the properties came to be vested in the company.

David, one of the directors in Bourneport Limited, paid Â£20,000 for 4,000 Â£1 fully paid ordinary shares in Bourneport Limited. He also signed a ...

Â£85,000
Â£150,000
Â£170,000
Â£4,000

This question relates to the definition of 'subsidiary' under s1159 of the Companies Act 2006. Which ONE of the following is correct?

Company A cannot be a wholly-owned subsidiary of company B if company A has more than one shareholder.
If company C holds 50% of the voting rights in company D, even though it does not have the right to appoint or remove the majority of its board of directors, company D is company C's subsidiary.
The definition of subsidiary under the Companies Act 2006 extends to companies owned by a general partnership within the definition of the Partnership Act 1890.
If Company E has the right to remove the entire board of directors of company D and is a member of company D, then company D is a subsidiary of company E.

Grants Limited is a wholly-owned subsidiary of Greenwear plc. Grants Limited is in financial difficulty and owes Barton Limited Â£100,000. Indicate...

True
False

Ian Gilford Transport Ltd ("IGT") is a distribution company whose assets include the remaining term of a 30 year lease of warehouse premises in Kent (...

IGT will continue to have the full legal and beneficial title to the Lease.
IGT will have legal title to the Lease, but will now hold it for FD and CC as joint tenants in equity.
IGT will have legal title to the Lease, but will now hold it for FD and CC as tenants in common in equity in proportion to their shareholdings.
The legal title to the lease is vested in IGT, but the beneficial title to it is vested in Portbase and will remain so unless there is a separate transfer by Portbase of its equitable interest.

Gouache Arts Limited has three directors. The company's articles are based on the Model Articles with one amendment reading "Whenever the nu...

True
False

Pacer Limited is a company with Model Articles. It has four directors, Alan, Brian, Carina and Danielle. Brian is also the chairman. Alan has called a...

Alan and Carina vote in favour of Alan's proposal and Danielle and Brian vote against.
Alan, Carina and Danielle vote for Alan's proposal and Brian votes against.
Alan is absent from the board meeting. Carina and Danielle vote in favour of Alan's proposal and Brian votes against.
The board vote on Brianâ€™s proposal. Alan and Carina vote against Brianâ€™s proposal but Danielle and Brian vote in favour.

Which of the following is CORRECT, in a company with Model Articles of Association?

Board minutes must be prepared after every board meeting and kept at the companyâ€™s registered office for ten years.
Board minutes must be filed at Companies House within 14 days of the board meeting under Model Article 15, and they will be kept there for 10 years.
Copies of all board resolutions must be filed at Companies House but companies do not need to file board minutes at Companies House.
Companies do not need to prepare board minutes after every meeting, but they must provide a record of the resolutions passed if they are requested to do so by the Registrar of Companies House.

Wagon Wheels Limited (WWL) is a private company limited by shares. WWL has three directors, Pauline (Managing Director), John (Finance Director) and W...

At the board meeting, all three directors must make a declaration of interest in the matters to be discussed under s177 Companies Act 2006.
At the board meeting, John must make a declaration of interest under s177 Companies Act 2006 but Pauline and Will do not have any interests to declare.
At the board meeting, there is no requirement for John or Will to make a declaration of interest under s177 Companies Act 2006 but Pauline may have to make a declaration of interest.
At the board meeting, none of the directors are required under s177 Companies Act 2006 to make any declarations of interest in the matters to be discussed.

Some decisions are taken by directors and others by shareholders. Consider the decisions below. A. Altering the articles of association. B. Changing...

B and C.
B, C and D.
A, B, C and D.
None of the above decisions are made by directors.

Alpins Skiware plc ("ASP") enters into an agreement with Northern Clothing Limited ("NCL") to purchase goods from NCL by instalmen...

ASP is not bound by the contract because DJ had no authority to enter into the contract.
NCL can enforce the contract because DJ had actual authority to enter into the contract.
ASP is bound by the contract because DJ had apparent / ostensible authority to enter into the contract.
ASP is not bound by the contract because DJ had apparent / ostensible authority rather than actual authority.

Which of the following is CORRECT? Assume that the company has the Model Articles of association.

A board meeting can be called by any director, or the company secretary if authorised by a director.
A board meeting can be called by any director or any shareholder.
A board meeting can be called only if two or more directors agree.
Any director can call a board meeting. Company secretaries and shareholders cannot call board meetings.

Egerton Limited ("Egerton") has four shareholders with ordinary voting shares. The shareholders are Charlotte (20% of the shares), Zara (50%...

Only William, because he is the only shareholder who is also a director.
Zara, because she has over 25% of the shares in Egerton.
Zara and James, because they have 25% or more of the shares in Egerton, and Charlotte, because she is James's wife.
None of them, because nobody owns more than half of the shares in Egerton.

Which of the following is INCORRECT?

An executive director of a company is both registered at Companies House as a director and also has a service agreement with the company.
Non-executive directors are often appointed in order for the company to benefit from their business knowledge and experience in a particular sector.
Non-executive directors may have a service agreement with the company but this is not compulsory.
A service agreement of three years would have to be approved by the members of a company.

Jake and Michael decide to import motorcycles from Europe to undercut expensive official dealers in the UK. Michael, who can speak French, goes to Fra...

True
False

Jamie and Malcolm went into partnership earlier this year. Jamie provided 25% and Malcolm 75% of the capital needed to buy the partnership assets. Jam...

Jamie will be entitled to 25% of the profits and Malcolm will be entitled to 75%.
Jamie and Malcolm will each be entitled to 50% of the profits.
Under the Partnership Act 1890, Jamie is entitled to a reasonable salary, and Jamie and Malcolm will split the remainder of the profits between them equally.
Because Malcolm is under no obligation to work for the business, he will not be entitled to a salary but James will be entitled to a reasonable sum for the work he carries out. Malcolm and Jamie will then split the remainder of the profits between them, Malcolm receiving 75% and Jamie 25%.

John, Andrew and Robert have been in partnership together for 3 years and they have no partnership agreement. John has recently been declared bankrupt...

True
False

Two years ago Adam, Rebecca and Kamal set up a partnership. Their agreement provides for income and capital profits to be shared in the same proportio...

Â£20,000
Â£8,000
Â£12,000
Â£6,000

Liam and Daniel have been partners since 1990 in a garage trading as L & D Vehicle Repairs. They have no partnership agreement. They have always p...

Liam is entitled to claim from Daniel an account for his share of the profits of Car Parts (Garages) Co on the basis that Daniel is involved in a competing business without Liam's knowledge and consent
Liam is entitled to expel Daniel from the partnership and to force Daniel to sell to him his share of the business
On the basis that the opportunity to invest in Car Parts (Garages) Co was initially offered to L & D Vehicle Repairs, Liam may succeed in claiming that Daniel should now account to Liam for any profit he has received from his involvement with the firm.
If Daniel now retires as a partner in L&D Vehicle Repairs, Liam will nevertheless continue as a partner in the firm.

Nicola has helped her daughters Antonia and Chelsea establish a beauty therapist business by providing the necessary finance and by visiting the salon...

Nicola could possibly be liable, if Nicola knew of and allowed the representations made by Antonia
Nicola could possibly be liable, if the contract with the supplier was made after the representation
Nicola could possibly be liable, if the supplier thought Nicola was a partner
Nicola could not be liable in any circumstances

Oliver, Henry and Michelle are in partnership supplying office furniture. On 26 February the firm enters into a contract to supply desks to a customer...

Only Oliver, Michelle and Isobel are liable for the breach of contract
Oliver, Henry, Michelle and Isobel are liable for the breach of contract
Only Oliver and Michelle are liable for the breach of contract
Only Oliver, Henry and Michelle are liable for the breach of contract

Therese, Tim and Scarlet were partners until Therese left the business amicably, leaving Tim and Scarlet to carry on in partnership. There was no part...

Therese cannot be liable because the debt was incurred after she left the firm.
Therese is not liable for the debt if at the time of her leaving she gave notice in the London Gazette.
Bramhope Limited can sue Therese for a maximum of 1/3 of the sum outstanding.
Assume that at the time of her leaving Therese gave notice in the London Gazette. She later wrote to Bramhope Limited to give notice that she had left but the company did not receive her letter until after the debt was incurred. Therese could become liable for the full debt.

Which ONE of the following is correct? The nominal value of a share in a company refers to:

The price at which the share is issued.
The market value of the share.
The fixed amount of the currency in which the share is denominated.
The highest price at which a share can be issued.

Indicate whether the following statement is TRUE or FALSE: Under the CA 2006 the directors of all limited companies wanting to allot new shares must ...

True
False

Which ONE of the following is correct? A company's issued share capital refers to:

The market value of a share in the company multiplied by the total number of shares in issue.
The total number of shares allotted by the company.
The total amount subscribed for shares in the company.
The aggregate nominal amount of the shares in issue.

Which ONE of the following is not a consequence of failure to register a charge?

The charge is void and unenforceable by the charge holder against the company.
The money secured by the charge immediately becomes payable.
The charge is void against a liquidator, administrator or secured creditor of the company.

Manage All Limited ("MAL"), which was incorporated on 10th January 2012, has an issued share capital which comprises only ordinary shares. P...

There is no constitutional restriction on the maximum number of shares that the company can allot so members of MAL do not need to pass an ordinary resolution to remove such a constitutional restriction.
The directors have automatic authority to allot the shares under s550.
The members do need to pass a special resolution to remove the pre-emption rights, and this would be under s569.
The members do need to pass a special resolution to remove the pre-emption rights, and need to use the procedure in s571.

Manage All Limited ("MAL") has an issued share capital which comprises only ordinary shares. In addition to subscribing for ordinary shares in MAL, Pi...

It will apply because the allotment is for cash.
It will not apply because these preference shares do not constitute "equity securities" for the purposes of s. 560 CA 2006.
It will apply because these preference shares constitute "equity securities" for the purposes of s. 560 CA 2006.
It will not apply because s. 561 never applies to the allotment of preference shares.

Trescothick Ltd was incorporated in November 2012. The company uses unamended Model Articles (Model Articles of Association for a Private Company Limi...

The statutory pre-emption rights under s. 561 Companies Act 2006 will not apply to this allotment as it is for cash consideration.
There will be no need for the board of Trescothick Ltd to obtain an ordinary resolution from the shareholders giving directors authority to allot shares, by virtue of s. 550 of the Companies Act 2006.
The board of Trescothick Ltd will need to obtain an ordinary resolution from the shareholders to remove the authorised share capital clause in the memorandum of association.
The board of Trescothick Ltd will need to obtain an ordinary resolution from the shareholders giving directors authority to allot shares under s. 551 Companies Act 2006.

The articles of association of Bayer Limited ("Bayer") are the model articles for private companies limited by shares. Bayer proposes to borrow Â£5,...

The loan agreement must be signed by two directors whose signatures must be witnessed.
The loan agreement must be signed by Bayer by a person acting under its authority express or implied.
The loan agreement must be signed by two authorised signatories whose signatures must be witnessed.
The loan agreement must be signed by two directors or one director in the presence of a witness who attests the director's signature.

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Legal Management MCQs