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Free Questions › ACCA › Corporate and Business Law
Free ACCA Corporate and Business Law Practice Questions & Answers
400 exam-style Corporate and Business Law questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 361
The 'Takeover Code' (City Code on Takeovers and Mergers) applies primarily to:
Select an option first.
Correct answer: B — Offers for public companies and certain other companies whose shares are publicly traded
Explanation: The Takeover Code applies to offers for public companies and certain other UK-connected companies.
Question 362
Under UK MAR, a company must disclose 'inside information' to the market:
Select an option first.
Correct answer: B — As soon as possible, unless a legitimate interest justifies delay and the company can ensure confidentiality
Explanation: UK MAR Art. 17: disclose inside information as soon as possible; delay permitted only in limited circumstances.
Question 363
A 'negative pledge' clause in a loan agreement is:
Select an option first.
Correct answer: B — A promise by the borrower not to create further security interests over their assets without the lender's consent
Explanation: Negative pledge: borrower commits not to grant further security without the lender's consent.
Question 364
The 'cross-class cram down' in a restructuring plan (Part 26A CA 2006) allows the court to bind a dissenting class if:
Select an option first.
Correct answer: B — No member of the dissenting class would be worse off than in the relevant alternative and at least one class that would benefit has approved the plan
Explanation: s.901G CA 2006 cross-class cram down conditions: no worse off test + approval by at least one benefiting class.
Question 365
The 'beneficial ownership' of a share refers to:
Select an option first.
Correct answer: B — The person who actually owns the economic interest in the share, regardless of who is named on the register
Explanation: Beneficial ownership: economic rights (dividends, capital, voting direction) belong to the beneficial owner.
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Question 366
The primary purpose of requiring company charges to be registered at Companies House is:
Select an option first.
Correct answer: B — To give public notice of existing security interests so that other creditors and lenders are aware of prior claims on company assets
Explanation: Registration creates public notice; anyone can search before extending credit.
Question 367
A company's 'distributable reserves' are calculated as:
Select an option first.
Correct answer: B — Accumulated realised profits minus accumulated realised losses as shown in properly prepared accounts
Explanation: s.830 CA 2006: distributable profits = accumulated realised profits less accumulated realised losses.
Question 368
When shares in a company are transferred, legal title passes when:
Select an option first.
Correct answer: B — The transferee is entered on the register of members
Explanation: Legal title to shares passes when the transferee is entered on the register of members.
Question 369
An 'interim dividend' is:
Select an option first.
Correct answer: B — A dividend declared and paid by the directors between AGMs, without a formal shareholder resolution
Explanation: Interim dividend: declared by directors at their discretion during the financial year without shareholder resolution.
Question 370
The UK Corporate Governance Code operates on a:
Select an option first.
Correct answer: B — 'Comply or explain' basis for premium-listed public companies
Explanation: UK Corporate Governance Code: comply or explain basis (Listing Rules).
Question 371
The Financial Reporting Council (FRC) is responsible for:
Select an option first.
Correct answer: B — Setting and enforcing UK accounting and auditing standards, and oversight of the audit profession
Explanation: FRC: sets UK accounting standards (UK GAAP), Corporate Governance Code, and auditing standards.
Question 372
In a company voluntary arrangement (CVA), the proposal must be approved by:
Select an option first.
Correct answer: B — 75% in value of creditors voting, with additional protections against connected creditor dominance
Explanation: CVA (IA 1986, Part I): approved by 75% (by value) of creditors voting, with protections on connected creditors.
Question 373
'Asset-based lending' (ABL) typically involves:
Select an option first.
Correct answer: B — Advancing funds against the value of company assets (e.g., receivables, inventory) using those assets as security
Explanation: ABL: funds advanced against asset value (e.g., invoice financing against receivables).
Question 374
A 'fixed and floating charge debenture' gives the lender:
Select an option first.
Correct answer: B — A fixed charge over specific stable assets (e.g., land, IP) combined with a floating charge over the remainder of the company's assets
Explanation: Typical bank debenture: fixed charge over specific assets + floating charge over all other assets.
Question 375
In an administration, the administrator must send proposals to creditors within:
Select an option first.
Correct answer: C — 8 weeks of appointment
Explanation: Para 49 Sch B1 IA 1986: administrator must send statement of proposals to creditors within 8 weeks.
Question 376
A 'voidable floating charge' (s.245 IA 1986) is invalid unless:
Select an option first.
Correct answer: B — New value (money, goods or services) was provided by the chargeholder to the company at the time the charge was created
Explanation: s.245 IA 1986: floating charge void unless new consideration was provided at time of creation.
Question 377
Public companies are generally prohibited from giving financial assistance for the purchase of their own shares because:
Select an option first.
Correct answer: B — It undermines the principle of capital maintenance and gives third parties an unfair advantage in acquiring control
Explanation: s.678 CA 2006: financial assistance prohibition for public companies protects capital maintenance and shareholder equality.
Question 378
The 'Insolvency Service' in the UK is:
Select an option first.
Correct answer: B — An executive agency of the Department for Business and Trade that administers the insolvency regime, investigates director conduct, and disqualifies unfit directors
Explanation: The Insolvency Service: government agency managing insolvency administration, director investigations, and disqualification.
Question 379
A company cannot pay dividends from share capital because:
Select an option first.
Correct answer: B — Paying dividends from share capital would erode the fund that creditors rely on as a buffer against insolvency, undermining capital maintenance
Explanation: Capital maintenance: share capital is a creditor buffer; distributing it as dividends undermines creditor protection.
Question 380
The 'Insolvency (England and Wales) Rules 2016' replaced:
Select an option first.
Correct answer: B — The Insolvency Rules 1986, modernising procedural aspects of corporate and personal insolvency
Explanation: The IR 2016 replaced the old Insolvency Rules 1986, modernising procedural aspects including virtual meetings, electronic communications, and simplified processes.
Question 381
A company that is 'balance-sheet insolvent' has:
Select an option first.
Correct answer: B — Total liabilities exceeding total assets
Explanation: Balance-sheet insolvency (s.123(2) IA 1986): liabilities exceed assets (including contingent and prospective liabilities). A is a liquidity issue; C and D are not the definition.
Question 382
Which of the following correctly describes the 'absolute priority rule' in insolvency?
Select an option first.
Correct answer: B — Senior creditors must be paid in full before junior creditors receive anything, following the statutory waterfall
Explanation: The absolute priority rule (statutory waterfall) requires each class to be paid in full before the next class receives anything. A and C are wrong; D reverses the priority order.
Question 383
A 'retention of title' (Romalpa) clause must, to be effective:
Select an option first.
Correct answer: B — Clearly reserve legal title in the goods until full payment and be incorporated into the contract at the time of the sale
Explanation: Retention of title: to be effective, the clause must reserve legal title, be part of the contract from the outset, and be clearly drafted. Registration (A, D) is not required for a simple ROT clause.
Question 384
Market manipulation in financial markets typically involves:
Select an option first.
Correct answer: B — Entering into transactions or disseminating information to create an artificial price or a false impression of market activity
Explanation: Market manipulation: creating false or misleading impressions of supply, demand, or price (UK MAR Art. 12). A, C and D are legitimate market activities.
Question 385
The 'waterfall' of payments on a company's insolvency begins with:
Select an option first.
Correct answer: B — Fixed charge holders, paid out of the proceeds of the specific assets subject to the fixed charge
Explanation: Fixed charge holders are first, paid from their charged assets. Then: insolvency costs, preferential creditors, prescribed part/floating charge holders, unsecured creditors, then shareholders.
Question 386
A 'moratorium company' under the Corporate Insolvency and Governance Act 2020 is:
Select an option first.
Correct answer: B — An eligible company that has obtained a standalone moratorium to allow breathing space to negotiate restructuring, supervised by a monitor
Explanation: CIGA 2020 standalone moratorium: an eligible company obtains breathing space (initially 20 business days) supervised by a licensed insolvency practitioner acting as monitor.
Question 387
The 'connected persons' look-back period for preferences under s.239 IA 1986 is longer because:
Select an option first.
Correct answer: B — Preferences to connected persons (directors, associates) are subject to a 2-year look-back (vs. 6 months for unconnected creditors), with a presumption that a desire to prefer existed
Explanation: s.239 IA 1986: 2-year look-back for connected persons with a presumption of desire to prefer. For unconnected creditors, 6 months and no presumption.
Question 388
The 'Financial Services and Markets Act 2000 (FSMA 2000)' created which regulatory regime?
Select an option first.
Correct answer: B — A statutory regime for authorisation, supervision, and enforcement of financial services, administered by the FCA and PRA
Explanation: FSMA 2000 created the statutory framework for UK financial regulation. A and C understate the statutory nature; D is too narrow.
Question 389
Under the Companies Act 2006, a 'redeemable share' can only be redeemed if:
Select an option first.
Correct answer: B — The company has at least some non-redeemable shares in issue at the time of redemption
Explanation: s.684 CA 2006: a company can issue redeemable shares but cannot redeem all its shares – there must always be some non-redeemable shares remaining to provide permanent capital.
Question 390
The 'financial assistance' prohibition for public companies (s.678 CA 2006) means a plc cannot:
Select an option first.
Correct answer: B — Give financial assistance (e.g., a loan, gift, or guarantee) to a person for the purpose of acquiring its own shares
Explanation: s.678 CA 2006: public companies cannot give financial assistance for the acquisition of their shares. This protects share capital integrity. A, C and D are lawful activities.
More free ACCA topics
Management Accounting401
Financial Accounting400
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Financial Reporting400
Financial Management400
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Advanced Financial Management400
Advanced Performance Management400
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Taxation300
Audit and Assurance300
Strategic Business Leader300
Advanced Audit and Assurance296
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