Free ACCA Corporate and Business Law Practice Questions & Answers
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Question 151
The Articles of Association can be altered by:
Select an option first.
Correct answer: B — A special resolution of the shareholders (75% majority)
Explanation: Alteration of articles requires a special resolution (at least 75% of votes cast).
Question 152
A company 'promoter' is a person who:
Select an option first.
Correct answer: B — Takes steps to form and incorporate a company, including acquiring property or entering contracts on its behalf
Explanation: A promoter brings the company into existence through preparatory steps.
Question 153
A 'pre-incorporation contract' is a contract made:
Select an option first.
Correct answer: B — By a promoter on behalf of a company that has not yet been incorporated
Explanation: Pre-incorporation contract: made by a promoter in the name of a company not yet in existence.
Question 154
Under s.51 Companies Act 2006, if a promoter signs a pre-incorporation contract:
Select an option first.
Correct answer: B — The promoter is personally liable on the contract
Explanation: s.51 CA 2006: promoter is personally liable on a pre-incorporation contract.
Question 155
A private limited company must include which word or abbreviation at the end of its name?
Select an option first.
Correct answer: B — Ltd or Limited
Explanation: Private limited companies must have 'Limited' or 'Ltd' at the end of their name.
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Correct answer: B — That the company has been registered and is a legally existing entity from the date shown
Explanation: Certificate of Incorporation: conclusive evidence of proper registration and existence.
Question 157
Directors of a company are required to have which qualifications?
Select an option first.
Correct answer: C — There is no prescribed professional qualification required by company law
Explanation: CA 2006 does not require directors to hold specific professional qualifications.
Question 158
A 'de facto director' is:
Select an option first.
Correct answer: B — A person who acts as a director without being formally appointed
Explanation: De facto director: acts in the role of director without formal or valid appointment.
Question 159
A 'shadow director' is:
Select an option first.
Correct answer: B — A person in accordance with whose directions or instructions the board is accustomed to act
Explanation: Shadow director: someone whose instructions the board habitually follows without being formally appointed.
Question 160
Under the Companies Act 2006, directors owe their duties to:
Select an option first.
Correct answer: B — The company itself (acting through its shareholders)
Explanation: Directors' duties (ss.171-177 CA 2006) are owed to the company.
Question 161
Which of the following is one of the seven duties of directors under the Companies Act 2006?
Select an option first.
Correct answer: B — To act within the company's constitution and only exercise powers for the purposes for which they were given
Explanation: s.171 CA 2006: duty to act within powers for their proper purpose.
Question 162
The duty to 'promote the success of the company' under s.172 CA 2006 requires directors to act for the benefit of:
Select an option first.
Correct answer: C — Members as a whole
Explanation: s.172: promote success for the benefit of members as a whole, with regard to other factors.
Question 163
Which of the following correctly describes the duty to avoid conflicts of interest (s.175 CA 2006)?
Select an option first.
Correct answer: B — A director must avoid situations where they have an interest that conflicts with the company's interests, unless authorised
Explanation: s.175: directors must avoid conflicts of interest; can be authorised by the board or shareholders.
Question 164
The duty to declare an interest in a proposed transaction (s.177 CA 2006) requires:
Select an option first.
Correct answer: B — A director to disclose to the board any direct or indirect interest in a proposed transaction
Explanation: s.177 CA 2006: director with an interest in a proposed transaction must declare it to the board.
Question 165
Which of the following best describes a 'non-executive director'?
Select an option first.
Correct answer: B — A director not involved in day-to-day management who typically provides independent oversight
Explanation: NEDs provide independent oversight without day-to-day operational involvement.
Question 166
Directors can be removed from office by:
Select an option first.
Correct answer: A — An ordinary resolution of the shareholders (more than 50% majority) with special notice
Explanation: s.168 CA 2006: removal by ordinary resolution of shareholders with 28 days' special notice.
Question 167
Under the Company Directors Disqualification Act 1986, a director can be disqualified for a minimum of:
Select an option first.
Correct answer: B — 2 years
Explanation: CDDA 1986: disqualification orders range from 2 to 15 years.
Question 168
Which transaction between a director and their company requires shareholder approval under the Companies Act 2006?
Select an option first.
Correct answer: B — A substantial property transaction where the value exceeds 10% of net assets or £100,000
Explanation: s.190 CA 2006: shareholder approval required for substantial property transactions with directors.
Question 169
A company secretary of a public company must:
Select an option first.
Correct answer: B — Have appropriate qualifications or experience
Explanation: s.273 CA 2006: public company secretary must have requisite knowledge/qualifications.
Question 170
A 'floating charge' differs from a fixed charge in that:
Select an option first.
Correct answer: B — A floating charge covers a class of assets that changes from time to time, allowing the company to deal freely with those assets until crystallisation
Explanation: Floating charge: hovers over changing class of assets; company can deal freely until crystallisation.
Question 171
Which of the following events causes a floating charge to 'crystallise'?
Select an option first.
Correct answer: B — The company entering liquidation, administration, or the chargeholder appointing a receiver
Explanation: Crystallisation converts floating to fixed charge on liquidation, administration, or receiver appointment.
Question 172
Which type of resolution is required to alter a company's Articles of Association?
Select an option first.
Correct answer: C — Special resolution (75% majority)
Explanation: Changing articles requires a special resolution (at least 75% of votes cast).
Question 173
An 'ordinary resolution' under the Companies Act 2006 requires:
Select an option first.
Correct answer: C — More than 50% of votes cast in favour
Explanation: Ordinary resolution: simple majority (more than 50% of votes cast).
Question 174
A 'special resolution' under the Companies Act 2006 requires:
Select an option first.
Correct answer: B — At least 75% of votes cast
Explanation: Special resolution: at least 75% of votes cast.
Question 175
Which of the following is typically performed at an Annual General Meeting (AGM)?
Select an option first.
Correct answer: B — Receiving the financial statements and reports, and re-appointing directors and auditors
Explanation: AGM: receive accounts, appoint/re-appoint auditors and directors, declare dividends.
Question 176
Private companies are NOT required to hold an AGM unless:
Select an option first.
Correct answer: B — They are required to by their articles or by shareholders representing 10% of voting rights
Explanation: Private companies need not hold AGMs unless articles or shareholders require it.
Question 177
The statutory books that a company must maintain include:
Select an option first.
Correct answer: B — The register of members, register of directors, register of charges, and PSC register
Explanation: CA 2006 statutory registers: members, directors, charges, and PSC.
Question 178
A 'person with significant control' (PSC) is generally defined as someone who:
Select an option first.
Correct answer: B — Holds more than 25% of shares or voting rights, or otherwise exercises significant influence or control
Explanation: PSC regime: more than 25% shares/voting rights or significant influence/control.
Question 179
A company auditor can be removed by:
Select an option first.
Correct answer: B — An ordinary resolution of shareholders at a general meeting
Explanation: s.510 CA 2006: auditor removed by ordinary resolution with special notice.
Question 180
Which Act first codified directors' duties in statute?
Select an option first.
Correct answer: B — The Companies Act 2006
Explanation: CA 2006 (ss.171-177) first codified directors' duties in statute.
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