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.
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Question 181
The duty of a director to exercise 'reasonable care, skill and diligence' (s.174 CA 2006) is assessed by:
Select an option first.
Correct answer: C — Both an objective standard (general) and a subjective standard (the director's actual knowledge), applying whichever is higher
Explanation: s.174 CA 2006: dual standard – objective minimum or higher if the director has particular expertise.
Question 182
Which is NOT a ground for court-ordered disqualification under the CDDA 1986?
Select an option first.
Correct answer: C — Taking a holiday during the company's financial year
Explanation: Taking a holiday is not a disqualification ground. A, B and D are grounds under CDDA 1986.
Question 183
A director who self-deals without disclosure breaches which duty?
Select an option first.
Correct answer: C — s.177 – Duty to declare interests in proposed transactions
Explanation: s.177 CA 2006: duty to declare direct or indirect interest in proposed transactions.
Question 184
The equitable remedy of 'account of profits' in company law is used to:
Select an option first.
Correct answer: B — Force a director who has made an unauthorised profit to hand that profit back to the company
Explanation: Account of profits: fiduciary must hand over unauthorised profits made from their position.
Question 185
Under the Companies Act 2006, a 'written resolution' for private companies:
Select an option first.
Correct answer: B — Can be passed by the required majority without holding a meeting
Explanation: s.288 CA 2006: written resolutions allow private companies to pass resolutions without a meeting by the required majority.
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In which situation would a court most likely 'lift the veil of incorporation'?
Select an option first.
Correct answer: B — A director uses the corporate form to facilitate fraud
Explanation: Courts lift the veil where the corporate form is used to facilitate fraud or evade legal obligations.
Question 187
A company's articles of association constitute a contract between:
Select an option first.
Correct answer: B — The company and each member, and between members inter se, in respect of their rights as members
Explanation: s.33 CA 2006: articles bind company and members in their capacity as members.
Question 188
The 'proper purpose' duty (s.171 CA 2006) prevents directors from:
Select an option first.
Correct answer: B — Issuing shares to dilute a hostile shareholder's voting power rather than to raise capital
Explanation: Proper purpose: directors must not use powers (e.g., share issue) for a collateral purpose (Howard Smith v Ampol).
Question 189
A partner's 'implied authority' in a general partnership means they can:
Select an option first.
Correct answer: B — Carry out acts usual for a person in their trade or business to bind the firm, unless the partner has no actual authority and the third party knows this
Explanation: s.8 Partnership Act 1890: implied authority to carry out usual partnership business.
Question 190
Which of the following correctly describes the 'objects clause' after the Companies Act 2006?
Select an option first.
Correct answer: B — Unless a company restricts its objects in its articles, it has unrestricted objects and can carry out any lawful activity
Explanation: s.31 CA 2006: objects are unrestricted unless articles specifically restrict them.
Question 191
The minimum age for a company director in England and Wales is:
Select an option first.
Correct answer: A — 16 years
Explanation: s.157 CA 2006: minimum age for a company director is 16 years.
Question 192
The tort of 'passing off' requires the claimant to prove:
Select an option first.
Correct answer: C — Goodwill or reputation, a misrepresentation by the defendant, and actual or likely damage to the claimant's goodwill
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