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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 241
Which of the following best describes 'plc' (public limited company) status?
Select an option first.
Correct answer: B — A company satisfying the statutory requirements to be a public company (including minimum share capital of £50,000), though it need not be listed
Explanation: 'plc' is a legal form under CA 2006, not the same as being listed. A plc must have at least £50,000 allotted share capital but need not be listed on any exchange.
Question 242
An 'off-the-shelf company' (shelf company) is:
Select an option first.
Correct answer: B — A pre-formed company registered but not yet used for business, which can be purchased and immediately used by a new owner
Explanation: An off-the-shelf company is a ready-made registered company purchased to avoid the delay of incorporating a new one.
Question 243
Under the Companies Act 2006, a director who has an unauthorised conflict of interest may:
Select an option first.
Correct answer: B — Be required to account to the company for any profit made and face rescission of any transaction
Explanation: Breach of s.175 (no-conflict) or s.177 (failure to declare): the director must account for any profits; any transaction may be rescinded. A, C and D understate the consequences.
Question 244
The 'Salomon principle' (from Salomon v Salomon & Co [1897]) established that:
Select an option first.
Correct answer: B — A one-person company is a valid separate legal entity distinct from its owner
Explanation: Salomon: a company is a separate legal person even if it has a single controlling shareholder. A, C and D contradict this principle.
Question 245
A 'community interest company' (CIC) is designed to:
Select an option first.
Correct answer: B — Operate for community benefit, with asset lock provisions preventing profit being extracted for private benefit
Explanation: CICs (Companies (Audit, Investigations and Community Enterprise) Act 2004) are for social enterprises benefiting the community. An 'asset lock' prevents assets/profits being diverted for private benefit.
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Question 246
Which of the following correctly describes minority shareholder protection under company law?
Select an option first.
Correct answer: B — Minority shareholders can use the unfair prejudice remedy (s.994 CA 2006), the derivative action (Part 11 CA 2006), or petition for just and equitable winding up (s.122(1)(g) IA 1986)
Explanation: Minority shareholder protections include: s.994 unfair prejudice petition, derivative claims, and just and equitable winding up. A and C overstate majority power; D is wrong.
Question 247
The 'business names' legislation (CA 2006 Part 41) requires a company using a trading name different from its registered name to:
Select an option first.
Correct answer: B — Display its registered name and registered number on business documentation and at its business premises
Explanation: CA 2006 Part 41: businesses trading under a name other than their legal name must disclose their legal name and registered number on letters, websites, invoices, and at premises.
Question 248
Under the Companies Act 2006, a shareholder's right to inspect the register of members is:
Select an option first.
Correct answer: B — Available to any person on payment of the prescribed fee, during usual business hours
Explanation: s.116 CA 2006: any person may inspect the register of members on payment of any prescribed fee during usual business hours.
Question 249
An 'authorised share capital' under the Companies Act 2006:
Select an option first.
Correct answer: B — No longer exists as a requirement – companies incorporated under CA 2006 do not need to state a maximum share capital in their articles
Explanation: CA 2006 abolished authorised share capital. Companies no longer need to specify a maximum share capital. A, C and D reflect the old law under CA 1985.
Question 250
Which of the following describes an 'alternate director'?
Select an option first.
Correct answer: B — A person appointed by an existing director (if permitted by the articles) to act in that director's place during their absence
Explanation: An alternate director acts in place of the appointing director at meetings they cannot attend, exercising the appointing director's powers.
Question 251
A company is said to be 'domiciled' in its place of:
Select an option first.
Correct answer: B — Incorporation – the jurisdiction whose law governs its constitution and existence
Explanation: A company's domicile (legal home) is the place of incorporation. A, C and D are commercial or tax concepts, not legal domicile.
Question 252
Under the Companies Act 2006, a company that fails to have a registered office at all times:
Select an option first.
Correct answer: B — Commits an offence and may be subject to a fine, and the Registrar may take steps to strike it off
Explanation: s.86 CA 2006: a company must always have a registered office. Failure is an offence; the Registrar may strike the company off. A, C and D are not automatic consequences.
Question 253
The 'corporate opportunity doctrine' prevents a director from:
Select an option first.
Correct answer: B — Taking advantage of a business opportunity that the company was actively considering or that arose through the director's role, without the company's informed consent
Explanation: The corporate opportunity doctrine (embedded in s.175 CA 2006) prevents directors from diverting opportunities belonging to the company without authorisation. A, C and D are not prohibited by the doctrine per se.
Question 254
The 'duty to exercise independent judgement' (s.173 CA 2006) requires directors to:
Select an option first.
Correct answer: B — Make their own decisions without being unduly constrained by the directions of others, while acting within any lawful restrictions in the company's constitution or a lawful agreement
Explanation: s.173 CA 2006: directors must exercise their own judgement. They can follow a shareholders' agreement or lawful delegation, but must still exercise their own discretion. A, C and D are incorrect.
Question 255
Under the Companies Act 2006, a director has a duty to 'declare interests in existing transactions' under:
Select an option first.
Correct answer: C — s.182 CA 2006
Explanation: s.182 CA 2006 requires directors to declare interests in existing transactions (already entered into). s.177 covers proposed transactions. s.175 is the no-conflict duty; s.172 is promoting success.
Question 256
A company that fails to deliver its annual confirmation statement to the Registrar of Companies may:
Select an option first.
Correct answer: B — Be struck off the register of companies by the Registrar
Explanation: If a company fails to deliver its confirmation statement, the Registrar may take steps to strike the company off the register (s.1000 CA 2006). A, C and D are not the consequences.
Question 257
The 'concept of ostensible authority' is particularly important in company law because:
Select an option first.
Correct answer: B — Third parties who deal with a company in good faith can rely on representations of authority even if internal limits restrict the director's actual authority
Explanation: Ostensible authority (and s.40 CA 2006) protects third parties who act in good faith relying on a representation that a director has authority, even if internally that authority is limited.
Question 258
The Enterprise Act 2002 significantly changed insolvency law by:
Select an option first.
Correct answer: B — Largely abolishing the right of floating charge holders to appoint administrative receivers, promoting administration as the primary collective insolvency procedure
Explanation: The Enterprise Act 2002 abolished administrative receivership in most cases and streamlined administration to promote rescue. A, C (CIC Act 2004) and D (CA 2006) are incorrect.
Question 259
Which of the following describes a 'deadlock' situation in a company and how it might be resolved?
Select an option first.
Correct answer: B — A deadlock occurs when shareholders or directors are equally divided and no decision can be made; it may be resolved by the articles, a shareholders' agreement, mediation, or ultimately by a just and equitable winding up petition
Explanation: Deadlock: equal division making decisions impossible. Resolutions: articles (casting vote), shareholders' agreement (deadlock provisions), mediation, or s.122(1)(g) IA 1986 winding up petition.
Question 260
The 'substantial property transaction' (SPT) rules require shareholder approval when:
Select an option first.
Correct answer: B — A director (or connected person) acquires a substantial non-cash asset from the company, or the company acquires one from a director, where the asset value exceeds the lesser of 10% of net assets (minimum £5,000) or £100,000
Explanation: s.190 CA 2006: SPT – asset value exceeds 10% of net assets (min £5,000) or £100,000. Shareholder approval required.
Question 261
Which of the following correctly describes a 'company voluntary arrangement' (CVA)?
Select an option first.
Correct answer: B — A binding agreement between a company and its creditors (approved by 75% by value of creditors) to repay or compromise debts, without requiring court approval of the arrangement itself
Explanation: A CVA (IA 1986, Part I) requires approval by 75% (by value) of creditors voting; once approved it binds all creditors. The court appoints a nominee but does not approve the arrangement itself.
Question 262
A company that re-registers from private to public must, among other requirements:
Select an option first.
Correct answer: B — Have allotted share capital of at least £50,000 with at least 25% paid up, pass a special resolution, and comply with other statutory requirements
Explanation: s.90 CA 2006: re-registration as a plc requires a special resolution, minimum share capital of £50,000 (25% paid up), and net assets at least equal to called-up capital plus undistributable reserves.
Question 263
A 'resolution in writing' passed by a private company requires:
Select an option first.
Correct answer: B — The required majority (simple majority for ordinary; 75% for special) of eligible members, communicated in writing
Explanation: Written resolutions (s.288 CA 2006): ordinary resolutions need simple majority; special resolutions need 75%. Unanimity is not required.
Question 264
Which of the following statements about 'deferred shares' is correct?
Select an option first.
Correct answer: B — Deferred shares (also called founders' shares) carry rights that are postponed until other classes of shares have received their entitlements
Explanation: Deferred shares: rights are deferred until other share classes are satisfied. Often used to give founders a capital interest without immediate priority.
Question 265
Under the Companies Act 2006, a shareholder's right to inspect the company's statutory registers may be exercised:
Select an option first.
Correct answer: B — During usual business hours at the registered office (or SAIL) on payment of any prescribed fee
Explanation: s.114 CA 2006: registers must be open for inspection during business hours. Any person may inspect on payment of the prescribed fee. A, C and D are incorrect.
Question 266
The 'corporate veil' metaphor in company law refers to:
Select an option first.
Correct answer: B — The legal separation between a company and its members/directors that prevents creditors from pursuing members personally for company debts
Explanation: The corporate veil is the legal separation created by incorporation (Salomon). 'Lifting' the veil means setting aside this separation.
Question 267
Under the Companies Act 2006, the 'model articles' for a private company limited by shares provide a default rule that:
Select an option first.
Correct answer: B — Directors may be appointed by ordinary resolution or (if the articles permit) by decision of the directors
Explanation: Model Articles (Art. 17): directors may be appointed by ordinary resolution of members or by a decision of the other directors. A uses the statutory s.168 removal procedure; C and D are not default model article rules.
Question 268
Which of the following correctly describes 'share capital'?
Select an option first.
Correct answer: B — The total amount raised or to be raised by issuing shares
Explanation: Share capital represents the equity stake raised by issuing shares.
Question 269
Which of the following best describes 'ordinary shares'?
Select an option first.
Correct answer: B — Shares that carry residual rights to dividends and capital, and usually carry full voting rights
Explanation: Ordinary shares: standard equity share with voting rights and residual profit/capital rights.
Question 270
Which of the following best describes 'preference shares'?
Select an option first.
Correct answer: B — Shares that carry a preferential right to a fixed dividend before ordinary shareholders are paid
Explanation: Preference shares: fixed preferential dividend, priority on winding up, typically limited/no voting.
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