Multiple Choice Questions and Answers (Version #1)

Regulatory Framewtirk
@J Multiple Choice Question » Select the best answer from the options below.
The Corporations Act 1989 (Cth), which vvas desig ned to enable the Commonv,ealth to
assume complete control over all aspects of corporate law, could not take effect because:
A The Governor-General refused to proclaim it.

+B The High Court ruled that the Commonwealth has no constitutional power to legislate
• Back Next • in respect of the formation of trading and financial companies.
C The government of New South Wales prevented the Commonwealth from
Exit Topic >< implementing it.
D The Commonwealth did not have the resources needed to carry it out.
Notes r Hide answer la)

II You have not answered the question correctly.
The High Court decision in New South Wales v Comn1011wealth (1 989) 169 CLR 482
meant that some of the objectives of the Corporations Act 1989 (Cth) could not be
achieved.
- See Yogaratnam & Xynas, Corporations Law: In Principle, 10th edition (Thomson Reuters
Lawbook Co 2017) parals [1.40] for further reading.
- See Lipton, Herzberg & Welsh, Understanding Company Law 19th edition (Thomson
Reuters Lawbook Co 2018) parals [1.45] - (1 .450] for further reading.
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( 02) Multiple Choice Question » Select the best answer f rom the options be low.
The Corporations Act 2001 (Cth) was enacted by the Commonwealth government _ __
A In exercise of its powers under the Commonwealth Constitution.

+B After the States agreed to refer their powers over corporations to it.
C After the High Court authorised it to do so.
• Back Next •
D , After gain ing the approval of the Australian Securities and Investments Commission
(ASIC).
Exit Topic ><
Hide answer
Notes The Commonwealth was able to enact this legislation after the States agreed to refer their
power over corporations to it.
Lawbook Co 2017) para/s (1.80] for further reading.
Reuters Lawbook Co 2018) para/s [1 .55] -(1 .62) for further reading.
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( 03) Multiple Choice Question » Select the best answer from the options below.
To establish v,hether a breach of the Corporations Act has occurred , the Australian Securities
and Investments Commission may _ _ __ .
A Authorise any person to arrest and bring before it any person to answer its questions.
B Impose a fine against any person who refuses to answer any of its questions.
• Back Next • C Enter upon any premises to collect relevant evidence.
,. D , Compel a person to produce any book or record.
Exit Topic ><
r Hide answer fa
Notes As part of its powers of investigation, AS IC can compel a person to produce all relevant
books and records.
Reuters lawbook Co 2018) para/s (1,100] for further reading.
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( DY) Multiple Choice Question» Select the best answer from the options below.
To ensure that any dispute arising during the course of a takeover is expeditiously resolved,
an interested party should refer it to _ _ __
A The NSW Pol ice.

B The Supreme Court of the State where the aggrieved party resides.
• Back Next • ,. C The Takeovers Panel.
D · The High Court of Australia.
Exit Topic ><
r Hide answer fa
Notes The Takeovers Panel has been established as the primary forum for the resolution of
disputes arising from takeover transactions.
Lawbook Co 2017) para/s (1 .300] for further reading .
Reuters Lawbook Co 2018) para/s (1.125] for further reading.
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(OS) Multiple Choice Question » Select the best answer f rom the options be low.
The main functions of the Australian Accounting Standards Board do not include (select more
than one if appropriate)
A developing a single set of accounting standards for worldwide use.

B developing a conceptual framework for eval uating proposed accounting standards.
• Back Next • C giving reports and advice to the government.
,. D , monitoring the effectiveness of and advising on auditor independence req uirements.
Exit Topic ><
r Hide answer fa
Notes The functions of the AASB can be found under s 227(1 ) of the ASIC Act.
Reuters lawbook Co 2018) para/s (1.140] for further reading.
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01 02 03 04 ( 06) Multiple Choice Question » Select the best answer from the options below.
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05 06 ~ 1 07 ~lI ~l08 As one of the mechanisms for ensuring the accountabi lity of ASIC, its activities are constantly
reviewed by _ _ __
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09 10 ,. A
B
The Parliamentary Joint Committee on Corporations and Financial Services.
The Commonwealth Ombudsman.
• Back Next • C The New South VVales Independent Commission Against Corruption.
D · The Federal Police.
Exit Topic ><
r Hide answer fa
Notes The Parliamentary Joint Committee on Corporations and Financial Services is elected to
provide some level of parliamentary supervision over the operations of ASIC.
Lawbook Co 2017) para/s (1 .320] for further reading.
Reuters Lawbook Co 2018) para/s (1 .165] for further reading.
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01 02 03 04 ( 07) Multiple Cho ice Questio n » Select the best answer from the optio ns below.
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05 06
lg
07
I08~l Under Australian law, w hich of the following authorities is vested with power to legislate in
respect of the formation of companies?
I09 ~11 10~I +B

A The Commonwealth government.
Both the Commonwealth and State governments.
• Back Next • C The various State governments.
D , The various Shire Councils.
Exit Topic ><
r Hide answer fa
Notes The power to make laws with respect to the incorporation of companies is a state matter.
- See Yogaratnam & Xynas, Corporations Law: In Principle, 10th edition (Thomso n Reuters
Lawbook Co 2017) para/s (1 .30] for further reading .
Reuters Lawboo k Co 2018) para/s [1.30]ff for further reading.
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01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer f rom the options be low.
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05 06 07
lg Following the enactment of the Corporations Legislation Amendment Act 1990 (Cth} (the
Co,porations Law scheme), _ _ __
I 09 ~11 10 ~I A The States and Territories ceased to have any pov,er in relation to company law
matters.
B The States and Territories were still free to enact their ow n legislation in relation to
• Back Next • company law matters.
+C The Corporations Law was a law of each individual Austral ian State and Territory but
Exit Topic >< operated as Commonwealth Law.
D The States and Territories were still free to amend any aspect of the Corporations
Law.
Notes l Hide answer @

The Corporations Law applied throughout Australia but as a law of each individual State
and Territory.
Lawbook Co 2017) para/s [1 .50] -(1 .60] for further reading.
Reuters Lawbook Co 2018) para/s [1 .50] for further reading .
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05 06 07
lg Which of the follov,ing organisations is likely to take action if a serious breach of the
Corporations Act occurs?
09
1 10 ~I A
B
The Queensland Police.
The Australian Federal Police.
• Back Next • ,. C The Australian Securities and Investments Commission.
D , The Australian Security and Intelligence Organisation.
Exit Topic ><
r Hide answer fa
Notes ASIC is the principal body charged with the administration of the law relating to
companies.
Reuters Lawbook Co 2018) para/s (1 .65] for further reading .
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01 02 03 04 @J Multiple Choice Question » Select the best answer from the options below.
05
Where a serious breach of the Corporations Act has occurred , ASIC can _ _ __
A Confiscate the assets of any person who may have acted in breach of the law.
09
+B Institute civil or criminal proceedi ngs against the errant party.
C Impose any sanction it considers appropriate agai nst the defaulting party.
• Back Next •
D , Request Parliament to make an appropriate order against the suspect.
Exit Topic >< ( Hide answer t?}

ASIC may institute legal proceed ings to enforce the law.
Notes
Lawbook Co 2017) para/s (1 .170] for fu rther reading .
Reuters Lawboo k Co 2018) para/s (1.105] for further reading.
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Registration and Its Effects
A company formed under the Corporations Act _ _ __
A Must always carry on business for the benefit of its shareholders.

B Must always carry on busi ness to promote the public interest.
C Must carry on business both for the benefit of its shareholders and for charitable
• Back Next • purposes.
+D May carry on busi ness other than for the benefit of its shareholders.
Exit Topic ><
Hide answer
l( You have not answered the question correctly.
Notes A company may be formed for this or any other purpose.
Reuters Lawbook Co 2018) para/s [2.285) for further reading.
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A person wishing to form a company _ _ __
,. A Must make a formal application and pay the prescri bed fees.
B Need not do anything.
C May make their intention to do so in any way they choose.
• Back Next •
D • Must sign a statutory declaration before any authorised person to that effect.

The registration of a company requires the lodgment of an application and payment of
Notes associated fees.
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Every company formed under the Corporations Act _ _ __
A Must have a name.

B Must never use its name and Australian Company Number together.
C May or may not use the word 'Li mited' as part of its name.
• Back Next •
,. D , May use its Austral ian Company Number as its name.

A company's Australian Company Number may serve as its name.
Notes
Reuters Lawbook Co 2018) para/s (2,355] for further reading.
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A company permitted by ASIC to dispense with the use of the •.-vord ·Limited' as part of its
name may _ _ __
A Pursue other than charitable purposes.

B Pay fees to its directors.
• Back Next • C Distribute its profits to shareholders.
,. D , Make a payment to a director so long as it is approved by all directors.
Exit Topic ><
r Hide answer fa
Notes A payment other than a director's fee may be made to a director if it is approved by all
directors.
Reuters lawbook Co 2018) para/s [2.380] for further reading.
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(OS) Multiple Choice Question » Select the best answer f rom the options below.
Which of the follov,ing is not part of the duties of ASIC in the process of registering a
company?
A Registering it.
+B Assigning it an auditor.
• Back Next • C Allotting it an Australian Company Number.
D , Issuing a certificate of registration .
Exit Topic ><
r Hide answer fa
Notes Appointing a company auditor is not part ASIC's duties.
Lawbook Co 2017) para/s (3.80) for further reading.
Reuters Lawbook Co 2018) para/s (2,490] for further reading.
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05 1 ~lI ~l
06 ~ 07 08 As commonly understood , a company is _ _ __
I ~I! ~I
09 10
,. C
A
B
Any artificial entity created under any law.
Any organisation through which business may be conducted .
An artificial entity, created under the Corporations Act or correspondi ng previous
• Back Next • legislation, through which business activity is commonly carried out.
D Any organisation established to carry on busi ness for the benefit of members.
Exit Topic ><
Hide answer
Notes A company is a type of body corporate created under the Corporations Act or
corresponding previous legislation .
Reuters Lawbook Co 2018) para/s [2.05] -(2.10] for further reading.
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05 06
lg
07
I08~l After registration, every company must _ _ __
I09 ~11 10~I A

BI
C
Establish a register of shareholders.
Keep a minute book.
Keep proper financial records.
• Back Next •
,. D All of the above.

All of the above statements are correct.
Notes
Reuters Lawbook Co 2018) para/s (2.445] & Figure 2.2 for further reading.
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05 06 07
lg Where all shareholders and officers of a company die _ _ __
I09 ~11 10~I A

B
C
The company ceases to exist.
ASIC is under a duty to strike it off the Register.
A meeting must be held w ithout delay to appoint nevi/ officers.
• Back Next •
,. D , The company's existence is unaffected.

The company would survive even if all its shareholders died.
Notes
Reuters lawbook Co 2018) para/s [2.15] for further reading .
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01 02 03 04 ( 09) Multiple Choice Question » Select the best answer f rom the options be low.
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05 06 07
lg Which of the follov,ing is not a potential consequence of incorporation for a company?
09
110 ~I +B
A The company can enter into enforceable contracts in its own right.
Shareholders of a company can never be held liable for its debts.
C The company can sue and be sued in its ovtn name.
• Back Next •
D , Assets of the company belong to the company and not its shareholders.

Shareholders may, in certain circumstances, be liable to pay a company's debts if it has
Notes insufficient assets.
Lawbook Co 2017) para/s (2.600] for further reading .
Reuters Lawboo k Co 2018) para/s [2.20] for further reading .
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05
A major disadvantage of limited liability is that._ _ __
A Shareholders of a company are not liable for its debts.

09
B Creditors can sue the government to recover debts owed to them by an insolvent
company.
• Back Next • C Directors, rather than shareholders, are liable for the debts of a company.
+D It can adversely affect the interests of creditors who are not in a position to protect
Exit Topic >< themselves against the company's insolvency.
r Hide answer la)

Notes
Some creditors, for example employees, are not in a position to protect themselves
against the risk of a company's insolvency. The law does now, ho\'tever, give employees
some statutory protection.
Lawbook Co 2017) parals (2.590] for further reading .
Reuters Lawbook Co 2018) parals (2.30] for further reading .
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Types of Companies
Ms X is a former director of Y Pty Ltd , which acts as a trustee company. She may be
personally liable for the debts of the company if : _ __
A The trust creditor has insufficient funds.

+B VVhile a director, she had reasonable grounds to suspect that the company was
insolvent and did not stop the company incurring the debt.
• Back Next •
C The debts were incurred after she was no longer a director of the company.
Exit Topic >< D The company does not have sufficient funds to cover the debt.
Hide answer ~

Notes
Under s 588G, a director may become personally liable if they fail to prevent a company
incurring a debt when there are reasonable grounds for suspecting the company is
insolvent.
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Types of Companies
Which of the follov,ing is not a type of company that may be formed under the Corporations
Act?
A Con1pany limited by shares.

B Company limited by guarantee.
• Back Next • C No Liability company.
,. D · Company limited by shares and guarantee.
Exit Topic ><
r Hide answer fa
Notes The Corporations Act does not provide for the formation of a company limited by shares
and guarantee from 1998. Those registered before 1998 are allowed to remain.
Lawbook Co 2017) para/s (2.580] for further read ing.
Reuters Lawboo k Co 2018) para/s [3.35] for further reading.
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Types of Companies
A No Liability company _ _ __
A May or may not have a share capital.

+B Must engage exclusively in mi ning activities.
C Has a contractual right to recover a call on its shares.
• Back Next •
D · May be a proprietary company.
A No Liability company may not engage in any activity not related to min ing purposes.
Notes
Reuters Lawbook Co 2018) para/s [3.30] for further reading .
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Types of Companies
( DY) Multiple Choice Question» Select the best answer f rom the options below.
It is more difficult for a proprietary company to raise capital because _ _ __
A Only public companies are allowed to raise working capital.

B It is not permitted to borrow.
,. C It cannot issue a general invitation to members of the public to invest in it.
• Back Next •
D , Members of proprietary companies usually do not have significant assets.

A proprietary company is not allowed to raise capital by offering its securities to members
Notes of the general public.
Reuters Lawboo k Co 2018) para/s (3.80] for further reading .
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Types of Companies
H Ltd is able to appoi nt all the directors of S Pty Ltd . What is the relationship between these
two companies?
A S Pty Ltd is subordinate of H Ltd.

B H Ltd and S Pty Ltd are sister companies.
• Back Next • ,. C H Ltd is the holding company of S Pty Ltd.
D , H Ltd is a shelf company of S Pty Ltd .
Exit Topic ><
r Hide answer fa
Notes The ability to determine the composition of the board of directors of another company puts
that company in the position of a holding company.
Lawbook Co 2017) para/s [4.100] for further read ing.
Reuters Lawbook Co 2018) para/s [3.135] for further reading.
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Types of Companies
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05 1 ~lI ~l
06 ~ 07 08 F Dotcom Inc was incorporated in New Jersey, USA, in
in Australia. To be able to do so _ _ __
2000. It wishes to carry on business
I ~I! ~I
09 10 A It must seek and obtain authorisation fron1 the US Securities and Exchange
Commission .
,. B It must register with ASIC as a foreign company.
• Back Next •
C It need not take any further step.
Exit Topic >< D It must obtain the consent of the Commonwealth Treasurer.
Hide answer ~

Notes
A company incorporated outside Australia n1ay not carry on business as a foreign
company in Australia unless it is first registered w ith ASIC.
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Types of Companies
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05 06
lg
07
I08~l In relation to a company limited by shares, which of the following statements is correct?
I09 ~11 10~I ,. C

A
B
It must have no fev,er than 100 shareholders.
It cannot impose any restrictions on the transfer of its shares.
On being v,ound up, its shareholders may be liable to contribute to the discharge of
• Back Next • its debts.
D It must have at least three directors.
Exit Topic ><
Hide answer
Notes On a company limited by shares being w ound up, a shareholder may be required to pay
the amount outstanding on the shares he or she holds in that company.
Reuters Lawbook Co 2018) pa ra/s (3.15] for further reading.
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Types of Companies
01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer f rom the options below.
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05 06 07
lg Which of these is a characteristic of a proprietary company?
I09 ~11 10~I ,. C

A
B
Membership is available only to members of one family.
Employees must be shareholders of the company.
Members of the public cannot invest in it.
• Back Next •
D , It must have at least tV'IO shareholders.

The prohibitions and restrictions contained in the Corporations A ct operate to ensure that
Notes members of the public cannot be members of a proprietary company.
Reuters Lawbook Co 2018) para/ s [3.45] for further reading .
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Types of Companies
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05 06 07
lg As a means of protecting investors in it, every public company must _ _ __
09
1 10 ~I A
B
Publish its accounts in the Official Government Gazette
Employ a qualified accountant.
.. C Have its financial reports audited .
• Back Next •
D , Be listed on a stock exchange.

All public companies must appoint an auditor to aud it their financial reports. From 2015,
Notes small companies that are limited by guarantee which don't require the appointment of an
auditor or wh ich elect to have their financial reports reviewed are not required to appoint
an auditor: ss 327A(1A) and 327B(1A), Corporations Act.
Reuters Lawbook Co 2018) para/s (3.90] for futther reading.
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Types of Companies
05
Which of the follov,ing statements is correct?
A A company cannot be a subsidiary of l'No companies.

09
B I An ultimate holding company may be a subsidiary of another holdi ng company.
,. C An entity must be incorporated to be a subsidiary.
• Back Next •
D All of the above.

Only a body corporate is capable of being classified as a subsidiary.
Notes
Lawbook Co 2017) para/s [4.100] for further reading .
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Constitution and Replaceable Rules
In order to modify or displace any of the replaceable rules _ _ __
A Agreement must be reached betvveen all the directors.

+B The company must pass a special resolution.
C An application must be made to the court.
• Back Next •
D , Consent of ASIC must be obtained.

In order to modify or displace any of the replaceable rules, a company must adopt a
Notes constitution. A constitution can only be adopted by special resolution.
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An amendment of a company's constitution which might result in the expropriation of a

member's shares - - - -
A Can never be valid.

+B May be valid if it is implemented for a proper purpose and it is fai r.
• Back Next • C Will be val id so long as it is supported by the maj ority.
D , Will be val id if it serves any commercial purpose.
Exit Topic ><
r Hide answer fa
Notes A company may validly amend its constitution to facilitate the expropriation of a member's
shares if this is done for a proper purpose and it is fair.
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On its formation on 20 March 2000, Enterprise Pty Ltd adopted the replaceable rules as its
constitution. If the Corporations Act is amended _ _ __ .
,. A The replaceable rules in the amended Act will apply as its constit ution.
B Enterprise Pty Ltd w ill be governed by the replaceable rules as they were on 20
March 2000.
• Back Next •
C Enterprise Pty Ltd w ill need to amend its internal governance rules to reflect the
changes introduced by the new Act.
Exit Topic >< D None of the above.
r Hide answer la)

Notes II You have not answered the question correctly.
The replaceable rules applicable to a company are those in the Corporations A ct as
amended from time to time.
Lawbook Co 2017) parals (5.40] for further reading.
Reuters Lawbook Co 2018) parals [4.35] for further reading .
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The replaceable rules _ _ __
A bind only those persons who agreed to form the company.

B bind even those persons who have ceased to be member of the company.
,. C bind every member of the company, incl uding future members.
• Back Next •
D , can be altered only by the original members of the company.

The replaceable rules bind all n1embers, even if they have not agreed to them. They are
Notes also bind ing on future members.
Reuters Lawbook Co 2018) para/s (4.80] for further reading .
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(OS) Multiple Choice Question » Select the best answer from the options below.
John Smith is the founder of Smith & Sons Pty Ltd. He has been appointed life governor
under a clause in the company's constitution. To ensu re that he retains control of the
company for as long as he wishes, it is advisable that _ _ __
A Only members of his family are admitted to membership of the company.

B I Only members of his family are appointed directors of the company.
• Back Next •
C Both A and B .
Exit Topic >< ,. D The clause in the company's constitution under which he has been appointed
expressly provides that it cannot be altered without his consent.
Hide answer ~
Notes
Smith's position \•Viii be more secure if it is made very difficult to amend the clause under
which he has been appointed.
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01 02 03 04 ( 06) Multiple Choice Question » Select the best answer f rom the options below.
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05 06 ~ 1 07 ~lI ~l08 The internal rnanagen1ent of a company formed after 1 July 1998 is governed by _ _ __
I ~I! ~I
09 10
,. C
A
B
The Corporations Act.
Its articles of association .
The replaceable rules set out in the Corporations Act.
• Back Next •
D , Such rules as are agreed to by the directors.

The replaceable rules contained in the Corporations Act govern the internal administration
Notes and management of a company formed after 1 July 1998 and those companies formed
before that date which have repealed their constitutions.
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05 06
lg
07
I08~l The First National Benevolent Society Li mited, a company limited by guarantee, was
established solely to assist the poor living in any part of Australia. It now wishes to dispense
I09 ~11 10~I with the word "Li mited" from its name. Assuming that all other requirements are satisfied, to
do this _ _ __
A It must pass a special resol ution .

• Back Next • B It must seek authorisation from ASIC.
,. C Its constitution must prohibit the making of any distributions to members and payment
Exit Topic >< of fees to directors.
D It must pay tax on its income.
Notes Hide answer ~

The company is required to have a constitution which restricts its activities to charitable
purposes, prohibits any distribution to members and payment of fees to directors.
Lawbook Co 2017) para/s [3.20] for further reading.
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01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer from the options be low.
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05 06 07
lg The constitution of a company provides that the company shall take a lease of 300 City
Street, Brisbane, for its upholstery business so long as Bill, one of the members of that
I09 ~11 10~I company, owns the premises. Which of the following statements is correct?
A The company will be liable to pay damages if it refuses to renew the lease if Bill is still
a member.
• Back Next • B The company can be restrained from deleting this provision from its constitution.
C The company will be liable to pay damages for refusing to renev, the lease whether or
Exit Topic >< not Bill remains a member.
,. D The company will not be liable if it refuses to renew the lease even though its
constitution remains unchanged.
Notes ( Hlcle answer ffl

I( You have not answered the question correctly.
The company will not be liable to pay damages for non-renewal of the lease as a member
cannot enforce a constitutional provision which purports to confer on her or him a right in a
capacity other than that of a member.
Reuters Lawbook Co 2018) parals [4,100] for further reading .
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05 06 07
lg Smart Ltd has issued both A and B class shares. The rights attaching to both classes of
shares are defined in Smart's constitution. How may the rights of the holders of B class
09
1 10 ~I shares be altered?
A By a special resolution of B class shareholders.

B By a special resolution of the company.
• Back Next •
,. C By a special resolution of the company and the holders of B class shares.
Exit Topic >< D , By a special resolution of both the A and B class shareholders.
( Hide answer t?}

As a general rule, variation of class rights must be supported with the approval of a
special resolution of the company and the members of the class affected.
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05
The constitution of a company formed after 1 July 1998 _ __
A May in every respect be different from that contained in the replaceable rules set out
09 in the Corporations Act.
B Must in every respect be the same as that contained in the replaceable rules set out
in the Co,porations Act.
• Back Next • C I May consist, in part, of the replaceable rules set out in the Corporations Act and
specific rules made by the company.
Exit Topic >< +D A and C.
( Hlcle answer @)
Notes I( You have not answered the question correctly.
Both options A and C are correct as the constitution of a company may replace or modify
all or any of the replaceable rules.
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The Company's Relations with Outsiders
The concept of 'di recting mind and will' under vvhich a company be held liable for the acts of
another person incl udes _ _ __
A Every officer of the company.

B Di rectors of the company only.
• Back Next • ,. C Any person to v,hom authority to perform a particular managerial function has been
delegated by the company.
Exit Topic >< D Any person designated by the members.
Hide answer ~
Notes l( You have not answered the question correctly.

Any person who has been authorised by the company to perform certain managerial
functions may be regarded as the directing mind and w il l of the company.
Reuters Lawbook Co 2018) para/s [5.25] . [5.30) for further reading.
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( 02) Multiple Choice Question » Select the best answer from the optio ns below.
Michael is the chair of the board of directors of Worldwide Trading Ply Ltd. Without the
knowledge of his co-directors, he orders office equipment valued at $15 000 from Jack.
Select the correct statement from the follovving:
A The contract is not valid as it was not counter signed by the company secretary.
B The contract is not valid as it was not counter signed by all directors.
• Back Next •
Worldwide Trading is not bound by the contract because Michael has no actual
authority to enter into this transaction.
Exit Topic ><
D Worldwide Trading is bound by the contract because, like any other director, Michael
has authority to exercise all the pov,ers vested in the board of directors.

Like any other director, the chair of the board of directors has no customary authority to
enter into contracts on behalf of a company.
Lawbook Co 2017) parals [7,180] for further reading .
Reuters Lawbook Co 2018) parals [5.345] for further reading.
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For the purpose of determining w hether or not a company is criminally liable, the court may
attribute the disputed act to the company if it was committed by _ _ __
A All members of the company.

B Any person claimi ng to act on behalf of the company.
• Back Next • C All directors of the company.
,. D , Any employee of the company acting within the scope of her or his employment.
Exit Topic ><
r Hide answer fa
Notes For purposes of criminal liability, an act is attributable to a company if it is committed by a
person acting within the actual or apparent scope of her or his employment or within her or
his actual or apparent authority.
Lawbook Co 2017) para/s (7,340] for further reading.
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The power to manage Worldwide Tradi ng Pty Ltd is vested in its three directors. Jack
supplies office equipment to the value of $15 000 to Worldwide Tradi ng. The purchase is
undertaken by Michael , one of the directors, without the consent of the other directors. Which
of the following statements is correct?
A Worldwide Trading is bound by the contract because, as a director, Michael has

• Back Next • actual authority to enter into this transaction .
,. B Worldwide Trading is not bound by the contract because, as a director, Michael has
no actual authority to enter into this transaction.
Exit Topic ><
C VVorldwide Trading is not bound by the contract because a single director can never
val idly enter into a contract on behalf of a company.
D Worldwide Trading is bound by the contract because it must honour every contract
Notes entered into by any of its agents.
l Hide answer @
An individual director generally has no authority to bind a company to contracts with
outsiders.
Reuters Lawbook Co 2018) para/s [5,335] for further reading.
Save U Clear o
A company n1ay be held liable in tort if the impugned acts were committed by _ _ __
A Any employee of the company.

B I An employee of the company acting within the scope of his or her employment.
C An agent of the company acting within the scope of his or her authority.
• Back Next •
,. D Both Band C.

Both options B and C are correct. A company is vicariously liable for torts committed by its
Notes employees within the scope of their employment and those committed by its agents acting
within the scope of their authority.
Save U Clear o
re
05 06 ~ 107 ~l 08 I ~l The constitution of Worldwide Trad ing Ply Ltd requi res every transaction over $10 000 to be
approved by the board of directors. While his co-directors are on leave during the Christmas
I ~I! ~I
09 10
break, Michael, the manag ing director, orders goods valued at $50 000 from his friend Mark.
Mark is also the secretary of Worldvtide. On their return, the other directors refuse to pay for
the goods. Select the correct statement from following: _ _ __
• Back Next • A The contract is valid and enforceable as Mark is entitled to assume that the
company's constitution has been complied with.
,. B The contract is not enforceable as lv1ark knew that the assumption that the company's
Exit Topic ><
constitution had been complied with was not correct.
C VVorldwide must pay for the goods as third parties can always enforce every contract
entered into on behalf of a company.
Notes D Worldwide need not pay for the goods as a company can not enter into contracts with
its officers.
l Hide answer @
A person who knows that a particular assumption is not correct is not entitled to rely on it.
Reuters lawbook Co 2018) para/s [5,365] for further reading.
Save U Clear o
re C
-
05 06
lg
07
I08~l Where the common seal of a company is duly affixed to a contract _ _ __
I09 ~11 10~I +B

A The contract w ill not be binding unless it is also signed by all the directors.
The contract w ill be treated as entered into by the company itself and •,viii be
enforceable against it.
• Back Next •
C The contract v,ill not be binding unless it is approved by the court.
D The contract w ill not be bindi ng unless it is authorised by a special resolution of the
Exit Topic >< shareholders.
r Hide answer la)

Notes
A company is taken to have agreed to a contract to wh ich its common seal has been
affixed in accordance with the requirements of the law.
Lawbook Co 2017) parals (7 .60] for further reading.
Save U Clear o
01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer from the optio ns below.
re
05 06 07
lg Bill is the founder and a director of Whirlwind Pty Ltd. The other three directors of the
company are far less active in the day-to-day running of Whirlwind. As a resu lt, Bill makes the
I09 ~11 10~I bulk of the key business decisions of the company, even though he has never been properly
appointed as the managing director of Whirlw ind. Which of the following statements best
describes Bill's position?
• Back Next • A Bill has no actual authority to manage the business of the company.
+B Bill is likely to be a de facto managing director of the company, with actual authority to
Exit Topic >< manage the business of the company.
C Bill's powers are limited to those customary powers attri buted to a manag ing director.
D Bill's powers will solely depend on the wording of the company's constitution.
Notes
Hide answer ~

Where a dominant director acts with the acquiescence of the board, the courts will regard
her or him as a de facto managing director with actual authority to manage the business of
the company.
Save U Clear o
re
05 06 07
lg Michael has been appointed managing director of Worldwide Trading Pty Ltd. He is
authorised to undertake purchases up to a maximum value of $10,000 without reference to
09
1 10 ~I the board of directors. Michael orders office equipment valued at $15,000 from Jack. Which
of the following statements is correct?
A Worldwide Trading is not bound by the contract because Michael has no actual
• Back Next • authority to enter into this transaction.
,. B Worldwide Trading is bound by the contract because, by appointing him managing
director, the board has represented to innocent third parties that Michael has authority
Exit Topic ><
to exercise all the management powers ordinarily vested in the holder of that office.
C VVorldwide Trading is bound by the contract because a company is always bound by
the acts of any of its officers .
Notes D Worldwide Trading is not bound by the contract because a managing director can
never bind a company.
l Hide answer @
By appointing a person as managing director, a company represents that person as
having authority to enter into contracts w hich are V'lithin the scope of the directors'
management power, and is therefore bound by such contracts.
Save U Clear o - See Lipton, Herzberg & Welsh, Understanding Company Law 19th edition (Thomson
05
Which of the follov,ing statements best describes the operation of s 129?
A If an outsider cannot rely on one of the assumptions in s 129, he or she cannot rely
09
on any of the section's assumptions.
B Section 129 does not apply to forged documents.
• Back Next •
C An outsider can only rely on one of the s 129 assumptions per transaction .
+D Section 129 applies to both multiple and si ngle transactions of the company with a
Exit Topic >< given outsider.
r Hide answer la)

Notes
The term 'dealings' in s 129 refers to both multiple and single transactions of the company
with a given outsider.
Save U Clear o
Promoters and Pre-registration Contracts
Some time ago, John, Jane and Michael formed a company, Metropolitan Holdings Limited,
of which they became the only directors. Thereafter, they sold a block of land which they
owned in Western Sydney to Metropolitan at a handsome profit. The transaction was duly
disclosed to, and approved by, them as directors. Which of the following statements is
correct?
• Back Next • A The sale is valid as John, Jane and Michael disclosed their interest.
B The sale w ill be val id if it is approved by the cou rt.
Exit Topic ><
C The sale is invalid as John, Jane and Michael are not allovved to sell their property to
a company formed by them.
+D The sale is liable to attack as John, Jane and Michael did not disclose their interest to
Notes an independent board of directors.
r Hide answer la)

Promoters must disclose any profit they make to an independent board of directors or to
the ultimate shareholders of the company.
Reuters Lawbook Co 2018) parals [6.30] -(6.40] for further reading.
Save U Clear o
In which of the following situations will the company not be found to have ratified a pre-
registration contract?
A The company pays for goods purchased under the contract.

+B The managing director phones the contracting party to tell him or her that the
company is now registered.
• Back Next •
C The directors pass a resolution to adopt the contract.
Exit Topic >< D The company sig ns a document officially ratifying the contract.
Hide answer ~

The phone call is not a valid means of ratifying the contract.
Reuters Lawbook Co 2018) para/s [6.80] for funher reading .
Save U Clear o
John, Jane and Michael are the directors of Metropolitan Holdings Limited ·which they fonned
recently. Shortly after the company vvas registered, John, Jane and Michael sold to it a block
of land which they owned in Western Sydney at a handsome profit. Should the company wish
to avoid this contract, w hich of the following remedies would you advise it to seek?
A Dismissal of Joh n, Jane and Michael as directors of the company.

• Back Next • B An injunction.
.. C Rescission of the contract.
Exit Topic ><
0 , Damages.
( Hide answer t?}

Notes
Rescission is the most appropriate remedy where a company wishes to avoid a contract
betvveen it and its promoters, in breach of their duty to disclose their interest in the
contract.
Save U Clear o
Two friends, Peter and Jane decide to form a company under the name 'Top Drops Pty Ltd .'
Before its registration is finalised, Peter signs an agreement on behalf of the proposed
company whereby it is to lease a warehouse at 120 Central Street, Brisbane, for its liquor
business. The company is promptly registered as planned. Soon thereafter, Peter and Jane
find cheaper premises. They cause the company to refuse to take possession of the
premises unless the lessor accepts a lower rental for the warehouse. What are the rights of
the landlord in these circumstances?
• Back Next •
A The landlord may sue the company for damages.
Exit Topic ><
B The landlord has no remedy at all as the company has not ratified the contract
,. C The landlord n1ay sue the promoters, Peter and Jane, for damages.
Notes D , The landlord may appeal to ASIC to take disciplinary action against Peter and Jane.
( Hide answer t?}

Under the Corporations A ct, if a contract is entered into on behalf of a company before it is
registered and it is ultimately registered but does not perform the contract, the third party
may sue the person who signed the contract for damages.
Save U Clear o Reuters Lawboo k Co 2018) para/s (6.80] for further reading .
Which of the follov,ing persons is not likely to be classified as a promoter?
A A person who arranges for the forn1ation of a company.

+B A solicitor v,ho undertakes the registration of a company on behalf of a cl ient.
C A person who, following the registration of a company, assists it to raise worki ng
• Back Next • capital.
D A person who is likely to benefit from a company in the formation of which he or she
Exit Topic >< has taken no active part.
r Hide answer la)

Notes
A person is not a promoter if they are involved in the in the formation of a company in a
professional capacity only.
Save U Clear o
re
05 1 ~lI ~l
06 ~ 07 08 At common lav,, w hy was a contract entered into on behalf of a company before its
registration not enforceable against it?
I ~I! ~I
09 10 ,. A Because at the time of the contract, the company was not a person that could enter
into legal relations.
B Because only natural persons can enter into legally enforceable contracts.
• Back Next •
C Because it was difficult to ascertai n whether the signatories intended the contract to
be bi nding.
Exit Topic >< Because the person v,ho signed the contract on behalf of the company w ill always be
D
personally liable.
( Hlcle answer @)
Notes
Before a company is registered, there is no legal entity that can enter into a contract.
Save U Clear o
re C
-
05 06
lg
07
I08~l To minimise the potential for abuse of their office _ _ __
I09 ~11 10~I A
B
Promoters are prohibited from entering into contracts on behalf of companies they
form.
Promoters are prohibited from becoming directors of companies they form.
• Back Next • • C Promoters are subject to obligations of a fiduciary character.

D Persons intending to act as promoters must register with the courts.
Exit Topic ><
Hide answer
Notes To protect companies against the potential for abuse, the law treats every person
considered a promoter as standing in a fiduciary relationship with the company they form.
Save U Clear o
01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer from the options below.
re
05 06 07
lg Two friends, Peter and Jane decide to form a company under the name 'Top Drops Pty Ltd.'
Before its registration is finalised, Peter signs a an agreement on behalf of the proposed
I09 ~11 10~I company whereby it is to lease a warehouse at 120 Central Street, Brisbane, for its liquor
business. The company is promptly registered as planned. Soon thereafter, the owner of the
premises finds a tenant who is prepared to pay a higher rent and refuses to deliver
possession of the premises to the company unless it agrees to pay the higher rent. In these
circumstances, what advice would you offer to Top Drops Pty Ltd?
• Back Next •
A Pay the higher rent demanded by the landlord.
Exit Topic ><
+B Ratify the contract forthwith and sue the landlord if it refuses to deliver possession of
the premises at the agreed rental.
C Look for new premises.
Notes
D Sue the landlord; the contract is enforceable.
Hide answer ~

Under the Corporations Act, it is now possible for a company to ratify a pre-registration
contract. Once ratified , it can be enforced by the company on whose behalf it was entered
into.
Lawbook Co 2017) para/s (8,130] for further reading.
Reuters Lawbook Co 2018) para/s [6.70]-(6.75] for further reading.
re
05 06 07
lg Three friends, John, Jane and Michael intend to form a company by the name of Metropolitan
Holdings Limited . They intend to sell a block of land which they own in Western Sydney to the
09
110 ~I company at a handsome profit. To insure that the transaction is valid, which of the following
would you advise them to do?
A Apply to cou rt for approval of the sale.

• Back Next • B Seek the consent of ASIC.
,. C Disclose the proposed sale and any profit they are likely to make to all shareholders.
Exit Topic ><
0 , Appoint their husbands and \"lives as directors of Metropolitan and disclose the
proposed sale to them.
Notes Hide answer ~

Promoters are under a fiduciary obligation to disclose any profit they stand to make in the
course of promoting a company either to an independent board of directors or to the
ultimate shareholders of the company.
Reuters Lawbook Co 2018) para/s [6.25] & [6.30] for further reading .
Save U Clear o
05
A syndicate of business people headed by Charlie tvlidas expects to obtain a concession
from the Timor-Leste Government to drill for oil and gas in the Timor Gap. They decide to
form a company, Bright Prospects N L to exploit the concession . Pending the finalisation of
09 negotiations and registration of the company, Charlie, on behalf of the proposed company,
orders various items of drilling equipment fron1 Techmart Ltd . Subsequently, however, the
Timor-Leste Government awards the concession to another bidder. In consequence, the
syndicate decides not to proceed v,ith the registration of the company. It also refuses to pay
• Back Next •
for the equipment, as it has no use for it now. Select the correct statement from the following.
Exit Topic >< A As Bright Prospects N L was never reg istered , no one is liable to pay for the
equipment.
B As Bright Prospects N L was never reg istered, Techmart's sole remedy is to recover
its equipment from the syndicate.
Notes
+C As Bright Prospects N L was never reg istered , Charlie is liable to pay for the
equipment.
D Techmart may sue Bright Prospects N L for the price of the equipment, as there was
an intention to register it.
l Hide answer @
Under the Corporations Act, a person who enters into a contract on a behalf of a company
before it is registered is liable to pay damages to the other party if the company is not
registered.
Save U Clear o
Fundraising
In some instances, an offer of securities may be made without complying w ith the disclosure
requirements set out in the Corporations Act because _ _ __
A The issuer may not be able to afford the cost of complying with the law.
B I All investors do not always need the information required by the law to be provided to
prospective investors.
• Back Next •
C In some instances the cost of meeting the relevant disclosure requirements may be
too high compared to the benefits likely to be gained from such disclosure.
Exit Topic ><
• D Both Band C.
r Hide answer la)

Both options B and C are correct.
Save U Clear o
Fundraising
New Venture Limited intends to lodge a prospectus with ASIC. To minimise printing costs, it
does not wish to provide a copy of that document, which is very bulky, to every prospective
investor. What would you advise it to do?
A Apply to court for an exemption.

B Provide a copy of the lodged prospectus to only select class of prospective investors.
• Back Next •
,. C Request ASIC to allow it to make the offer by using only a profile statement.
Exit Topic >< D , Apply to court for an order that the company make the offer by using only a profile
statement.
Hide answer ~
Notes
ASIC may authorise a company that has lodged a prospectus to make an offer of
securities using a profile statement instead of a full prospectus.
Lawbook Co 2017) para/s (21. 70] for further reading.
Save U Clear o
Fundraising
To ensure that every prospective investor has a copy of the prospectus before applying for
the securities offered, the Corporations Act requires _ _ __
A A person applying for securities to sig n a statement to the effect that they have got a
copy of the prospectus.
B The company offering securities to certify to ASIC that a copy of the prospectus was
• Back Next • provided to the applicant.
+ C I The application forn1 for securities to be attached to, or be accompanied by, a
Exit Topic >< prospectus.
D All of the above.
( Hlcle answer @)
Notes
An application for securities must be made on a form attached to, or accompanied by, a
disclosure document.
Save U Clear o
Fundraising
Which of the follov,ing offers are exempt from the disclosure req uirements?
A An offer of $3 million v,orth of securities made to financial services licensees.

B I An offer made to a select group of investors \'/ho all have net assets of at least $2
million .
• Back Next •
C An offer where the minin1um amount payable is $650,000 paid in 8 instalments over
12 months .
• D Both A and C.
Exit Topic ><
r Hide answer la)
Notes
Both A and C are offers that are exempt from the disclosure requirements.
Reuters Lawbook Co 2018) parals [7.30] -(7.86] for further reading.
Save U Clear o
Fundraising
(OS) Multiple Choice Question » Select the best answer from the optio ns below.
CleanCities Limited, a waste management company, has won a contract to collect domestic
rubbish in Nev,City. To exploit this contract, it wishes to raise $3,500,000 from to the public to
enable it to purchase waste collection trucks. To satisfy the requirements of the Corporations
Act, which of the follov,ing documents v,ould you advise it to prepare?
A A profile statement.
• Back Next • B An advertisement in a local nev1Spaper.
C A statutory declaration.
Exit Topic ><
,. 0 , An offer information statement.
( Hide answer t?}

Notes
A company may use an offer information statement, instead of a prospectus, to raise up to
$ 10 million in new capital.
Save U Clear o
Fundraising
re
05 06 ~ 1 07 ~lI ~l08 If a lodged prospectus is found to contain a statement which is misleading or deceptive, v,hat
action can ASIC take to protect the investing public?
I ~I! ~I
09 10 ,. A
B
Issue a stop order halting the offer of securities.
Fine the company offering the securities.
• Back Next • C Advise all prospective investors of the defect.
D , Prohibit the issuing company from ever offering securities to the public again.
Exit Topic ><
r Hide answer fa
Notes ASIC is empowered to issue a stop order to prevent any offer or issue of shares on the
basis of a disclosure document that is found to contain deceptive or misleading
information.
Lawbook Co 2017) para/s (21 .210) for further reading.
Save U Clear o
Fundraising
re C
-
05 06
lg
07
I08~l As a v,ay of protecting investors in companies, the Corporations Act 2001 (Cth) _ _ __
I09 ~11 10~I +B

A Prohibits the issue of securities.
Requires issuers of securities to disclose accurate information to prospective
investors.
• Back Next •
C Sets minimu m education requirements for shareholders.
D Establ ishes a compensation fund for victims of securities fraud.
Exit Topic ><
Hide answer
Notes One of the objectives of the law governing fundraising is to ensure that investors are
provided v11ith relevant, accurate information so that prospective investors can decide, on a
rational basis, whether or not to invest in the securities offered.
Save U Clear o
Fundraising
re
05 06 07
lg What must an offerer of securities do before distributing its disclosu re document to potential
investors?
I09~11 10~I ,. A
B
Lodge it with ASIC.
Have it registered by ASIC.
• Back Next • C Submit it to Court for approval.
D , Advertise it in a local newspaper.
Exit Topic ><
r Hide answer fa
Notes A disclosure document is required to be first lodged w ith ASIC before it is distributed to
potential investors.
Lawbook Co 2017) para/s (21 .120) fo r further reading.
Reuters Lawboo k Co 2018) para/s (7 .90] for futther reading .
Save U Clear o
Fundraising
re
05 06 07
lg Transcontinental Energy Limited , which v,as proposing to construct a gas pipel ine between
East Timor and Australia, issued a prospectus to enable it to raise worki ng capital of $100
09
110 ~I 000 000. After readi ng the prospectus, Michelle applied for shares worth $10 000. The
prospectus stated that the company needed to raise a minin1um of $50 000 000 before the
project could start. Hov,ever, six months after the issue of the prospectus, Transcontinental
had raised only $15 000 000. Which of the following remedies is available to Michelle?
• Back Next •
A Sue the directors of Transcontinental for fraud .
Exit Topic >< +B Seek repayment of her money from Transcontinental.

C Seek compensation from the Commonwealth government
D , None of the above.
Notes
( Hide answer t?}
Where the minimum su bscription condition is not met, an applicant for shares is entitled to
repayment of her or his money.
Save U Clear o
Fundraising
05
If a lodged prospectus is found to contain a statement which is misleading or deceptive, v,hat
action can the issuer take to cure the defect?
09 A Advise every person who has applied for securities on the basis of that prospectus of
the defect.
B Publish a corrective statement in the official Commonwealth Gazette.
• Back Next •
C Place an advertisement in the newspaper correcting the defect in the original
prospectus.
Exit Topic ><
,. D Lodge a suppleme.ntary prospectus correcting the defect in the original prospectus.
r Hide answer la)

A supplementary or replacement disclosure document must be lodged with ASIC if there
is a defect in the original disclosure document which is materially adverse from an
investor's point of view.
Lawbook Co 2017) parals (21 .180) for further reading.
Reuters Lawbook Co 2018) parals [7 .195] for further reading.
Save U Clear o
Share Capit.al
@J Multiple Choice Question » Select the best answer f rom the options be low.
How may a company confer different rights on shareholders?
,. A By creating different classes of shares.

B By stating so in the official Commonwealth Gazette.
C By issuing a letter to each shareholder informing them of their rights.
• Back Next •
D , By negotiating with each individual shareholder the rights to be enjoyed by them.

A company may confer different rights on its members by creating different classes of
Notes shares.
Reuters Lawbook Co 2018) para/ s (8.110] for further reading.
Save U Clear o
Share Capit.al
Which of the follov,ing statements is incorrect?
,. A Holders of redeen1able preference shares have an automatic right to dividend

payments.
B Holders of preference shares receive dividends ahead of all other shareholders.
• Back Next •
C Holders of deferred shares receive dividends after ordinary shareholder's dividends
have been paid.
D Holders of cumu lative preference shares have the right to be paid dividends in arrears
Exit Topic ><
ahead of ordinary shareholders if dividends are not paid one year.
( Hlcle answer @)
This is an incorrect statement as a company has no legal obligation to declare a dividend.
Lawbook Co 2017) para/s [17.40] . (17.80] for further read ing.
Save U Clear o
Share Capit.al
Greenacre Li mited has, to date, issued only one class of shares. It v,ishes to issue shares
which w ill entitle the holders to dividends at a certain rate but restrict their voting rights. What
would you advise Greenacre to do to achieve this?
A Apply to court for authority to do this.

B Apply to ASIC for authority to do this.
• Back Next •
C Proceed to issue the shares.
Exit Topic >< ,. D , Amend its constitution to authorise it to create this class of shares and spell out in the
constitution the rights attached to this class.
Hide answer ~
Notes
For a company to issue a class of shares v,ith rights different to the existing classes of
shares, it must an1end its constitution, by passing a special resolution to authorise it to
create the new class of shares and also state the rights attached to those shares in that
resolution .
Lawbook Co 2017) para/s (17.260) - (17.290] for further reading.
Reuters Lawbook Co 2018) para/s (8.110) for further reading.
Save U Clear o
Share Capit.al
Greenacre Li mited has, to date, issued only one class of shares. It issues further shares
which entitle the holders to preferential treatment in the payment of dividends. Jack, one of
the original members of Greenacre is dissatisfied with this. What can he do to protect his
interests?
A Sue the directors for breach of their duties.

• Back Next • B Require Greenacre to cancel the issue of new shares.
,. C Challenge the new issue in court as a variation of his rig hts.
Exit Topic ><
O , Lodge a complaint with ASIC.
( Hide answer t?}

Notes
A sing le member may challenge a variation of his rights if it is either oppressive or unfair.
Lawbook Co 2017) para/s (17.310) . (17 .320) for further reading .
Save U Clear o
Share Capit.al
According to the rule in Trevor v Whitvi1orth (1887) 12 App Cas 409, a company may
A Pay dividends out of its capital.

+B Not reduce its issued capital.
• Back Next • C Purchase its shares only if its constitution authorises it to do so.
D , Freely purchase its shares.
Exit Topic ><
r Hide answer fa
Notes The rule prohibited a company from reducing its issued capital.
Lawbook Co 2017) para/s (18.20) -(18.25] for further reading .
Save U Clear o
Share Capit.al
re
05 06 ~ 1 07 ~lI ~l08 Which of the follov,ing conditions is not required before a company may reduce its capital?
I ~I! ~I
09 10
A
B
The reduction must be fair and reasonable to company's shareholders.
The reduction must not materially prejudice the ability of the company to pay its
creditors.
• Back Next • • C The reduction must be approved by ASIC.
D The reduction must approved by shareholders.
Exit Topic ><
Hide answer
Notes The reduction must be approved by the company's shareholders, not ASIC.
Save U Clear o
Share Capit.al
re C
-
05 06
lg
07
I08~l Which of the follov,ing is not a characteristic of a share?
I09 ~11 10~I +B

A
C
It confers rights which are enforceable in law.
It is a debt due by the company to the holder.
It can be sold by the ov,ner.
• Back Next •
D , The legal and equitable interest in a share may be held by different persons.

A share is a chose in action, not a debt owed by a company to the holder.
Notes
Save U Clear o
Share Capit.al
re
05 06 07
lg The shareholder approval requi rements for a share reduction \Viii vary according to:
I09 ~11 10~I A Whether the reduction is an equal or selective reduction.

B I Whether it affects the company's ability to pay creditors.
• Back Next • C Whether it involves a cancellation of shares.
,. D Both A and C.
Exit Topic ><
r Hide answer fa
Notes The shareholder approval requirements for a share reduction w ill vary according to both A
and C.
Lawbook Co 2017) para/s (18.140) - (18.160) for further reading .
Save U Clear o
Share Capit.al
re
05 06 07
lg Sue holds options granted by Bigbucks Limited. Which of the following statements most
closely describes her legal position?
09
110 ~I A
B
Sue is a member of Bigbucks Limited.
Sue has no rights whatsoever in Bigbucks Li mited .
• Back Next • ,. C At some future date, Sue may elect to become a member of Big bucks Limited .
D · Sue must acq uire shares in Bigbucks Li mited w hen so required by the directors.
Exit Topic ><
r Hide answer fa
Notes An option entitles the holder to elect to become a member of the issuing company.
Lawbook Co 2017) para/s (16.240) fo r further reading.
Reuters Lawbook Co 2018) para/s (8.15) for futther reading .
Save U Clear o
Share Capit.al
05
The shares of FirstBank Limited have been trading at $15 for the past several months. The
directors bel ieve that this price does not accurately represent the full value of the bank.
Which of these options may they pursue to correct the perceived undervaluation?
09
A Request the stock exchange to revise the price.
+B Buy back some of FirstBank's shares.
• Back Next •
C Obtain a new credit rating.
Exit Topic >< D · Advise shareholders of the correct price.
( Hide answer t?}

A purchase of its shares may enable a company's market price to reflect its underlying
value more accurately.
Save U Clear o
Membership
Andrea and Zoe are the directors of a small proprietary company called A-Z Ply Ltd which
has adopted the replaceable rules set out in the Corporations Act. The shares issued in A-Z
Pty Ltd's capital are held by Andrea, Zoe and their friend Heather. Recently, Heather decided
to sell her shares to her nevv partner Steve. Andrea and Zoe refuse to register the transfer as
they do not v,ant to admit any strangers into the company. Select the correct advice to Steve
from the following:
• Back Next •
,. A Given that this is a proprietary company, Andrea and Zoe are able to prevent the
transfer.
Exit Topic ><
B The transfer can not be blocked if Steve is prepared to pay !he full market vall1e of the
shares.
C The transfer can not be blocked as shares issued by a company are freely
Notes transferable.
D Steve should convene a meeting of all members to decide w hether or not the transfer
should proceed.
l Hide answer @
The directors of a proprietary company that has adopted the replaceable rules have
discretion to refuse to register a transfer of shares.
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Membership
Ron Retired is sorting out his affairs and \"/ants to give his shares in Mod Con Ltd to his
daughters, Rita and Anita. He tells them of his intention over dinner one night and presents
them with the share certification. Anita takes the document home for safekeeping. In the eyes
of the company, w ho nov, ov,ns the shares?
A Anita, as she is in physical possession of the share certificate.

• Back Next • B Ron holds the shares on trust for his daughters.
C Rita and Anita hold the shares in equal parts, as Ron has declared his intention and
Exit Topic ><
no longer has the share certificate in his possession .
+D Ron, until a proper instrument of transfer has been signed and the transfer
documents and share certificate have been lodged w ith the registered office of Mod
Notes Con.
r Hide answer la)

For a transfer of shares to occu r, a proper instrument of transfer must be signed and then
the instrument and the share certificate n1ust be lodged with the registered office of the
company.
Lawbook Co 2017) parals (9 .130] - (9.150] for further reading .
Reuters Lawbook Co 2018) parals (9.165] & (9.170] for further reading.
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Membership
In relation to the transfer of shares of public companies, which of the following is correct?
A A public company can never restrict the transfer of its shares.

+B A restriction imposed by the constitution of a public company on the transfer of its
shares is likely to be enforced by the court if it is clear.
• Back Next •
C A formal resolution must alw ays be passed by the directors before a transfer of
shares of shares of a publ ic company can be refused.
D A court 'Nill not enquire into the directors' reasons for refusi ng to reg ister a transfer of
Exit Topic ><
shares of a public company.
( Hlcle answer @)
Companies are permitted to restrict the transfer of shares; however, any restriction
contained in the company's constitution must be clear and unambiguous.
Lawbook Co 2017) para/s (9.180] . (9.186] for further read ing.
Save U Clear o
Membership
The pu rpose of CHESS (Clearing House Electronic Su bregister Systen1) is to enable the ASX
to compete effectively w ith overseas stock exchanges by offering an efficient settlen1ent
system . Which of the following is not an aim of CHESS:
A Predictability of settlement obl igations vvithi n a fixed time.

B More efficient settlement v1hen market volumes are high.
• Back Next •
,. C Slower settlement so that risk is reduced.
Exit Topic >< D , Cost savings for market participants.
( Hide answer t?}

One of the aims of CHESS is faster settlement w ith reduced risk.
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Membership
Mark Bigprovider, who owned 1 000 shares in Ayres Ltd, died last year. Which of the
following persons is entitled to be registered as a member of Ayres Ltd in lieu of Mark?
A His widovv.
B His eldest son.
• Back Next • C His eldest un married daughter.
,. D , His personal representative.
Exit Topic ><
r Hide answer fa
Notes A deceased member's shares vest in his or her personal representative.
Lawbook Co 2017) para/s [9.50] . (9.60) for further reading.
Reuters Lawbook Co 2018) para/ s (9.250] for further reading.
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Membership
re
05 06 ~ 1 07 ~lI ~l08 Improvident Limited, a trading company established in 1958, is in the process of being v,ound
I ~I! ~I
up. Who, among the following persons, is likely to be called upon to contribute to the
discharge of its debts?
09 10
A Every current member.
B Every person w ho was a member of the company at any time during the past five
• Back Next • years.
C Every person who may have agreed to buy shares in the company.
Exit Topic ><
+D A person who holds partly paid shares in the company
Hide answer ~
Notes
A member holding shares on which some amount remains unpaid is liable to contribute to
the discharge of its debts.
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Membership
01 02 03 04 ( 07) Multiple Choice Question » Select the best answer from the options be low.
re C
-
05 06
lg
07
I08~l Which of the follov,ing does not lead to a person ceasing to be a member of company?
I09 ~11 10~I +B

A
C
Failu re to a pay a call.
Conviction for theft.
Surrender of shares.
• Back Next •
D , Sale of shares.

Conviction for a crime does not, of itself, lead to loss of membership of a company.
Notes
Lawbook Co 2017) para/s [9.50] . (9.60) for further reading.
Reuters Lawbook Co 2018) para/s [9.260]-(9.275] for further read ing .
Save U Clear o
Membership
re
05 06 07
lg Which of the follov,ing circumstances does not entitle a person to become a member of a
company?
I09 ~11 10~I +B

A Issue of shares by a company.
Marryi ng a member of a company.
• Back Next • C Inheriting shares from a member.
D · Exercise of an option over shares.
Exit Topic ><
r Hide answer fa
Notes Marriage to a member of a company does not entitle that member's spouse to become a
member of the company also.
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Membership
re
05 06 07
lg Peter believes that his mother Jane, who passed av1ay last year, ovvned shares in Broken Hill
Pty Ltd. What should he do to ascertain this?
09
110 ~I A
B
Enquire at the Australian Stock Exchange.
Inspect the State register of titles.
• Back Next • C Ask his mother's bank manager.
,. D , Inspect the register of members of Broken Hi II Pty Ltd.
Exit Topic ><
r Hide answer fa
Notes Every company is required to maintain a register of members, which must be open to
inspection by anyone.
Reuters Lawbook Co 2018) para/s [9.20] & [9.35] for further reading .
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Membership
01 02 03 04 @J Multiple Choice Question » Select the best answer from the optio ns below.
05
In relation to a fact set out in the register of members of a company, which of the following
statements is not correct?
09 A That fact will ordinarily be treated as correct.
+B That fact can never be challenged.
• Back Next • C A person other than a member may seek to correct that fact.
D , ASIC must be advised of any fact corrected by an order of the Court.
Exit Topic ><
r Hide answer fa
Notes A fact set out in the register of members is open to attack if it is not correct.
Reuters Lawbook Co 2018) para/s [9.50] & (9.75] for further reading .
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Dividends
Which of the follov,ing is a likely consequence if a company pays a dividend when it is

insolvent?
A The company will be able to recover the dividend from the shareholders.
+B The di rectors may be ordered to repay the dividend to the company.
• Back Next • C The company will be liable to be de-registered.
O , The creditors may petition for the company to be v11ound up.
Exit Topic ><
r Hide answer fa
Notes This dividend payment is contrary to s 254T and may result in directors becoming liable
for insolvent trading and being ordered to compensate the company.
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Dividends
Henry is still registered as the O\lvner of 500 shares, which he sold to his friend Colin last
month. The issuer, Grand Enterprises Ltd, has just declared a dividend. What should the
company do with regard to the dividend payable in respect of these shares?
A Remit it to Colin directly.

+B Remit it to Henry.
• Back Next •
C Seek the direction of the court as to what to do.
Exit Topic >< 0 , Retain the money as neither Henry nor Colin is the legal owner of the shares.
( Hide answer t?}

A dividend is payable to the person whose name appears on the register of members at
the time the dividend is declared.
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Dividends
Which of the follov,ing statements with respect to no liability companies is correct?
,. A A shareholder is not entitled to a dividend if a call has been made on the share that is
due and unpaid.
B Unless the company's constitution states otherwise, dividends are payable according
to the amount paid up on them.
• Back Next • C A shareholder is entitled to a dividend even if a call has been made on the share
which has not been paid.
Exit Topic >< 0 There are no special rules for the payment of dividends with respect to no liability
companies.
l Hide answer @
Notes
A shareholder of a no liability company is not entitled to a dividend if a call has been made
on the share that is due and unpaid.
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Dividends
What measure has been implemented to prevent the double taxation of dividends?
A Shareholders do not pay tax on dividend earnings as they are not deemed to be
'income'.
B Companies are exempted from paying tax on their income.
• Back Next • • C The amount of tax paid by a company is imputed to its shareholders and individual
shareholders can get a tax offset equal to the tax paid by the company.
0 Tax on dividends is waived if shareholders re-invest thei r earnings.
Exit Topic ><
r Hide answer la)
Notes
An imputation credit is attached to dividends received by a shareholder from a company
which has paid tax on its income.
Lawbook Co 2017) parals (19.160) for further reading.
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Dividends
Immediately before paying a dividend, a company must ensure that _ _ __
A The amount payable is acceptable to shareholders.

+B Its assets exceed its liabilities and the excess is sufficient for the pay1nent of the
dividend.
• Back Next •
C It has sufficient funds in its bank accou nt to pay the dividend.
0 The dividend will not be paid other than out of its profits.
Exit Topic ><
Hide answer
Notes A company may pay a dividend if, immediately prior to the payment, its assets exceed its
liabilities and the excess is sufficient for the payment of the dividend.
Reuters Lawbook Co 2018) pa ra/s (1 0.30] for further reading.
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Dividends
re
05 06 ~ 1 07 ~lI ~l08 Which is of the following is an incorrect statement about the payment of dividends?
I ~I! ~I
09 10
.. C
A
B
Dividends are most commonly paid in cash .
The granting of share options can constitute the payment of a dividend.
An issue of shares can constitute the payment of a dividend. Dividends paid in this
• Back Next • manner are called "preference shares".
0 The transfer of assets is a legitimate form of payment of a dividend.
Exit Topic ><
Hide answer
Notes Dividends paid through the issue of shares are known as "bonus shares".
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Dividends
re C
-
05 06
lg
07
I08~l A company that has adopted the replaceable rules may pay a dividend _ _ __
I09 ~11 10~I ,. C

A
B
when directed by ASIC.
when directed by the shareholders.
when its directors so resolve.
• Back Next •
0 , so long as its creditors do not object to the payment

Under the replaceable rule governing the payment of dividends, the power to decide
Notes whether a company will pay a dividend or not is vested in its directors.
Reuters Lawbook Co 2018) para/s [1 0.15] for further reading.
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Dividends
re
05 06 07
lg Which of the follov,ing is not a necessary requirement for an authorised reduction of capital
by a company? The reduction must _ _ __
I09 ~11 10~I A

B
be fair and reasonable to the shareholders as a whole.
not materially prejudice the company's ability to pay its creditors.
• Back Next • ,. C not negatively affect "profits", as defined in the Corporations Act.
0 , be approved by shareholders under s 256G.
Exit Topic ><
r Hide answer fa
Notes A company may reduce its capital if the reduction is fair and reasonable to shareholders
as a whole, does not materially prejudice the company's ability to pay its creditors, and is
approved by shareholders under s 256G.
Save U Clear o
Dividends
re
05 06 07
lg Which of the follov,ing statements about payment of dividends is in correct?
09
110 ~I ,. A
B
Shareholders are able to enforce payment of a dividend after it has been declared
and the date fixed for payment has passed.
Unless varied by the company's constitution, the replaceable rules provide directors
with the power to pay a dividend without the need for a prior dividend declaration by
• Back Next • shareholders.
C Shareholders cannot generally force a company to pay a dividend, even if it has
Exit Topic >< sufficient surplus assets.
D In exceptional circumstances, a refusal to pay dividends may amount to oppressive or
unfair conduct.

Shareholders may enforce payment of a debt if the dividend is not paid on the date fixed
for payment.
Save U Clear o
Dividends
05
Rocky Ply Ltd has adopted the replaceable rules set out in the Corporations Act. At its last
annual general meeting, it declared a final dividend at the rate of 10c per share.
Subseq uently, however, it was decided to pay a lower dividend . Steve, a shareholder, is
09 aggrieved by this. What would you advise him to do?
,. A Accept the dividend actually paid.

• Back Next • B Sue the company to recover the difference.
C S ue the directors for breach of trust.
Exit Topic ><
0 , Require the company to pay the shortfall before paying any further dividend in the
future.
Notes Hide answer ~

A company may revoke a decision to pay a dividend at any time before the date fixed for
its payment.
Save U Clear o
Debentures and Loan Capitsl
New Enterprise Ltd proposes to borrow funds in order to increase its working capital. Which
of the following should a potential lender ascertain in order to protect their interest?
A Whether the company has pov,er to borrow.

B VVhether the company's constitution has been observed .
• Back Next • ,. C Whether the persons causing the company to borrovv' have the authority to do so.
D , Whether the company's shareholders approve of the borrowing.
Exit Topic ><
r Hide answer fa
Notes It is important to ascertain that the persons seeking to borrow on behalf on behalf of a
company have the authority to do so.
Save U Clear o
Pristine Pastures Ltd proposes to borrow extra capital from the public, w ith the lenders
having an option to become members of the company at some future time. W hat type of
security should it issue to achieve this?
A Ordinary shares.
B Mortgage debentures.
• Back Next •
C Preference shares.
Exit Topic >< ,. D , Convertible debentures.
( Hide answer t?}

A convertible debenture is a debt instrument which gives the holder a right to elect to
convert it into a share, thereby becoming a member of the company.
Save U Clear o
Which of the follov,ing organisations may not be appointed as trustee for debenture-holders?
A An authorised trustee company.

B A company carrying on life insurance business.
,. C A mini ng company.
• Back Next •
D · An Austral ian bank.
A mining company is not one of the entities that are eligible for appointment as trustee for
Notes debenture-holders.
Reuters Lawboo k Co 2018) para/s [11.40) for further reading.
Save U Clear o
If a company goes into liquidation or volu ntary ad ministration , or executes a deed of

company arrangement, a security interest vests in the company if it was perfected , registered
or became enforceable against a third party at a certain time. W hich of the following times is
not relevant to determining whether a security interest vests in the company?
A six months before the critical time;

• Back Next • B 20 days after the security agreement came into force;
,. C three months after the financing statement was lodged;
Exit Topic ><
O , a time ordered by the court under s 588FM.
( Hide answer t?}

Notes
Where a security interest vests in the company, the secured party loses the right to
enforce their security interest
Reuters Lawbook Co 2018) para/s (11 .205] for further reading .
Save U Clear o
Which of the follov,ing statements about circulating security interests and circulating assets is
not true?
A A mortgage over a company's land is not a circu lating security interest.

B Book debts are a type of circulati ng asset.
• Back Next • C A grantor is able to sell circulating assets in the ordinary course of business without
obtaining the secured party's prior consent.
Exit Topic >< +D A circulating security interest provides the secured party \"lith the means to sell or
othervvise dispose of the circulati ng assets without prior consent
r Hide answer la)

A grantor is able to sell or otherwise dispose of circulating assets in the ordinary course of
business without obtaining the secured party's prior consent.
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re
05 1 ~lI ~l
06 ~ 07 08 Priority between l\vo or more security interests that have been perfected is determined by the
'priority time' for each security interest. Which of the following is not taken into account when
I ~I! ~I
09 10
determining the priority time in relation to each security interest:
,. A the time the grantor first perfects the security interests by taking control of the
collateral;
• Back Next • B the registration time for the collateral;
C the time the secu red party first perfects the security interests by taking possession;
Exit Topic ><
D the time the security interest is temporarily perfected, or otherwise perfected, by force
of the PPS Act.

The time the secured party first perfects the secu rity interests by taking control of the
collateral is one of the considerations in determining priority.
Reuters Lawbook Co 2018) para/s (11 .195) for further reading .
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re C
-
05 06
lg
07
I08~l Which of the follov,ing statements is incorrect?
I09 ~11 10~I A

B
A non-circulating security interest is not defined in the Corporations Act.
A non-ci rculating security interest attaches to specific personal property owned by the
grantor.
• Back Next •
C A fixed charge is a secu rity interest in a non-circulating asset.
+D The granter of a non-circulating secu rity interest is entitled to sell the collateral free of
Exit Topic >< the security interest without the secured party's consent.
r Hide answer la)

Notes
The granter of a non-circulating security interest is not entitled to sell the collateral free of
the security interest without the secured party's consent.
Reuters Lawbook Co 2018) parals (11 .125] for further reading .
Save U Clear o
re
05 06 07
lg The concept of attachment was introduced by the PPS Act. Which of the follov,ing statements
is false?
I09 ~11 10~I A A security interest must "attach" to personal property for it to be enforceable against
the grantor.
,. B The secured party acquires enforceable rights against the collateral one n1onth after a
• Back Next • security interest attaches to collateral.
C The PPS Act refers to the personal property to which a security interest is attached as
Exit Topic >< "collateral".
D A security interest in respect of particular collateral is enforceable against thi rd parties
if it is attached to the property.

The secured party acquires enforceable rights against the collateral as soon as a security
interest attaches to collateral.
Reuters Lawbook Co 2018) para/s (11 .90) for further reading.
Save U Clear o
re
05 06 07
lg An issue of debentures enables a company to _ _ __
09
1 10 ~I ,. A
B
Borrow n1oney from the general public.
Lend money to the public.
C Restrict the class of persons who may invest in it .
• Back Next •
D · Avoid paying tax on its income.
Issue of debentures is a method by which a company may borrow money from the public
Notes generally.
Save U Clear o
01 02 03 04 @J Multiple Cho ice Questio n » Select the best answer from the optio ns below.
05
Bondex Ltd wishes to raise extra working capital through an issue of debentures to the
public. Which of the following requi rements doesn't it have to comply with?
09 A Issue a prospectus.
+B Obtain court approval.
• Back Next • C Prepare a trust deed.
D , Appoint a trustee for debenture-holders.
Exit Topic ><
r Hide answer fa
Notes Court approval is not one of the requirements that a company seeking to raise loan capital
must meet.
Lawbook Co 2017) para/s (20.60] & (20.100] for further reading.
Reuters Lawbook Co 2018) para/s [11.35] - (11 .40] for further read ing .
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Directors
The responsibilities of a C hair of directors incl ude _ _ __ .
A Disciplining errant directors.

B Determini ng the kind of busi ness to be carried on by the company.
,. C Presiding and exercising procedu ral control over shareholders' and directors'
• Back Next • meetings.
0 Representing the company in its dealings with outsiders.
Exit Topic ><
Hide answer
Notes A Chair of directors is ordinarily appointed to preside at and exercise procedural control
over shareholders' and directors' meetings.
Save U Clear o
Directors
( 02) Multiple Cho ice Questio n » Select the best answer from the optio ns below.
The members of Kingsy Ltd vvish to remove the n1anaging director for his dismal
performance. How can this be achieved?
A By the aggrieved members passing an ordinary resolution forthwith.

B By the aggrieved members passing a special resolution.
• Back Next • ,. C By the aggrieved members passing an ordinary resolution, after giving the company
at least tv,o months notice.
Exit Topic >< 0 By the aggrieved members applying to the court for an order disqualifying the
managing director from holding that office.
r Hide answer la)
A director of a pu blic company may be removed by members passing an ordinary
resolution so long as at least two months notice was given to the company and provided
the company gave a copy of that notice to that director.
Save U Clear o
Directors
In large public companies, v,hat strategy is usually adopted to minimise the potential for
conflict between the interest of the directors and that of the company?
,. A The maj ority of the board is usually comprised of non-executive directors.

B Executive directors are not involved in the daily management of the company's
business.
• Back Next •
C Prospective directors are vetted by ASIC.
Exit Topic >< 0 Directors are prohibited from owning shares in the company.
Hide answer ~
Notes !I You have not answered the question correctly.

In large public companies, the majority of the board usually consists of non-executive
directors, as they are seen as having an important role to play in resolving the potential for
conflict between the interests of the directors and those of the company.
Save U Clear o
Directors
As a check on the level of remuneration paid to directors of other than small proprietary
comparnes, _ _ __
A Every payment to directors must be authorised by shareholders.

B All di rectors' contracts of employment must be lodged w ith ASIC.
• Back Next • C Every company is required to have a remuneration committee.
,. 0 , Payments to directors must be disclosed in the company's annual financial report.
Exit Topic ><
11 You have not answered the question correctly.
Every company other than a small proprietary company is required to disclose the
Notes remuneration paid to its directors in its annual financial repo1t.
Save U Clear o
Directors
Peta's first appointment to a board is as a director of Pickled Ltd, a company ·which has
adopted the replaceable rules. As she is new to the role of director, a few people have told
her about her pov,ers in the position. Which piece of advice is incorrect?
A Di rectors are given pov,ers as a board, not as individual directors.

+B Di rectors have the discretionary power to refuse to register a transfer of shares for
• Back Next • any reason .
C Di rectors may execute a document or negotiable instrument if two directors sign it.
Exit Topic ><
D Directors have the powers to sell a company's only business without shareholder's
approval.

As Pickled Ltd is not a proprietary company, directors can only refuse to register a transfer
of shares if the shares are not fully paid or the company has a lien on the shares.
Lawbook Co 2017) parals (9 .180] for further reading .
Reuters Lawbook Co 2018) parals (12.75] for further reading.
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Directors
re
05 06 ~ 1 07 ~lI ~l08 As its chief administrative officer, the company secretary may competently _ _ __
I ~I! ~I
09 10
,. C
A
B
Dismiss a director of the company.
Enter into commercial transactions on behalf of the company.
Enter into contracts relating to the administration of the company.
• Back Next •
0 · Decide whether or not a dividend will be paid to shareholders.

The authority of a company secretary extends to binding the company to contracts
Notes connected with the administration of the company.
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Directors
01 02 03 04 ( 07) Multiple Choice Question » Select the best answer from the options be low.
re C
-
05 06
lg
07
I ~l
08 If the constitution of a company vests all the powers of managing its business in the board of
I
directors - - -- ·
09 ~11 10 ~I A The shareholders may instruct the directors to desist from enteri ng into any
transaction which they disapprove of.
B The directors may not change the company's li ne of business without the consent of
• Back Next • ASIC.
C The di rectors m ust seek the approval of shareholders before selling a major asset of
Exit Topic >< the company.
+D Shareholders cannot interfere with a decision taken by the directors on a
management issue.

If the constitution of a company vests the powers of managing its business in the board of
directors, then the sh areholders cannot lawfully interfere w ith a decision of the directors on
a matter concerning the management of the company.
Save U Clear o
Directors
re
05 06 07
lg A defect in the appointment of a director _ _ __
I 09 ~11 10 ~I +B
A
C
Renders all actions done by that director void.
Does not affect the validity of actions done by that di rector.
Renders all actions done by that director voidable at the option of the company.
• Back Next •
0 , Renders all actions done by that director voidable at the option of the third party.

Acts done by a director or secretary are effective notwithstandi ng that her or his
Notes appointment is defective because that person did not meet a particular requirement of the
Corporations Act or the company's constitution.
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Directors
re
05 06 07
lg Progressive Publishers Ltd, vthich has adopted the replaceable rules, has two directors,
Peter and Pauline. Pauline will not be able to attend any meeting of directors to be held
09
1 10 ~I within the next two months. In view of these facts, which of the following statements is
correct?
A All matters requiring the action of the directors will need to v,ait until Pau line can
• Back Next • attend directors' meetings again.
B All matters requ iring the action of the directors will need to \"lait until Pauline can
attend directors' meetings again as it is not possible to appoint an alternate director
Exit Topic ><
while Pa,ll ine is away.
+C A resol ution of directors w ill be deemed to have been passed if it is signed by both
Peter and Pau line.
Notes O Because of Paul ine's absence, Peter will be able to pass all necessary resolutions by
himself .
l Hide answer @
Under the replaceable rules, a resolution of di rectors is deemed to have been passed if all
directors entitled to vote on it sign a document with a statement stating that they are in
favour of it.
Directors
05
A decision of a committee of the board _ _ __
09 A Binds only the directors who took it.

+B Has the same effect as if it w as made by the board.
C Can be revoked by the shareholders.
• Back Next •
0 · Must be ratified by the board before it takes effect.

A decision of a committee of the board is as effective as a decision made by the board
Notes itself.
Save U Clear o
Corporate Governance and Duties of Directors
Cindy, a director of Independent Removals Ltd, tendered for and won a contract to supply
transport services to the company. In relation to this, which of the following statements is
correct?
A This contract requires shareholder approval as it involves a public company giving a

financial benefit to a related party.
• Back Next • ,. B This contract does not require shareholder approval as it is the result of an arms
length transaction.
Exit Topic >< C A copy of this contract must be lodged w ith the Australian Securities and Investments
Commission.
D This contract is invalid as there is a conflict of interest.

Shareholder approval of a contract entered into between a public company and any of its
directors is not requ ired if the parties have dealt at arm's length.
Reuters Lawbook Co 2018) para/s (13.3.60] for further reading.
Save U Clear o
Delilah is a director of B Corp Ltd. At a meeting of the dir ectors of the company at which
Delilah is present, it is resolved that the company sell one of its penthouses to Delilah's
husband, Alan , for $3,500,000. This price is 25% below the property's current market value.
Select the correct statement from the follovving.
A The contract is void as there is a giving of a financial benefit by a public company to a

• Back Next • related party.
B Delilah is liable to be prosecuted.
Exit Topic >< C Alan is liable to account to B Corp Ltd for the benefit derived fron1 this contract.
+D Delilah is liable to pay a civil penalty.
Notes Hide answer ~

A director involved in a contravention of the law relating to the giv ing of financial benefits
to related parties contravenes a civil penalty provision and may be ordered to pay a civil
penalty to the Commonwealth.
Reuters Lawbook Co 2018) para/s (13.3.75] for further reading.
Save U Clear o
Bunya Ltd w ishes to acquire a piece of land adjacent to its factory site. This land belongs to
Henry, who is one of its five directors . Under w hat circumstances can Henry vote on this
transaction?
A If the value of the transaction does not exceed $250 000.

B If the constitution of Bunya Ply Ltd allows hi m to vote.
• Back Next •
If the non-interested di rectors have resolved that Henry's interest should not
disqualify him from voting.
Exit Topic ><
D If the purchase price for the land is market value, thereby making it an arm's length
transaction .
Notes
r Hide answer la)
A director of a pu blic company who has an interest in a transaction being considered by
the board may vote on it if the non-i nterested directors have resolved that his interest
should not disqualify him from voting.
Reuters Lawbook Co 2018) parals (13.3.85] for further reading.
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The duty of a director not to have und isclosed personal profits while acting in her or his
position: _ _ __
A means that a director can personally profit, so long as the profit is disclosed.
B means that a director can never derive personal benefit from thei r position as a
director.
• Back Next •
C is modified by the Corporations Act, which permits a di rector to derive personal profit
if the company has not suffered any loss.
Exit Topic ><
is modified by the Corporations Act, vthich permits a di rector to derive personal profit
if he or she acted honestly and ought fairly to be excused.
( Hlcle answer @)
Notes
Section 1318 permits a court to relieve a director from liability for having personal profits in
these circumstances.
Lawbook Co 2017) para/s [13.50] & (13.56] for further reading.
Reuters Lawbook Co 2018) parals (13.3.115] for further reading.
Save U Clear o
Agnes is a director of a property development company. Without the authority of the board,
she signs a contract to purchase land from her friend, Scott. She then causes the company
secretary to counter sign and affix the company seal to the contract documentation. Agnes
does this to help Scott out of his financial difficulties. Which of the follovving considerations is
likely to support an allegation that Agnes has made improper use of her position?
• Back Next • A That the company has suffered loss.

B I That he acted without authority.
Exit Topic ><
C That he intended, primarily, to benefit his friend .
,. D Both Band C.
Notes ( Hide answer t?}

Both options B and C are correct.
Reuters Lawbook Co 2018) para/s (13.3.120], (13.3.200] for further reading .
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re
05 1 ~lI ~l
06 ~ 07 08 In which of the follow ing circumstances v,ill a director not breach a fiduciary duty?
I ~I! ~I
09 10
A
B
C
Taking out an interest-free loan with the company.
Setting up a new company to compete vvith the original company in a tender process.
Accepting an additional undisclosed payment from a customer of the company in
• Back Next • return for preferential treatment.
+D None of the above.
Exit Topic ><
Hide answer
Notes A director is likely to be found to have breached a fiduciary duty in all of the above
circumstances.
Lawbook Co 2017) para/s [13.40] - (13.100] for further reading.
Reuters Lawbook Co 2018) para/s (13.3.190)-(13.3.230] , (13.3.360] for further reading.
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05 06
lg
07
I08~l Tom, a director of The Queensland Meat Company Ltd has access to very valuable
information relating to a nevv method developed by the company for processing and
I09 ~11 10~I preserving beef. What may Tom competently do v,ith this information?
,. A He must use it exclusively for the pu rposes connected w ith the business of the
company.
• Back Next • B He may freely use it to advance his ov,n business interests.
C He may freely supply it to any person interested in the beef industry.
Exit Topic ><
D He may licence a third party to use the information and charge a fee for it.
Hide answer ~
Notes
A director may not use information gained in the course of his employment v,ith a
company other than for the benefit of that company.
Reuters Lawbook Co 2018) para/s (13.3.290] for further reading .
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re
05 06 07
lg Martha is non-executive director of the confectionary company, Cookies & C ream Ltd and is
considering taking up a position as a director of Biscuits & Butter Ltd in addition to her first
directorship. How would you advise her to avoid breaching s 183?
+A She may take up the second directorship, so long as she doesn't divulge any of
Cookies' confidential information.
• Back Next •
B It will depend on her terms of engagement with Cookies.
Exit Topic ><

C She may not hold both directorship positions at the same time.
D If she resigns from Cookies, she may take up the Biscuits position and use any of the
information acqui red at Cookies, regardless of whether it is confidential or not.
Notes ( Hide answer @

Martha may take up the second directorship, so long as she doesn't divulge any of
Cookies' confidential information.
Reuters Lawbook Co 2018) pa rals (13.3.315) for further reading.
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re
05 06 07
lg Which of the follo\ving has been adopted as a legal means of mi nimising the potential for
conflict of interest?
09
110 ~I +B
A Di rectors are prohibited from entering into contracts with their companies.
A director who is interested in a matter must make full disclosu re of the nature and
extent of his or her interest.
• Back Next •
C Di rectors must not serve on the board of a competing company.
Exit Topic >< D The approval of ASIC must be obtained before a person may serve as a director of a
public company
r Hide answer la)
A director who has an interest in a matter relating to the affairs of a company must make
full disclosure of the nature and extent of her interest to the members and directors of the
company.
Reuters Lawbook Co 2018) parals (13.3.385) for further reading.
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05
In relation to the directors' duty of care, vthich of the following is not correct?
A Directors must take steps to ensure that they are familiar with the company's
09 business and affairs.
B Directors must, at all times, keep abreast of every aspect of the company's business
affairs.
• Back Next • +C Directors are expected to read the company's financial statements only if they are
qualified to interpret them.
Exit Topic >< D Directors must set in place effective mechanisms to ensu re that the company is being
properly run.
l Hide answer @
Notes
Regardless of their particular background, all directors are expected to read the
company's financial statements and regularly review its financial position.
Reuters Lawbook Co 2018) para/s (13.4.100] for further reading .
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Shareholders' Meetings
@J Multiple Choice Question » Select the best answer f rom the options below.
When may directors validly refuse to hold a meeting requested by shareholders?
A If the directors do not want to hold the meeting.

+B If the meeting has been requested for improper purpose.
C To save the company the expenses of holding the meeting .
• Back Next •
D · If the company secretary is out of the country.

The directors may refuse to hold a meeting which has been requested for an improper
Notes purpose.
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It is proposed to call a meeting of Wellworth Ltd to consider amending the constitution of the
company. How much notice of this should be given to members?
A At least 28 days.
B At least 14 days.
• Back Next • C At least 60 days.
,. D , At least 21 days.
Exit Topic ><
r Hide answer fa
Notes An unlisted company must give 2 1 days notice of a members' meeting unless it is required
by its constitution to give a longer minimum notice.
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Which of the follov,ing is incorrect? Before a meeting may validly proceed _ _ __
A If the directors have not elected a chai r, the shareholders must do so.
B The directors must elect a person to chair the meeting if they have not done so prior
to the meeting.
• Back Next • • C If a chair has not been elected by the directors or the shareholders, the most senior
director must assume the role.
D If the chair the directors have appointed is unavailable, the shareholders must elect a
Exit Topic >< chair.
( Hlcle answer @)
A person must be designated to chair a meeting of shareholders.
Save U Clear o
To assist shareholders to have a say in decisions affecting a company commensurate with

their stake _ _ __
A All shareholders are entitled to an equal number of votes.

+B Shareholders may demand that voting be by way of a poll.
• Back Next • C Directors are not permitted to vote at a meeting of shareholders.
D , The chair may rej ect the votes of some shareholders.
Exit Topic ><
r Hide answer fa
Notes Voting at a meeting of shareholders may be by w ay of a poll and , w here this is the case,
each shareholder enjoys one vote for every share held.
Save U Clear o
A meeting of PHC Ltd is due to take place next Wednesday. Jamie, a shareholder of that
company, ·w ould like to vote on the matters to be considered . However, owing to illness, he
will not be able to attend the meeting. In the circu mstances, vthich of these statements is
correct?
A Jamie may appoi nt a proxy to vote on his behalf if the constitution of PHC Ltd permits
• Back Next • this.
B Jamie must designate the chair of the meeting as his proxy to vote on his behalf.
Exit Topic >< • C Jamie is entitled to appoint a proxy of his choice to vote on his behalf.
D Jamie cannot vote at all at this meeting.
Notes Hide answer ~

A shareholder of a company is entitled to appoint a proxy of his or her choice to attend
and on his behalf or her behalf at a meeting of the company.
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re
05 06 ~ 1 07 ~lI ~l08 A special resolution must be used in circu mstances: _ _ __
I ~I! ~I
09 10
A Where it is to vary the rights of a class of shareholders.
B I Where it is to alter a company's constitution.
C Where it is required by the Corporations Act.
• Back Next •

A special resolution must be used in all the circumstances listed in A, B and C.
Notes
Reuters lawbook Co 2018) para/s (14.170] fo r further reading .
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05 06
lg
07
I08~l In relation to matters discussed at meetings of shareholders, which of the following
statements is correct?
I09 ~11 10~I A Every shareholder may, after giving the necessary notice to the company, propose a
resol ution at a meeting of the company.
,. B A shareholder who holds 50fc, or more of the voting shares of a company n1ay, after
• Back Next • giving the necessary notice to the company, propose a resolution at a meeting of the
company.
Exit Topic >< C Only the directors may put resolutions at meetings of shareholders.
D S hareholders may, with the concurrence of the directors, put resol utions at meetings
of a company.
A shareholder w ho holds 5°/o or more of the voting shares of a company is entitled to
propose a resolution at any of its meetings.
Reuters Lawbook Co 2018) para/s (14.190) for further reading .
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05 06 07
lg The minutes of State Coach Line Ltd, duly signed by the Chairman, state that at a meeting of
shareholders held on 3 March 2005, Bill, v,ho had been appointed by the directors a month
I09 ~11 10~I previously to fill a casual vacancy on the board, was elected to fill the position substantively.
Georgia claims that no such election ever happened at that meeting. What is the status of
this record?
• Back Next • A The entry is conclusive evidence of Bill's election and is not open to challenge.
B The entry will stand if not challenged by ASIC.
Exit Topic >< ,. C The entry is prima facie evidence of Bill's election and w ill stand until it is proved
otherwise.
D The entry will stand if the company secretary verifies that the resolution was passed .
Notes
Hide answer ~

The minutes are prima facie evidence of the proceeding to which they relate.
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re
05 06 07
lg A meeting of ABC Ltd was held last Wed nesday. On Friday, it was discovered that because
of an administrative error, all shareholders were not advised of the meeting. It also transpired
09
110 ~I that the notice given was actually two days short of that required . In relation to the
proceedings at this meeting, vthich of the following statements is correct?
A Because of the defects in convening it, the proceedings at this meeting are totally
• Back Next • invalid.
B Shareholders have a choice whether to treat the proceedings at this meeting as valid
or require the directors to re-convene the meeting
Exit Topic ><
+C A court is likely to uphold the validity of the proceedings at this meeting
notwithstanding the defects in calling it.
D The validity of the proceedings at this meeting cannot be questioned once the
Notes minutes of the meeting have been sig ned by the chair.
l Hide answer @
Proceedings at a meeting of shareholders of a company are valid, notwithstanding that
there was an irregularity in calling it, unless it can be shown that the irregularity
complained of resulted in substantial injustice to a shareholder.
Lawbook Co 2017) para/s (10.300)-(10.310) forfunher reading .
Save U Clear o Reuters Lawbook Co 2018) para/s (14.200] for further reading .
05
Which of the follov,ing types of company must hold an annual general meeting?
A Every company.
09
B Every public company.
,. C Every public company vthich has more than 1 member.
• Back Next •
D · Every No Liability company.

A public company must hold an annual general meeting if it has more than 1 member.
Notes
Reuters Lawbook Co 2018) para/ s [14.10] for further reading.
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Financial Reporting and Disclosure
A disclosing entity: _ _ __
A Must prepare such financial statements as its members decide.

B Must prepare a financial report whenever it is so required by ASIC.
C May prepare a half-year financial report if its directors so choose.
• Back Next •
,. D , Must prepare a half-year and full-year financial report.

Every disclosing entity must prepare a half-year and full-year financial report.
Notes
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PHB International Limited, \"those shares are quoted on the Australian Stock Exchange, has
just won a mining concession from the government of Papua Nev, Guinea. This gives it an
exclusive right to exploit the vast deposits of gold in the Nev, Guinea highlands for a period of
49 years. W hen this information becomes knov,n, the price of its shares is bound to rise
considerably. W hat are PHB's obligations in the circumstances?
• Back Next • A It must disclose the information concerning the concession in the next directors' half-
year report.
B It must disclose the information concerning the concession in the next annual
Exit Topic ><
financial report.
+C It must release the information concerni ng the concession to the Australian Stock
Exchange immediately
Notes D It must release the information concerning the concession to ASIC immediately.
( Hlcle answer @)
A company listed on the ASX must, upon becoming aware of any information which is
likely to have a material effect on the price of its shares, notify the ASX of that information,
if it is not generally available to the market.
Save U Clear o Reuters Lawbook Co 2018) parals (15.140) & (15.142)-(15.143) for further reading.
Which of the follov,ing is not a requirement of a director's report?
,. A details of all of the company's activities

B details of any significant changes in the company's state of affai rs
C a review of the company's operations
• Back Next •
D · a reference to expected results in future financial years
A director's report must contain details of the company's significant activities.
Notes
Lawbook Co 2017) para/s (15.180Jff for further reading.
Save U Clear o
Regarding access to the financial report of a company, vthich of the following statements is
correct?
,. A Every member is entitled to receive a copy of the financial report of a company.

B A member may, w ith the consent of the directors, inspect the fi nancial report of a
company.
• Back Next •
C A member may inspect the fi nancial report of a company only if authorised by the
court.
Exit Topic ><
D A member may gain access to the financial report of a company if a special resolution
authorising such access has been passed.
( Hlcle answer @)
Notes
Every company is required to send a copy of its financial report to every member.
Save U Clear o
Colin, w ho is not a member of Alpha Ltd, would like to ascertain the type of shares issued by
it. How can he obtai n this inforn1ation as of right?
A By inspecting the share register of Alpha Ltd.

B By interviewing the directors of Alpha Ltd.
• Back Next • ,. C By inspecting the latest annual statement of Alpha Ltd lodged with ASIC.
D , By inspecting the records of Alpha Ltd after obtaining a court order.
Exit Topic ><
r Hide answer fa
Notes Information concerning the capital structure of a company is set out in its annual
statement vthich, once lodged with ASIC, may be inspected by any member of the public.
Reuters Lawbook Co 2018) para/s (15.165]-(15.170] for further reading .
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re
05 06 ~ 1 07 ~lI ~l08 The law compels companies to disclose certain financial information primari ly to _ _ __
I ~I! ~I
09 10 +B
A Ensure ASIC's records are up to date.
Provide shareholders w ith reliable information to enable them to assess the
performance of management.
• Back Next •
C Ensure that shareholders' funds are committed to authorised investments only.
D Ensure that directors are paid a fair rate of remuneration.
Exit Topic ><
Hide answer
Notes The obj ect of compulsory financial disclosure is to enable members of the investing public
to assess the performance of the teams entrusted with the management of their
investments.
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05 06
lg
07
I08~l Blankety Blan k Ply Ltd is about to start preparing its financial report. The directors consider
that in its particular ci rcumstan ces, it would not be appropriate for the company to comply
I09 ~11 10~I with the accounting standard governing the valuation of its intangible assets. What would you
advise them to do?
A Call a meeting of members to resolve that the company need not comply with the
• Back Next • accounting standard.
Apply to ASIC for an exemption from complying w ith the accounting standard.
Exit Topic >< C Apply to court for an exemption from the applicable accounting standard.
D Obtain a certificate fron1 the company's auditor exempting it from complying with the
applicable accounti ng standard .
Notes
r Hide answer la)
ASIC may, in some circumstances, exempt a company from compliance with any
applicable accounting standard.
Reuters lawbook Co 2018) parals (15.195] for further reading .
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re
05 06 07
lg To ensure that the transactions of a company can be fully explained, the Corporations Act
requires _ _ __
I09 ~11 10~I A

B
Every company to keep their financial records in English.
Di rectors of a company to make then1selves available to explai n its transactions.
• Back Next • ,. C Every company to keep proper financial records.
D · Every company to employ a book keeper.
Exit Topic ><
r Hide answer fa
Notes Every company must keep financial records w hich properly explain its transactions.
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re
05 06 07
lg Which of the follov,ing persons does not have a general right of access to the financial
records of a company?
09
1 10 ~I +B
A A director of a company.
A member of a company.
• Back Next • C The auditor of a company.
D · The receiver of a company.
Exit Topic ><
r Hide answer fa
Notes Members have limited rights of access to the financial records of a company.
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05
Which of the follov,ing entities is not required to prepare a financial report?
09 A A public company.
B A listed company.
,. C A small proprietary company.
• Back Next •
D , A large proprietary company.

A small proprietary company need not prepare a financial report unless directed by ASIC
Notes or the holder/s of at least 5% of its voting shares.
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Auditors
@J Multiple Choice Question » Select the best answer f rom the options below.
The responsibilities of an aud itor include: _ _ __
A Preventing fraud .
+BI Detecti ng errors and fraud and reporting any irregularity uncovered by the audit to
management.
• Back Next • C Both A and B .
D None of the above.
Exit Topic ><
Hide answer
Notes It is a prime responsibility of a company auditor to detect fraud and any other irregularity
and bring these, if any are found, to the attention of the appropriate officers of the
company.
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Auditors
An auditor may be held liable to a third party who has suffered loss as a result of relying on
an audit report if: _ _ __
A The auditor knew that that her or his report would be communicated to that third party.
B I The report was likely to lead that third party to enter into a commercial transaction.
• Back Next • C The auditor knew that the third party risked incurring economic loss as a result of
relying on the audit report.
Exit Topic >< +D All of the above
Hide answer ~

All the elements in Options A, B and C must be proved for a claim for damages by a third
party against a company auditor to succeed.
Reuters Lawbook Co 2018) para/s (16.215] -(16.220] for further reading .
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Auditors
An audit of the financial report of a company assures the user that _ _ __
A The report contains no misstatements or errors at all.

B The company is likely to contin ue as a successful undertaking.
C The information has been double checked internally.
• Back Next •
,. D , In preparing its financial report, the company has complied with the applicable legal
and accounting standards.
Exit Topic ><
Hide answer
Notes An audit of the financial report of a company confirms w hether or not it has been prepared
in accordance w ith the rules governing the preparation of financial statements.
Save U Clear o
Auditors
Which of the follov,ing statements about an auditor's duty to use reasonable care and skill is
not correct?
,. A An auditor will be liable to a company for failure to exercise reasonable care and skill
where they have failed to detect fraud .
B A failu re to exercise reasonable care and skill will render the auditor liable to the
• Back Next • company for breach of contract.
C I An auditor may be ordered to pay damages for their failu re to exercise reasonable
Exit Topic >< care and skill.
D A failu re to exercise reasonable care and skill may render the auditor liable to the
company in negligence.

An auditor will not be liable to a company simply because they have failed to detect fraud .
Lawbook Co 2017) parals [15.500) for further reading.
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Auditors
The CLERP 9 amendments introduced a proportionate liability system for aud itors in relation
to economic loss caused by negl igence or mislead ing and deceptive conduct. These changes
in law vvere ai med at: - - - -
A Allowing auditors to perform their jobs ,..,ithout the threat of litigation.

B I Making professional indemnity insurance more affordable to auditors.
• Back Next •
C Stopping plai ntiffs targeting auditors rather than other parties because they are seen
to have 'deep pockets'.
Exit Topic ><
+D Both Band C.
Hide answer ~
Notes
!I You have not answered the question correctly.
Both B and C were aims of the 2004 amendments.
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Auditors
re
05 06 ~ 1 07 ~lI ~l08 Sigma Ltd is considering appointing Peter Jones, a partner in the Chartered Accountancy
firm of Jones, Smith & Co, as its auditor. Which of the following circumstances is not relevant
I ~I! ~I
09 10
in determini ng whether or not Peter can be so appointed?
,. A He is 50 years of age.
B He is the secretary of Sigma Ltd .
• Back Next •
C He is indebted to Sigma Ltd in the sum of $150 000.
Exit Topic >< D , Bill Smith, a former partner of Jones, Smith & Co, left the fi rm 12 months ago and
became a di rector of Sigma Ltd.
Hide answer ~
Notes
Age is not a bar to the appointn1ent of an otherv1ise qualified person as an auditor of a
company.
Reuters Lawbook Co 2018) para/s (16.20), (16.45) -(16.60] for further reading.
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Auditors
re C
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05 06
lg
07
I ~l
08 In relation to the standard of care expected of an auditor, which of the following statements is
I
correct?
09 ~11 10 ~I A The standard of care expected of an auditor is met if he or she relies on another
professional to verify certain facts.
,. B The standard of care expected of an auditor changes from time to time to reflect
• Back Next • changed conditions.
C The standard of care expected of an auditor is met if she relies on an officer of the
Exit Topic >< company to verify certai n facts.
D To discharge the standard of care expected of her or him, an auditor must check
every transaction to ascertain its gen uineness.

The standard of care expected of an auditor changes as conditions in the business world
change.
Reuters Lawbook Co 2018) para/s [16,165] for further reading .
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Auditors
re
05 06 07
lg Which of the follov,ing has no power to appoint an auditor under any circumstances?
I 09 ~11 10 ~I
,. C
A
B
Shareholders in general meeting.
The di rectors.
The court.
• Back Next •
D • ASIC.

The Court has no power to appoint a company auditor.
Notes
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Auditors
re
05 06 07
lg A company may recover damages against an auditor for breach of her or his contractual duty
of care and skill, if it is proved that _ _ __
09
1 10 ~I A
B
The auditor acted in breach of duty.
The company suffered loss as a result of the breach of duty.
• Back Next • C The loss v,ould not have occurred but for the auditor's breach of duty.
,. D , The auditor acted in breach of duty, the company suffered loss as a result of the
Exit Topic >< breach of duty and the loss would not have occu rred but for the auditor's breach of
duty.
Hide answer ~
Notes
All the elements in options A, B and C must be proved before a company can recover
damages against an auditor for breach of contractual duty to exercise care and skill.
Reuters Lawboo k Co 2018) para/s [16.160]ff for further reading.
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Auditors
01 02 03 04 @J Multiple Choice Question » Select the best answer f rom the options be low.
05
As one of the means for promoting the independence of auditors, the Corporations Act
requires _ _ __
09 A That all members must agree before an auditor can be removed .
+B A special procedure to be followed, including that the aud itor be given the chance to
explain the circumstances, before an auditor can be removed.
• Back Next •
C A special resolution to be passed before an auditor can be removed.
Exit Topic >< D That all directors must agree before an auditor can be removed.
Hide answer ~

The Corporations Act lays down a special procedure to be followed before an auditor may
be removed
Save U Clear o
Members' Rem.,,dies
@J Multiple Cho ice Questio n » Select the best answer f rom the optio ns be low.
In proceedings alleging oppressive, unfairly prejudicial or unfairly discriminatory conduct,

which of the following orders is a court not likely to make in favour of an applicant?
A An order that the company be wound up.

+B An order that the errant directors pay a fine to the Commonwealth.
• Back Next • C An order that a certain person purchase the applicant's shares.
D , An order providing for the management of the company in the future.
Exit Topic ><
r Hide answer fa
Notes A court is unlikely to impose a fine on errant directors in such proceedings as the main
objective of the oppression remedy is to release the applicant from the effects of such
conduct.
Reuters Lawbook Co 2018) para/s (17.215] fo r further reading .
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Members' Rem.,,dies
Steve, a member of The Downs Pastoral Company Ltd, asserts that Marion, a director and
very influential member of the company, has engaged in conduct which has sig nificantly
benefited her family at the expense of the company. He would like court action to be taken
agai nst Marion to red ress this very serious abuse of position. However, the other directors of
the company rarely question Marion's decisions or dare challenge her. How would you advise
Steve to proceed?
• Back Next •
A To commence proceedings on behalf of the company against Marion forthvtith.
Exit Topic >< B To commence a common law derivative suit against Marion forthwith.
,. C To apply to court for leave to commence proceedings on behalf of the company
against Marion.
Notes D To req uest the directors of Downs Pastoral Company Ltd to institute proceedi ngs
against Marion.
r Hide answer la)

A member wishing to commence proceedings on behalf of a company must, in the first
place, apply for leave from the court to do so. .
Save U Clear o
Members' Rem.,,dies
Which of the follov,ing considerations is not a relevant factor in determining an appl ication by
a member to commence proceedings on behalf of a company?
A The applicant is acting in good faith.

B Notice of intention to make the application was given to the company.
• Back Next • C There is a serious question to be tried .
,. D , The applicant is impecunious.
Exit Topic ><
r Hide answer fa
Notes It is immaterial to a determination of an application by a member to commence
proceedings on behalf of a company that he or she is of limited financial resources.
Save U Clear o
Members' Rem.,,dies
Samuel is a director of SmartEnd Ltd which has entered into an agreement to purchase a
block of land from his son, Solomon. A seven-day settlement period has been negotiated.
Brian, a member of Sn1artEnd Ltd, is of the view that this transaction is in breach of the law
and vvould like to prevent it from being completed. Hov, would you advise him to go about
this?
• Back Next • A Sue the directors for breach of duty.

+B Apply to court for an injunction under s 1324 of the Corporations Act.
Exit Topic ><
C Direct the company not to proceed to settlement of the transaction .
D , Request ASIC to block the transaction forthwith.

A court may grant an injunction to restrain the doing of any conduct that would result in a
contravention of the Corporations Act.
Lawbook Co 2017) para/s (14.520) - (14 .550] for further reading .
Reuters Lawbook Co 2018) para/s (17.305) -(17.315] for further reading .
Save U Clear o
Members' Rem.,,dies
(OS) Multiple Cho ice Questio n » Select the best answer f rom the optio ns be low.
On a petition by a member, a court will n1ake an order to w ind up a company _ _ __
A Whenever any ground on which a company may be wound up is established.

B VVhenever it is proved that the affairs of a company have been conducted in a manner
oppressive of the petitioner.
• Back Next • • C Only when it is shown that w indi ng up the company is the only appropriate remedy in
the circumstances.
D If the directors do not object to the company being wound up.
Exit Topic ><
r Hide answer la)
Notes
Windi ng up a company is a drastic remedy and will be ordered only if the court is satisfied
that there is no other remedy available to the applicant.
Save U Clear o
Members' Rem.,,dies
re
05 06 ~ 1 07 ~lI ~l08 In which of the follow ing circu mstances is a court likely to authorise a member to inspect the
books of a company?
I ~I! ~I
09 10 A
B
Where a member vfishes to obtain information about the company's pricing formula.
VVhere a member wishes to obtain information to assist it to gain control of the
company.
• Back Next •
• C Where it is shown that the inspection is to be carried out for a proper purpose.
Exit Topic >< D Where a member \'Fishes to obtain information to decide whether or not to set up a
business similar to that carried on by the company
r Hide answer la)
A member wishing to inspect the books of a company must satisfy the court, among other
things, that the inspection is to be carried out for a proper purpose.
Save U Clear o
Members' Rem.,,dies
re C
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05 06
lg
07
I08~l Which of the follov,ing describes as nearly as possible the legal position of a member who
commands a majority of the voting shares of a company?
I09 ~11 10~I Though entitled to act in her or his own interest, a majority shareholder may not act in
a man ner oppressive of the minority.
B A majority shareholder must always take into account the interests of all
• Back Next • shareholders.
C A majority shareholder owes duties of a fiduciary nature towards the minority.
Exit Topic >< A majority shareholder is free to exercise her or his voti ng power in her or his own
D
interest in all circumstances.
( Hlcle answer @)
Notes
A majority shareholder may use her or his voting power to advance her or his own interest
but is not free to act in a manner oppressive of the minority.
Save U Clear o
Members' Rem.,,dies
re
05 06 07
lg While it operated, the rule in Foss v Harbottle _ _ __
I09 ~11 10~I +B

A Authorised any member to take court action to enforce the rights of a company.
Precluded members from taking any in cou rt action to enforce the rights of a company
except in some limited circumstances.
• Back Next •
C Prevented members from taking any action in court to enforce the rights of a
company under any circumstance.
D Prevented members from taking action in court to enforce their personal rights.
Exit Topic ><
r Hide answer la)
Notes
Under the proper plaintiff limb of the rule in Foss v Harbottle, only the company, not its
members, could sue to enforce its rights.
Save U Clear o
Members' Rem.,,dies
re
05 06 07
lg In relation to the enforcement of the personal rights of members, w hich of the follov,ing
statements is correct?
09
110 ~I A
B
Only the company may take action to enforce the rights of its members.
Only the directors may act to enforce the rights of members.
• Back Next • C Every member may sue to enforce any right conferred on her or him in her or his
capacity as a member.
Exit Topic >< D The maj ority cannot ratify any breach of duty by directors which violates the personal
rights of a member.
,. E , Both C and D.

The majority cannot ratify an infringement of the personal rights of a member and a
member can sue the company to enforce her or his personal rights.
Lawbook Co 2017) para/s [14.10], (14.90] for further reading.
Reuters Lawbook Co 2018) para/s (17.480) -(17.495] for further reading .
Save U Clear o
Members' Rem.,,dies
05
Which of the follov,ing circumstances is not of itself a deprivation of a member's personal
rights?
09 A Where a general meeting attempts to pass an ordinary resolution in a ci rcumstance
that req uired a special resolution.
B Where proper notice for a resolution had not been given .
• Back Next •
C Where the actions of the majority shareholders constituted a fraud on the minority.
Exit Topic >< +D Where the majority shareholders used their voting powers to deprive a member of her
or his shares in the company.
r Hide answer la)

If the majority shareholders use their voting powers to deprive a member of her or his
shares in the company, it is not necessarily a deprivation of personal rights. There n1ust be
an improper purpose for the exercise as well.
Save U Clear o
Takeovers
On which of the following grounds may a shareholder seek to prevent the compulsory
acq uisition of their shares?
A That she would like her shares to remain under family ownershi p.
+B That the price offered is not fai r.
• Back Next • C That the acqu irer is likely to sell the company's assets.
D , That the acquirer is likely to gain total control of the company cheaply.
Exit Topic ><
r Hide answer fa
Notes Following a successful takeover offer, a shareholder may resist the compulsory acquisition
of their shares if they can demonstrate that the price offered for the securities is not fair.
Save U Clear o
Takeovers
Which of the follov,ing is not a potential benefit of takeover activity?
A Promotion of efficiency in the util isation of corporate assets.

+B Boosting government revenue.
C Providing an incentive to directors to act in the interests of shareholders.
• Back Next •
D , Enabling shareholders to sell their shareholdings at a price in excess of the prevailing
market price.
Exit Topic ><
Hide answer
Notes It is not commonly claimed that takeover activity increases government revenue.
Save U Clear o
Takeovers
Robert owns 26% of the voting shares issued by PHB Limited . He would like to increase his
shareholdi ng to 35%. Hov, can he achieve this without contravening the Corporations Act?
A Apply to court for an exemption.

+B Obtain a resolution of PHB Limited authorising the acquisition .
• Back Next • C Acqui re 5% in one transaction and the remain ing 4% a month later.
D , Purchase the required 9% on the open market.
Exit Topic ><
r Hide answer fa
Notes A general meeting of shareholders may approve an acquisition of shares which is
other.vise prohibited by the Corporations A ct.
Lawbook Co 2017) para/s (23.90] . (23.130] for further reading .
Save U Clear o
Takeovers
In takeover transactions, an independent expert's r eport is not required _ _ __
A When a takeover offer is made for a company and both the bidder and target
companies are under common control.
,. B In every takeover situation.
• Back Next •
C In compulsory acquisition situations.
D If the bidder controls 30% or more of the voting power of the target company.
Exit Topic ><
Hide answer
Notes An independent expert's report is not required in every takeover transaction . A report is
required where the bidder's voting power in the target is 30% or more.
Save U Clear o
Takeovers
The provisions of the Corporations Act vthich regulate takeover activity do not have as their
aim to - - - -
.. A Empower the Commonwealth government to judge the merits of takeover bids.

B Ensure that the transfer of corporate control occurs in an efficient market
environment.
• Back Next •
C Enable shareholders to have adequate time and information to assess a takeover
offer.
Exit Topic ><
D Ensure that so far as possible all shareholders are treated equally.
r Hide answer la)

The law governing takeover activity does not seek to authorise the Commonwealth
government or any other authority to judge the merits of takeover bids.
Lawbook Co 2017) parals [23.40] for further reading .
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Takeovers
re
05 06 ~ 1 07 ~lI ~l08 Geotech International Li mited currently owns 46% of the voting shares of MedQuip
(Australia) Ltd and would like to make a takeover bid to acqu ire all its outstanding shares.
I ~I! ~I
09 10
Under the Corporations A ct, which of the following will Geotech not be required to do?
A Prepare a bidder's statement.

B Make an offer to all shareholders.
• Back Next •
,. C Automatically increase its offer price if a rival bid is made.
Exit Topic >< D , Offer the same consideration to all shareholders.
( Hide answer t?}

No obligation is imposed on takeover bidder to increase its offer price in the event of a
rival bid emerging.
Lawbook Co 2017) para/s (23.140), (23.160] - (23.200] , (23.220] for further read ing .
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Takeovers
re C
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05 06
lg
07
I ~l
08 Acquico Ltd made a takeover offer for Metalcorp Ltd. Included in Acquico's bidder's statement
was a report made by Cleaver, a geologist. Unfortunately, Cleaver's report contained son1e
I 09 ~11 10 ~I statements which turned out to be incorrect in several material respects. Who, among the
following, is not liable for any loss occasioned by Cleaver's misstatements?
,. A The shareholders of Acquico Ltd.

• Back Next • B Acquico Ltd.
C The di rectors of Acquico Ltd .
Exit Topic ><
0 , Cleaver.
( Hide answer t?}

Notes
Shareholders of the bidder are not liable in respect of misleading or deceptive statements
contained in a bidder's statement.
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Takeovers
re
05 06 07
lg To ensure that every listed company and the market generally know the identity of any
person who holds large parcels of its voting shares _ _ __
I09 ~11 10~I A Every person acquiring shares in a company is required to notify it and the ASX of
that fact.
Every person is required to notify the company and the ASX once they and their
• Back Next • associates acquire a relevant interest in 5% or more of the company's voting shares.
C Every person acquiri ng a relevant interest in 5% or more of the voting shares of a
Exit Topic >< company may be required by ASIC to notify the company of that fact.
D Every person acquiri ng shares in a company must quote their tax file number.
( Hlcle answer @)
Notes
Immediate disclosure must be made to the company and the ASX of any acquisition by a
person and her associates of a relevant interest in 5% or more of its voting shares.
Save U Clear o
Takeovers
re
05 06 07
lg AIBon Pty Limited has made an offer to acq uire all the outstanding shares of Tusker Ltd . The
offer document states, among other things, that the offer is conditional on the value of the
09
110 ~I Australian dollar not rising above US $0.75 at any time during the offer period. In relation to
this condition , which of these statements is correct?
,. A The condition is permitted so long as the offer document indicates a date when Al Bon
• Back Next • will give notice as to w hether it has been fulfilled.
B The condition is a prohibited defeating condition .
Exit Topic >< C The condition w ill be permitted so long as ASIC consents to its inclusion in the offer
document.
D The condition will be permitted so long as the directors of the target company do not
object to it.
Notes
( Hlcle answer @)
A condition w hich entitles an offerer to rescind a concluded takeover contract (defeating
condition) is permitted so long as the offer document states a date before the end of the
offer period when the offerer will give notice as to it status.
Save U Clear o
Takeovers
01 02 03 04 @J Multiple Choice Question » Select the best answer from the options be low.
05
Ashton Ltd is considering maki ng a takeover bid for Uniquesystems Ltd. Its directors believe
that compliance with all of the requirements of the Corporations Act is likely to impose a
significant financial burden on the company, while at the same time not seN ing much useful
09 purpose. What v,ould you advise them to do?
A Fully comply v1ith the law.

• Back Next • B Petition Parliament for an exemption from the relevant requirements.
,. C Seek an exemption from the relevant requirements from ASIC.
Exit Topic ><
O , Apply to the court for an exemption from the relevant requirement.
( Hide answer t?}

Notes
ASIC is authorised by Parliament to exempt some parties to takeover transactions from
the requirements of the Corporations Act.
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Financial Services and Markets
In relation to trading in the shares of a company, which of the following practices is not
prohibited by the Corporations Act?
,. A Speculating in the price of the shares of a company.

B Creating a false appearance of active trading in the shares of a company.
• Back Next • C Entering into a transaction vvhich is likely to create an artificial price for the shares of a
company.
Exit Topic >< D Making a false statement that is li kely to ind uce a person to purchase shares of a
company.
r Hide answer la)

It is not prohibited to speculate in the price of the shares of a company. Read generally,
however, about short selling - Co,porations Amendment (Short Selling) Act 2008 (Cth).
Reuters Lawbook Co 2018) parals (19.120)-(19.125] for further read ing.
Save U Clear o
Who, among the follovving persons, is free to trade in the shares of a company on the basis
of price sensitive information which is not generally available?
A An employee of a company.
B A director of a company.
• Back Next • C An outsider who has no connection with the company at all .
,. D , None of the above.
Exit Topic ><
r Hide answer fa
Notes No person is permitted for any person to trade in the shares of a company on the basis of
price sensitive information w hich is not generally available
Reuters Lawbook Co 2018) para/s (1 9.235] for further reading .
Save U Clear o
Jones has obtained information which, v,hen disclosed , is likely to cause the price the shares
of Alpha Ltd to plummet. In which of these circumstances is she prohibited from trading in
Alpha's shares on the basis of this information?
A If the information consists of a matter which is readily observable by any interested

person.
• Back Next • ,. B If the information is contained in the company's annual report which has just been
despatched to shareholders.
Exit Topic >< C I If the information consists of his conclusions from a study of the company's financial
reports and other reports lodged vvith the ASX.
D Both Band C.
Notes ( Hlcle answer @)

Information is not considered to be generally available, and a person may not trade in the
shares of a company on the basis of it, if sufficient time has not elapsed since its release
for it to be disseminated amongst the persons who commonly invest in shares.
Reuters Lawbook Co 2018) parals (19.270) -(19.280] for further reading.
Save U Clear o
( DY) Multiple Choice Question» Select the best answer f rom the options below.
Which of the follov,ing organisations may not trade in the securities of a company?
A A securities exchange.
B I A futures exchange.
.. C A casino.
• Back Next •
D All of the above.

Only a qualified financial market may trade in the securities of a company.
Notes
Lawbook Co 2017) para/s (22.80] . (22.90] for further reading .
Save U Clear o
(OS) Multiple Choice Question » Select the best answer from the optio ns below.
Which of the follov,ing is not exempt from the insider trading prohibitions set out in ss 1043B-
1043J?
A An underwriter selling to a subunderwriter.

+B A stockbroker whose client is an associate.
• Back Next • C A company that has in place an effective Chinese wall.
D • Both A and B.
Exit Topic ><
r Hide answer fa
Notes A stockbroker must satisfy certain conditions in order to be exempted from the insider
trading prohibition.
Reuters Lawbook Co 2018) para/s (19.305] & [19,320) for further reading.
Save U Clear o
re
05 06 ~ 1 07 ~lI ~l08 The supervision and enforcement of financial markets in Australia is the responsibility of
I ~I! ~I
09 10
+B
A TheASX.
The Australian Securities and Investments Commission.
• Back Next • C The Australian Federal Police.
D , The Australian Stock Exchange and the Australian Securities and Investments
Exit Topic >< Commission.
Hide answer ~

The task of supervising financial markets in Australia, and the enforcen1ent of relevant
laws, is entrusted to the Australian Securities and lnvestn1ents Commission.
Reuters Lawbook Co 2018) para/s (1 9.40] for further reading.
Save U Clear o
re C
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05 06
lg
07
I08~l Who is unable to receive compensation for a breach of insider trading provisions?
I09 ~11 10~I +B

A
C
The issuer of the financial product.
ASIC
The disposer of the financial prod uct.
• Back Next •
D • Both A and C.

ASIC may bring an action on behalf of either the issuer or disposer, but it does not receive
Notes the compensation itself.
Reuters Lawbook Co 2018) para/s (1 9.340] for further reading .
Save U Clear o
re
05 06 07
lg Which of the follov,ing pieces of legislation was aimed largely at margin lending practices and
their role in the global financial crisis?
I09 ~11 10~I +B

A Co,porations Amendn1ent (Shod Selfing) Act 2008 (Cth)
Co,porations Legislation Amendn1ent (Financial Services Mode111isation) Act 2009
(Cth)
• Back Next •
C Corporations Amendment (Improving Accountability on Termination Payments) Act
2009 (Cth)
Exit Topic >< D None of the above.
r Hide answer la)

The Corporations Legislation Amendment (Financial Services Modernisation) Act 2009
(Cth ) introduced a new regime for margin loans focussed on investor protection.
Lawbook Co 2017) parals (22.60] for further reading.
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re
05 06 07
lg In relation to the ASX listing rules, which of the fol lowing statements is not correct?
09
1 10 ~I A
B
Listed con1panies are under a contractual obligation to observe the listing rules.
The listing rules are enforceable under the Corporations Act.
,. C Failu re by a listed company to observe the listing rules renders its di rectors liable to
• Back Next • punishment with criminal sanctions.
D A listed company may be removed from the official list of the ASX for noncompliance
Exit Topic >< with the listing rules.
r Hide answer la)

Notes
Criminal sanctions are not available as a means of enforcing compliance w ith the ASX
listing rules.
Reuters Lawbook Co 2018) parals (19.50)-(19.60] for further reading .
Save U Clear o
05
Futures markets provide a useful facility for _ _ __
,. A Managing the risks associated with fluctuation in the price of commodities.

09
B Tradi ng in secu rities.
C Trading in physical commodiiies.
• Back Next •

Futures markets assist participants to know in advance the price at which they will buy or
Notes sell a commodity and so plan their affairs accordingly.
Reuters lawbook Co 2018) para/s (19.70] for further reading.
Save U Clear o
Managed Investments
• Back Next • Cafedelic Limited v,ishes to invite the public to purchase units in a scheme it has promoted
which involves growing, processing and marketi ng coffee. Which of the following conditions
Exit Topic x need not be satisfied for the scheme to proceed?
A The scheme must be registered with ASIC.
Notes B The scheme must have a constitution.

C The scheme must have a compliance plan .
,. D , The scheme's responsible entity must have a mini mum capital of $10m.
( Hide answer t?}

There is no minimum capital requirement in respect of the responsible entity of a managed
investment scheme.
Save g Clear o Lawbook Co 2017) para/s [22.40] for further read ing.
Managed Investments
01 ( 02) Multiple Choice Question » Select the best answer from the options below.
• Back Next • A managed investment scheme vtill not be ordered to be wound up on the ground that
Exit Topic x
A The purpose for w hich it was established has been accomplished.
+B It has incurred a tradi ng loss.
Notes C Execution of a judgment debt against it has been returned unsatisfied.
D , The time specified by its constitution for it to be wound up has come.
r Hide answer fa
A managed investment scheme may not be wound up simply because it has sustained a
trading loss.
Save g Clear o
Managed Investments
01 02 03 e I ~I
04
• Back Next • Which of the follov,ing is not a characteristic of a managed investment scheme?
Exit Topic x A Several people contribute money to a comn1on fund.

B The money contributed by members is used to acquire income-generating assets.
,. C The members control the day-to-day operation of the scheme.
Notes
D , The members are entitled to participate in the benefits accruing from the operation of
the scheme.
Hide answer
Members of a managed investment scheme do not control its day-to-day operation.
Save g Clear o Reuters Lawbook Co 2018) para/s (20.10] for further reading.
Managed Investments
01 02 03 s _o4J ( DY) Multiple Choice Question» Select the best answer from the options below.
• Back Next • Which of the follov,ing statements is not correct regarding the responsible entity of a
managed investment scheme?
Exit Topic x
,. A The responsible entity must be an Australian bank.
B I The responsible entity must hold an Australian financial services licence.
Notes C The responsible entity bears obl igations under the Corporations Act.
D The responsible entity must be a publ ic company.
r Hide answer fa
Provided all other relevant requirements are met, any public company may act as the
responsible entity of a managed investment scheme.
Save g Clear o - See Lipton, Herzberg & Welsh, Understanding Company Law 19th edition (Thomson
Reuters Lawbook Co 2018) para/s (20.20)-(20.30] for further read ing .
ASIC Investigation Powers
An investigation into the affairs of Kismet Ltd, carried out by ASIC at the direction of the
Minister, unearthed evidence of serious breaches of duty by the directors of the company.
What are ASIC's next steps in these circumstances?
, Back Next •
A Prosecute the directors.
Exit Topic x B Petition for the company to be wound up.
,. C Issue a report of its findings to the Min ister.
D , Dismiss the errant directors of the company.
Notes
( Hide answer t?}
Following the conclusion of an investigation into the affairs of a company undertaken at
the direction of the Minister, ASIC may submit a report of its findings to the Minister. ASIC
must submit a report where directed to do so by the Minister. Preparation of a report w ith
respect to a s 14 investigation is mandatory.
Reuters lawbook Co 2018) para/s [21 .05] for further reading.
Save g Clear o
( 02) Multiple Choice Question » Select the best answer f rom the options below.
ASIC is investigating certain transactions involving the shares of Mischiv Ltd, a company
listed on the ASX. It wishes to obtain from the ASX some information about these
transactions quite urgently. How v,ould you advise ASIC to go about securing this
, Back Next • information?
Exit Topic x ,. A Require the ASX to provide it with the required infom1ation.
B Exami ne the Chief Executive Officer of the ASX.
C Hire a private investigator to collect the necessary information.
Notes 0 , Request the State Police Commissioner to interview relevant officers of the ASX.
( Hide answer t?}

For the purpose of discharging its functions, ASIC may require a financial markets
operator to provide it w ith certain information if it is not appropriate to conduct a fom1al
examination.
Save g Clear o
A person being exami ned by ASIC in the course of its investigations is not entitled to
, Back Next • A Be furnished w ith particulars of any alleged contravention of the law in respect of
which the examination is being conducted .
Exit Topic x ,. B Invoke the right against self-incrimination in order to refuse to ansv,er questions.
C Be represented by a lawyer.
D Claim that an answer to a particular question might incriminate them.
Notes
Hide answer ~

A person being examined by ASIC cannot invoke the right against self incrimination in
order to avoid providing information.
Reuters Lawbook Co 2018) para/s [21 .25) for further reading.
Save g Clear o
01 02 03 04 ( DY) Multiple Choice Question» Select the best answer from the options below.
---- le le -
1~
lI ~lI
05 06 07 ~lI ~l
08 Which of the follov,ing actions is ASIC not likely to do if an investigation carried out by it into
the affairs of a company reveals breaches of the law?
, Back Next • A Initiate the prosecution of any person found to have contravened the law.
B Initiate civil proceedings in the name of the company against any person found to
Exit Topic x have acted in breach of the law.
C Petition that the company be wound up.
+D Confiscate the assets of any person bel ieved to have breached the law.
Notes
Hide answer ~

ASIC is not authorised to confiscate the assets of any person - although it will frequently
appoint a receiver regarding the property of the person under investigation .
Save g Clear o
To enable it to obtain all relevant information where it is investigating a matter, ASIC is

authorised to _ _ __
, Back Next • Order a person to produce certain books and records.

B Tap any telephone communication .
Exit Topic x
C Intercept any mail correspondence.
D • Both Band C.
Notes
r Hide answer fa
ASIC is given the power to require certain persons to produce certain books and records
where it is investigating the affairs of a company.
Save g Clear o
re - C
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05 06
(g I ~lI ~l
07 08 What must ASIC take into account w hen deciding whether to commence as 50 class action
on behalf of a natural person?
, Back Next • A Whether the ASIC investigation has been in the 'public eye'.
+ B I Whether the person consents.
Exit Topic x
C Whether ASX has been notified .
D All of the above.
Notes
r Hide answer fa
A natural person must consent to the action for ASIC to commence proceedings on her or
his behalf.
Save g Clear o
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05 06
lg
07
I ~l
08 On what basis may a person required by ASIC to produce certain books refuse to do so?
A That they are under a contractual duty to keep the information contained in the books
, Back Next • confidential.
B That the books are not the property of ASIC.
Exit Topic x C That it would be too costly to produce the books.
+D That there is a reasonable excuse with respect to the practical difficulties involved in
producing the books.
Notes
r Hide answer la)
Failure to comply with a notice to produce may not be an offence where the person can
provide a reasonable excuse. A reasonable excuse n1ay only relate to certain physical or
practical difficulties of complying, not issues of confidentiality.
Reuters Lawbook Co 2018) para/s [21 .35) for further reading.
Save g Clear o
re
05 06 07
lg In relation to hearings conducted by ASIC, which of the following statements is not correct?
A ASIC may hold a hearing to decide \'Vhether or not to exercise any of its powers.
, Back Next •
B ASIC may summon any person to attend its hearing and prod uce any record .
Exit Topic x ,. C ASIC is bound by the formal rules of evidence in the conduct of its hearings.

ASIC is not bound to follow the formal rules of evidence when it conducts a hearing .
Save g Clear o
Corporate Insolvency
With respect to receivershi p, which of the following statements is correct?
A A receiver can only be appointed by a secured creditor of the company.

, Back Next •
B A receiver is not a 'controller' as defined in s 9.
Exit Topic x ,. C A receiver can be appointed by either a secured creditor or a court.

D , A court can only appoint a receiver with the express consent of all secured creditors
of the company.
Notes Hide answer
A receiver can be appointed by either a secured creditor or, if a company is the subj ect of
an ASIC investigation, a court.
Lawbook Co 2017) para/s (24.310), (24.370] . (24.380] for further read ing .
Save g Clear o
01 I ~lI ~I
~ 02 03 04
I ~lI ~l
05 06 The decision to put a company into voluntary administration may be made by: _ _ __
,. A Directors.
, Back Next •
B ASIC.
Exit Topic x C A shareholders meeting.

D · A court.

Directors may decide to put a company into voluntary administration.
Save g Clear o
01 02 03 e I ~I
04
Which of the follov,ing statements is correct?
A For a creditor to w ind up a company, it must apply to the court.

, Back Next •
+ B I A creditor may either in itiate a voluntary w ind ing up of a company or a compulsory
liquidation
Exit Topic x C A creditor can only initiate a voluntary winding up if the company is already in
voluntary administration.
D Both Band C
Notes
r Hide answer la)
A creditor can initiate both a compulsory and a voluntary liquidation of a company.
Lawbook Co 2017) parals (24.130)-(24.160) for further reading.
Reuters Lawbook Co 2018) parals (22.125) -(22.130] for further reading.
Save g Clear o
01 02 oJ __ o4J ( DY) Multiple Choice Question» Select the best answer from the options below.
Which of the follov,ing statements is incorrect?
,. A Any questions regarding the validity of appointment of a receiver by the secured party
, Back Next • can be resolved by appl ication to the cou rt under s 588G.
B Cred itors may apply to wind up a company on the grounds of insolvency even though
Exit Topic x a receiver has been appoi nted.
C Creditors may appoint a receiver even though a company is bei ng wound up.
D Creditors may, in certai n circumstances, appoint a receiver when a company is in
Notes voluntary administration.
( Hlcle answer @)
Any questions regarding the validity of appointment of a receiver by the secured party can
be resolved by application to the court under s 418A .
Save g Clear o
01 02 03
-
_ 04 J (OS) Multiple Choice Question » Select the best answer f rom the options be low.
05
I ~l
06 Which of the foflov,ing types of creditors is only bound by a deed of company arrangement if
they voted in favour of the deed?
, Back Next • A Owners and lessors of property.

BI Unsecured creditors.
Exit Topic x
C Secured creditors.
Both A and C.
Notes
r Hide answer fa
Both ow ners and lessors of property and secured creditors are only bound by a deed of
company arrangement if they voted in favour of the deed.
Save g Clear o
01 02
re
03
-
_ 04 J ( 06) Multiple Choice Question » Select the best answer from the options below.
05 06
(g With the introduction of the scheme of voluntary administration, a scheme of arrangement is
now more likely to be used as a means of _ _ __
, Back Next • A Effecting a compromise of creditors' claims agai nst a debtor company.
BI Faci litating a debt for equity swap with creditors of a debtor company.
Exit Topic x
C Effecting a merger between companies.
All of the above.
Notes
r Hide answer fa
A scheme of arrangement may be used to ach ieve any of the purposes mentioned in
options A, B and C: A scheme of arrangement may be used for a compromise of creditors'
claims against a debtor company;
A scheme of arrangement may be used for a debt for equity svvap in which creditors take
up shares in a debtor company; and
A scheme of arrangement may be used to ach ieve a merger between companies.
Save g Clear o Reuters lawbook Co 2018) para/s [22.155] for further reading .
Receivership
Which of the follov,ing statements with respect to privately appointed and court-appointed
receivers is false?
,. A It is less costly to have a receiver manager appointed by the court.

B A court-appointed receiver manager is an officer of the court.
• Back Next • C Court-appointed receivers and managers are subject to more stri ngent duties than
privately appointed receivers.
Exit Topic >< D Privately appointed receiver managers and court-appointed receiver managers have
different functions.
r Hide answer la)

Debenture trust deeds are usually a less expensive means of appoi nting a receiver
manager as there are legal costs associated with havi ng a receiver manager appointed in
court.
Reuters Lawbook Co 2018) para/s [23.35) for further reading.
Save U Clear o
Receivership
A receiver appointed by the court, on the appl ication of ASIC, pending the outcome of
proceedings initiated by ASIC in relation to the affairs of a company is authorised to
A Manage the company's business.

+B Preserve the company's assets.
• Back Next •
C Sell the company's assets.
Exit Topic >< D , Investigate possible breaches of the lav,.
( Hide answer t?}

A receiver appointed by the court, on the application of ASIC, pending the outcome of
court proceedings commenced by ASIC against a person for a breach of the corporations
legislation is authorised to act to preserve the assets of a company.
Save U Clear o
Receivership
Which of the follov,ing does not describe a court-appointed receiver?
A Has more stringent duties than a privately-appointed receiver.

B A company caretaker, not a company doctor.
,. C Regarded as an officer of the company, not an officer of the court.
• Back Next •
D , Works to preserve the company's potential to earn profits rather than restore the
company's profitability.
Exit Topic ><
Hide answer
Notes A court-appointed receiver is regarded as an officer of the court, not an officer of the
company.
Save U Clear o
Receivership
Which the following statements most accurately describes the povvers of a receiver?
A A privately appointed receiver may exercise only such powers as are conferred on
her or him by the instrument of appoi ntment.
B A receiver appointed by the court may exercise only such powers as are conferred on
her or him by the court.
• Back Next • C A receiver, w hether appointed privately or by the court, may exercise only such
powers as are conferred on her or him by the Corporations Act.
Exit Topic >< +D A receiver, v,hether appointed privately or by the court, may exercise such powers as
are conferred on her or hin1 by the instrument of appointment and by the Corporations
Act.

A receiver, whether appointed privately or appoi nted by the cou1t, enjoys powers
conferred by both the instrument of appointment and by the Corporations Act.
Save U Clear o
Receivership
Where a liquidator is appointed in respect of a company already in receivership _ _ __
A The receivership is automatically terminated.

B The receiver contin ues to have authority to carry on business as the agent of the
company.
• Back Next • • C The receiver may, v,ith the consent of either the liquidator or the court, conti nue to
carry on business as the agent of the company.
D The receiver n1ay, subj ect to the approval of ASIC, contin ue to carry on business as
Exit Topic ><
the agent of the company.
( Hlcle answer @)
A receiver appointed prior to the making of an order to wind up a company may, \"lith the
consent of either the liquidator or the cou rt, continue to carry on business as the agent of
the company.
Save U Clear o
Receivership
re
05 1 ~lI ~l
06 ~ 07 08 As a privately appointed receiver working out priority debts, which of these orders for
payment of debts is not legal?
I ~I! ~I
09 10 A Amounts payable in priority to unsecured debts under s 562 prior to employees'
unpaid wages.
,. B Retrenchment payments prior to fees and expenses of auditors.
• Back Next •
C Secured debts prior to income tax payments.
Exit Topic >< D Workers compensation insurance payments prior to auditor's fees .
Hide answer ~

The reasonable fees and expenses of auditors must be paid prior to employee
retrenchment payments.
Save U Clear o
Receivership
re C
-
05 06
lg
07
I08~l To protect against liability for debts incurred in the course of performing their duties, it is
advisable for a receiver to _ _ __
I09 ~11 10~I +B

A Take out an insu rance policy.
Obtain an indemn ity fron1 the debenture-holder.
• Back Next • C Ensure that the company has sufficient funds.
D · Not enter into any contract during the course of the receivership.
Exit Topic ><
r Hide answer fa
Notes In order to protect her or himself from personal liability in the event that the company has
insufficient funds to discharge the debts incurred in connection with the receivership, a
receiver would be well advised to obtain an indemn ity from the debenture-holder.
Save U Clear o
Receivership
re
05 06 07
lg Who, among the follovving persons, is eligi ble for appointment as a receiver?
I 09 ~11 10 ~I +B
A
C
The auditor of a company.
A registered liquidator.
A person who is already acting as a receiver of some property of the company.
• Back Next •
D · The holder of a mortgage over some asset of the borrowing company.

Only a registered liquidator may be appointed as a receiver.
Notes
Save U Clear o
Receivership
re
05 06 07
lg Peter is appoi nted a receiver of Deepindebt Ltd and proceeds to seize the company's factory
site, plant and machinery. S ubsequently, it is discovered that the alleged act of default had in
09
1 10 ~I fact not occurred. W hat are the legal conseq uences for Peter?
A He is liable to disciplinary action by ASIC .

B He is liable to prosecution for theft.
• Back Next •
C He is liable to be struck off the register of liquidators for professional misconduct.
Exit Topic >< ,. D , He is liable to be sued for damages as a trespasser.
( Hide answer t?}

A receiver who takes possession of a company's property under a defective appointment
may be liable in damages to the company for trespass.
Save U Clear o
Receivership
05
In which of the follow ing circumstances may a court not appoint a receiver on the 'just and
convenient' ground?
09 A When an act of default has occurred .
B Before an act of default has occurred .
• Back Next • C When circumstances which are likely to put the assets of a company in jeopardy
occur.
Exit Topic >< +D When an unsecured creditor wishes to recover an overdue debt.
Hide answer ~

The 'just and convenient' ground does not authorise an unsecured creditor to apply to
court for the appointment of a receiver.
Save U Clear o
Voluntiry Administration
Who is liable for the discharge of the debts incurred by an administrator of a company?
A The di rectors of the company.

+B The ad ministrator.
C The company.
• Back Next •

The administrator is personally liable for all debts incurred during the time a company is
Notes under administration.
Save U Clear o
Regarding the committee of cred itors, v,hich of the following statements is not correct?
A Only a creditor or a creditor's duly authorised attorney may be a member of a

committee of creditors.
B Members of the committee of creditors consider reports from the administrator and
generally consu lt with her or him on matters affecting the administration.
• Back Next • +C I The role of the committee of creditors is to supervise the administrator.
D All of the above.
Exit Topic ><
r Hide answer la)
Notes
The role of a committee of creditors is to consult with, and consider reports from, the
administrator on matters concerning the administration.
Save U Clear o
The decision as to what step to take with regard to the future of a company under
administration is reserved for - - -- ·
A The court.
B The ad ministrator of the company.
• Back Next • C The members of the company.
,. D , The company's creditors.
Exit Topic ><
r Hide answer fa
Notes The creditors of a company under administration decide what steps to take with regard to
the company's future.
Lawbook Co 2017) para/s (24.30) -(24.40] for further reading .
Save U Clear o
Which of these decisions is not likely to be made at a meeting called to decide the future of a
company under administration?
,. A That the administrator be removed.

B That the company enter into a deed of arrangement with the creditors.
• Back Next • C That the administration be terminated.
D • That the company be wound up.
Exit Topic ><
r Hide answer fa
Notes The removal of the administrator is not one of the n1atters considered at a meeting called
to decide the future of a company under administration. Issues such as a lack of
independence of an administrator are more likely to have arisen at the first creditors'
meeting, at v,hich time a replacement administrator would have been appointed.
Lawbook Co 2017) para/s (24.30)-(24.40], (24.100)-(24.120] for further reading .
Save U Clear o
In relation to voting at a meeting of creditors of a company under administration, select the

false statement fron1 the following: _ _ __
A Ordinarily, voting will be by show of hands unless a poll is demanded.

B VVhere voting is by way of a poll, the chai r must take into account the number of
creditors voting in favour of a resolution as 'Nell as the value of their debts relative to
• Back Next • the total value of debts owed by the company.
C An administrator holding proxies with discretion on how to vote may vote against a
Exit Topic >< motion to remove the administrator.
Every creditor is entitled to vote.

A creditor n1ay, in some circumstances, not have a rig ht to vote.
Lawbook Co 2017) parals [24.30] -(24.40] for further reading .
Save U Clear o
re
05 06 ~ 1 07 ~lI ~l08 On 20 November last year, the directors of Seesaw Ltd resolved that it v,as insolvent and
appointed Michael as its ad ministrator. What are the rights of George who sold certain goods
I ~I! ~I
09 10
to the company on seven day terms, l\vo weeks before Michael's appointment, which have
not been paid for?
A Retrieve his goods from the company if he can identify them.

• Back Next • +B None, so long as the administration continues.
C S ue the administrator for the price of the goods.
Exit Topic ><
O , Sue the company to recover the price of the goods.
( Hide answer t?}

Notes
Once an administrator is appointed, creditors cannot recover their property or deal with it
in any way without the consent of the administrator.
Save U Clear o
01 02 03 04 ( 07) Multiple Choice Question » Select the best answer from the optio ns below.
re C
-
05 06
lg
07
I08~l Yummy Drops Ltd , which carries on a liquor distri bution business throughout Australia, is
experiencing financial difficulties. W hich of the following creditors will not be entitled to
I09 ~11 10~I enforce their rights against the company if it is placed under administration?
A creditor who holds a security interest over its stock of liquor.

B The ow ner of the property where it carries on its business who took control of the
• Back Next • property before an administrator was appointed.
C A secured creditor who, through a receiver, took control of a security interest prior to
Exit Topic >< the commencement of the administration.
D None of the above.

Once the administration process commences, a secured creditor is not entitled to enforce
her or his security interest except with the administrator's consent or with leave of the
court.
Reuters Lawbook Co 2018) parals (24.190] for further read ing .
Save U Clear o
01 02 03 04 (0 8 ) Multiple Choice Question » Select the best answer f rom the options below.
re
05 06 07
lg Cred itors enter into a deed of company arrangement with a company as a means of
I09 ~11 10~I A

BI
Expediting the liquidation process.
Enabling the administrator to recover the costs of the administration .
• Back Next • ,. C Enabli ng the company to continue to carry on business.
D Both A and B .
Exit Topic ><
r Hide answer fa
Notes The pu rpose of entering into a deed of company arrangement is to facilitate the continued
existence of a company.
Save U Clear o
01 02 03 04 ( 09) Multiple Choice Question » Select the best answer from the optio ns below.
re
05 06 07
lg Under the Corporations A ct, which of the following need not be in the content of the deed of
company arrangement?
09
110 ~I +B
A The priorities among creditors bound by the deed .
The moratorium period.
• Back Next • C The extent to which the company is released from its debts.
D , The property of the company available to pay creditor's claims.
Exit Topic ><
r Hide answer fa
Notes It is not compulsory for a deed to have a moratorium period; however if it does, the nature
and duration of the moratorium period must be set out in the deed.
Save U Clear o
05
Which of the follov,ing statements is false?
,. A Every creditor is bound by the terms of a deed of company arrangement.

09
B Every member is bound by the terms of a deed of company arrangement.
C A deed of company arrangement binds an owner of property used by the company
• Back Next • only if he or she has agreed to its terms.
D No person bound by a deed of company arrangen1ent may apply to court for an order
Exit Topic >< that the company be wound up.
r Hide answer la)

Notes
A secured creditor who has not consented to a deed of company arrangen1ent may
proceed to realise her or his security unless the court orders otherwise.
Save U Clear o
Liquidation
A creditors' vol untary vvinding up _ _ __
A Is possible only in respect of proprietary companies.

B Must be in itiated by a special resolution of cred itors.
,. C May come about as a result of the failure of a members' voluntary winding up to take
• Back Next • effect.
D Must be approved by the court.
Exit Topic ><
Hide answer
Notes If, for some reason, a members' voluntary w inding up cannot proceed as such, it is
converted into a creditors' voluntary winding up.
Save U Clear o
Liquidation
Which of the follov,ing factors is not likely to influence ASIC in deciding whether or not to de-
register a company?
A Its annual return is 19 months late.

+B Its assets are worth only $50,000.
• Back Next • C It has not lodged any document for 24 months.
D · It has ceased carrying on busi ness.
Exit Topic ><
r Hide answer fa
Notes In deciding whether or not to de-register a company, ASIC is not likely to be influenced by
the value of its assets. (Note that assets of less than $ 1,000 may be considered,
however.) ASIC may deregister a company if its response to the return as to particulars is
at least six months late, if the company has not lodged any other documents in the last 18
months, or if ASIC has no reason to believe the company is carrying on a business .
Save U Clear o
Liquidation
Regarding the legal effect of a winding up order, which of the following statements is not
correct?
,. A The company ceases to exist.

B Legal proceedings cannot be instituted agai nst the company w ithout leave of the
cou rt.
• Back Next •
C A receiver manager who was appointed prior to the commencen1ent of the winding up
ceases to have authority to carry on business as the agent of the company.
Exit Topic ><
D The pu blication of a winding up order operates as a dismissal of the employees of a
company.
( Hlcle answer @)
Notes
A company continues to exist after a \"linding up order is made.
Lawbook Co 2017) para/s (24.180)-(24.220] for further reading.
Save U Clear o
Liquidation
A person is not eligible for appointment as a liquidator of a company if _ _ __ .
A They are a registered official liquidator.

B They are solvent.
C They are independent of the company.
• Back Next •
,. D • There is potential for conflict between their private interests and those of the
company.
Exit Topic ><
Hide answer
Notes A person is disqualified from appointment as a liquidator of a company if there is potential
for conflict between their interests and those of the company.
Save U Clear o
Liquidation
Without prior approval by the court, a liquidator may not _ _ __ .
A Enter into commercial contracts on behalf of a company.

B Sell any asset of the company.
,. C Compromise any debt due to a company of a value exceeding $20,000.
• Back Next •
D , Initiate any court proceedings on behalf of a company

A liqu idator may not compromise any debt due to a company of a value exceedi ng $20
Notes 000 v1ithout prior approval by the court.
Save U Clear o
Liquidation
re
05 06 ~ 107 ~l 08 I ~l In which of these circumstances would it be appropriate for a liquidator to seek directions
from the court?
I ~I! ~I
09 10 ,. A
B
When in doubt as to the propriety of a certain action the liquidator proposes to take.
To decide whether it is advisable to enter into a certai n commercial transaction.
• Back Next • C To determine the rights of a creditor who suppl ied goods to the company under a
contract containi ng retention of title clause.
Exit Topic >< D Any of the above
Hide answer ~

A liquidator may seek directions from the court as to the way they should act in matters
concerning the general administration and conduct of the winding up of a company.
Save U Clear o
Liquidation
re C
-
05 06
lg
07
I ~l
08 Samantha is the liq uidator of Cosmos Holdings Ltd. One of its assets is a 99 year lease on a
block of land vthich the company intended to sub-divide and sell. Samantha believes that
I 09 ~11 10 ~I holding on to the lease is likely to be quite burdensome. Substantial outgoi ngs are payable in
respect of the land but, because of a change in the zoning scheme affecting it, the land, has
become unsaleable. What v,ould you advise Samantha to do?
• Back Next • A Abandon the lease.

+B Disclaim the lease.
Exit Topic ><
C S ue the local municipal ity that changed the zoning scheme affecting the land, for
damages, for breach of trust.
D Apply to court for directions as to w hat to do with the lease.
Notes
Hide answer ~

To relieve a company of property that is burdensome and effectively a liability, a liquidator
may disclaim it.
Reuters Lawbook Co 2018) para/s [25.315] fo r further reading .
Save U Clear o
Liquidation
re
05 06 07
lg Which of the follov,ing is not part of the duties of a liquidator?
I 09 ~11 10 ~I A
B
Collecting and selling the assets of a company and distributing the proceeds of sale
among the creditors and members according to law.
Investigating the affairs of a company and reporti ng any breaches of duty to ASIC.
• Back Next • • C Prosecuting officers of the company suspected of having breached the law.
D Taking steps to have a company de-registered.
Exit Topic ><
Hide answer
Notes It is not part of the duties of a liquidator to prosecute officers of a company suspected of
having contravened the law. However, a liquidator will report suspect behaviour to ASIC.
Save U Clear o
Liquidation
re
05 06 07
lg A liquidator vtho has acted in breach of duty _ _ __
09
1 10 ~I A
BI
May be ordered to pay a civ il penalty to the Commonwealth.
May be ordered to pay compensation to the company.
C May be liable to prosecution.
• Back Next •

A liqu idator vtho has acted in breach of duty is liable to suffer any of the penalties set out
Notes in options A, B and C
A liqu idator vtho has acted in breach of duty may be ordered to pay a civil penalty to the
Commonwealth;
A liqu idator vtho has acted in breach of duty is liable to be ordered to pay compensation to
the company; and
A liquidator vtho has acted in breach of duty may be prosecuted if he or she acted
dishonestly.
Save U Clear o Reuters lawbook Co 2018) para/s [25.385] for further reading .
Liquidation
05
A court is not likely to appoint a provisional liquidator if it is alleged that _ _ __
A The directors of a company are pilfering its assets.

09
+B Some directors have gained access to sensitive information concerni ng the
company's manufacturing processes.
• Back Next •
C The directors are unwilling to continue managing the company.
D There is a dispute between some members which is likely to jeopardise the company'
Exit Topic >< assets.
r Hide answer la)

Notes
A provisional liquidator will be appointed only if its assets are sl1ow n to be at risk.
Save U Clear o

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Regulatory Framewtirk

A The Governor-General refused to proclaim it.

Notes r Hide answer la)

A In exercise of its powers under the Commonwealth Constitution.

A The NSW Pol ice.

A developing a single set of accounting standards for worldwide use.

I09 ~11 10~I +B

Notes l Hide answer @

Exit Topic >< ( Hide answer t?}

A company formed under the Corporations Act _ _ __

A Must always carry on business for the benefit of its shareholders.

A person wishing to form a company _ _ __

Exit Topic >< ( Hide answer t?}

Every company formed under the Corporations Act _ _ __

A Must have a name.

Exit Topic >< ( Hide answer t?}

A Pursue other than charitable purposes.

I09 ~11 10~I A

Exit Topic >< ( Hide answer t?}

I09 ~11 10~I A

Exit Topic >< ( Hide answer t?}

Exit Topic >< ( Hide answer t?}

A Shareholders of a company are not liable for its debts.

r Hide answer la)

A The trust creditor has insufficient funds.

l( You have not answered the question correctly.

A Con1pany limited by shares.

A May or may not have a share capital.

It is more difficult for a proprietary company to raise capital because _ _ __

A Only public companies are allowed to raise working capital.

Exit Topic >< ( Hide answer t?}

A S Pty Ltd is subordinate of H Ltd.

l( You have not answered the question correctly.

I09 ~11 10~I ,. C

I09 ~11 10~I ,. C

Exit Topic >< ( Hide answer t?}

Exit Topic >< ( Hide answer t?}

A A company cannot be a subsidiary of l'No companies.

Exit Topic >< ( Hide answer t?}

In order to modify or displace any of the replaceable rules _ _ __

A Agreement must be reached betvveen all the directors.

Exit Topic >< ( Hide answer t?}

An amendment of a company's constitution which might result in the expropriation of a

A Can never be valid.

r Hide answer la)

The replaceable rules _ _ __

A bind only those persons who agreed to form the company.

Exit Topic >< ( Hide answer t?}

A Only members of his family are admitted to membership of the company.

Exit Topic >< ( Hide answer t?}

A It must pass a special resol ution .

Notes Hide answer ~

II You have not answered the question correctly.

Notes ( Hlcle answer ffl

A By a special resolution of B class shareholders.

( Hide answer t?}

A Every officer of the company.

Notes l( You have not answered the question correctly.

Notes r Hide answer la)

A All members of the company.

A Worldwide Trading is bound by the contract because, as a director, Michael has

A Any employee of the company.

Exit Topic >< ( Hide answer t?}

I09 ~11 10~I +B