Solicitors Qualifying Examination (SQE1)
SQE1 - SOLICITORS QUALIFYING EXAMINATION |
COMPLETE EXAM QUESTIONS AND VERIFIED
SOLUTIONS | 2026/2027 LATEST VERSION
Solicitors Qualifying Examination (SQE1)
Functioning Legal Knowledge
1. Which business structure gives its owners the benefit of limited
liability while being taxed as if it were a partnership?
A. A sole trader business
B. An unlimited company
C. A limited liability partnership (LLP)
D. A general partnership
C. LLPs have separate legal personality and limited liability but are
tax-transparent, taxed as partnerships under the Partnership Act
1890 default rules applied by analogy.
2. In the absence of a partnership agreement, how are profits shared
under the Partnership Act 1890?
A. According to hours worked
B. At the discretion of the managing partner
C. In proportion to capital contributed
D. Equally between the partners
D. Section 24 of the Partnership Act 1890 implies equal sharing of
profits and losses where there is no agreement to the contrary.
3. What is the effect of an LLP having separate legal personality?
A. The LLP cannot be sued in its own name
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, Solicitors Qualifying Examination (SQE1)
B. Profits automatically belong to the LLP rather than its members
C. Members remain personally liable for all LLP debts
D. The LLP, not its members, contracts and owns property in its own
name
D. Like a company, an LLP is a body corporate under the LLP Act
2000, distinct from its members, who benefit from limited liability.
4. Which document must be filed with Companies House to incorporate
a private company limited by shares?
A. A partnership deed
B. Form IN01 together with the memorandum and articles of association
C. A certificate of good standing
D. A statutory declaration of solvency
B. Form IN01 (application to register a company), plus a
memorandum of association and articles, is filed to achieve
incorporation under the Companies Act 2006.
5. What is the key distinction between a private and a public limited
company?
A. Private companies must file accounts at Companies House but public
companies need not
B. Only public companies can have limited liability
C. A public company may offer its shares to the public; a private company
may not
D. A private company must have at least two directors
C. Under CA 2006, a plc may offer shares to the public and must have
a minimum issued share capital; a private company is prohibited
from doing so.
6. Under the Model Articles, what is generally required for the board of
directors to transact business validly?
A. Shareholder approval is required for every board decision
B. The company secretary must chair the meeting
C. A quorum of directors, as fixed by the articles, must be present
D. Every director must attend in person
C. Model Articles require a quorum (commonly two directors) to be
present for board decisions to be validly taken, unless the articles
state otherwise.
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, Solicitors Qualifying Examination (SQE1)
7. What majority is required to pass a special resolution at a general
meeting?
A. At least 75% of votes cast
B. Unanimous consent of all shareholders
C. 60% of votes cast
D. A simple majority of votes cast
A. Section 283 CA 2006 defines a special resolution as one passed by
a majority of not less than 75% of members voting.
8. Which duty under the Companies Act 2006 requires a director to act
in the way most likely to promote the success of the company for the
benefit of its members as a whole?
A. The duty to avoid conflicts of interest (s.175)
B. The duty to exercise independent judgment (s.173)
C. The duty to declare an interest in a proposed transaction (s.177)
D. The duty to promote the success of the company (s.172)
D. Section 172 CA 2006 codifies the core director's duty to act in a
way considered, in good faith, most likely to promote the company's
success.
9. What are pre-emption rights in the context of a company allotting
new shares?
A. Existing shareholders have first refusal to subscribe for new shares pro
rata to their holdings
B. Only public companies can enjoy pre-emption rights
C. New shareholders are always given priority over existing ones
D. Directors have the right to buy new shares before anyone else
A. Section 561 CA 2006 gives existing shareholders statutory pre-
emption rights on an allotment of shares for cash, protecting them
from dilution.
10. How can a company alter its articles of association?
A. By a simple board resolution alone
B. By notifying Companies House without any shareholder vote
C. By passing a special resolution of the shareholders
D. Only with unanimous written consent of all shareholders
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, Solicitors Qualifying Examination (SQE1)
C. Section 21 CA 2006 requires a special resolution (75% majority)
to amend the articles, after which the amended articles must be filed
at Companies House.
Business Law & Practice: Finance, Insolvency & Tax
11. What is the key difference between a fixed and a floating charge?
A. A fixed charge cannot be registered at Companies House
B. A floating charge gives the lender immediate ownership of the asset
C. A floating charge always ranks ahead of a fixed charge
D. A fixed charge attaches to a specific identified asset and restricts
dealing with it; a floating charge hovers over a class of changing assets
D. A fixed charge fixes on specific property (e.g. land); a floating
charge covers a fluctuating class of assets like stock, crystallising
into a fixed charge on default.
12. Within what period must a registrable charge created by a company
generally be delivered to Companies House?
A. 21 days beginning the day after creation
B. 7 days
C. 3 months
D. 6 months
A. Under s.859A CA 2006, particulars of a charge must be delivered
to the registrar within 21 days of creation to avoid it being void
against a liquidator or administrator.
13. In a company liquidation, which of the following is paid first from
realised floating charge assets, ahead of the floating chargeholder?
A. Unsecured trade creditors
B. The costs and expenses of the liquidation and preferential debts
C. Subordinated loan creditors
D. Shareholders
B. Liquidation expenses and preferential debts (e.g. certain
employee claims) are paid out of floating charge assets in priority to
the floating chargeholder under the Insolvency Act 1986.
14. What must be shown to establish wrongful trading under s.214
Insolvency Act 1986?
Page 4 of 62
SQE1 - SOLICITORS QUALIFYING EXAMINATION |
COMPLETE EXAM QUESTIONS AND VERIFIED
SOLUTIONS | 2026/2027 LATEST VERSION
Solicitors Qualifying Examination (SQE1)
Functioning Legal Knowledge
1. Which business structure gives its owners the benefit of limited
liability while being taxed as if it were a partnership?
A. A sole trader business
B. An unlimited company
C. A limited liability partnership (LLP)
D. A general partnership
C. LLPs have separate legal personality and limited liability but are
tax-transparent, taxed as partnerships under the Partnership Act
1890 default rules applied by analogy.
2. In the absence of a partnership agreement, how are profits shared
under the Partnership Act 1890?
A. According to hours worked
B. At the discretion of the managing partner
C. In proportion to capital contributed
D. Equally between the partners
D. Section 24 of the Partnership Act 1890 implies equal sharing of
profits and losses where there is no agreement to the contrary.
3. What is the effect of an LLP having separate legal personality?
A. The LLP cannot be sued in its own name
Page 1 of 62
, Solicitors Qualifying Examination (SQE1)
B. Profits automatically belong to the LLP rather than its members
C. Members remain personally liable for all LLP debts
D. The LLP, not its members, contracts and owns property in its own
name
D. Like a company, an LLP is a body corporate under the LLP Act
2000, distinct from its members, who benefit from limited liability.
4. Which document must be filed with Companies House to incorporate
a private company limited by shares?
A. A partnership deed
B. Form IN01 together with the memorandum and articles of association
C. A certificate of good standing
D. A statutory declaration of solvency
B. Form IN01 (application to register a company), plus a
memorandum of association and articles, is filed to achieve
incorporation under the Companies Act 2006.
5. What is the key distinction between a private and a public limited
company?
A. Private companies must file accounts at Companies House but public
companies need not
B. Only public companies can have limited liability
C. A public company may offer its shares to the public; a private company
may not
D. A private company must have at least two directors
C. Under CA 2006, a plc may offer shares to the public and must have
a minimum issued share capital; a private company is prohibited
from doing so.
6. Under the Model Articles, what is generally required for the board of
directors to transact business validly?
A. Shareholder approval is required for every board decision
B. The company secretary must chair the meeting
C. A quorum of directors, as fixed by the articles, must be present
D. Every director must attend in person
C. Model Articles require a quorum (commonly two directors) to be
present for board decisions to be validly taken, unless the articles
state otherwise.
Page 2 of 62
, Solicitors Qualifying Examination (SQE1)
7. What majority is required to pass a special resolution at a general
meeting?
A. At least 75% of votes cast
B. Unanimous consent of all shareholders
C. 60% of votes cast
D. A simple majority of votes cast
A. Section 283 CA 2006 defines a special resolution as one passed by
a majority of not less than 75% of members voting.
8. Which duty under the Companies Act 2006 requires a director to act
in the way most likely to promote the success of the company for the
benefit of its members as a whole?
A. The duty to avoid conflicts of interest (s.175)
B. The duty to exercise independent judgment (s.173)
C. The duty to declare an interest in a proposed transaction (s.177)
D. The duty to promote the success of the company (s.172)
D. Section 172 CA 2006 codifies the core director's duty to act in a
way considered, in good faith, most likely to promote the company's
success.
9. What are pre-emption rights in the context of a company allotting
new shares?
A. Existing shareholders have first refusal to subscribe for new shares pro
rata to their holdings
B. Only public companies can enjoy pre-emption rights
C. New shareholders are always given priority over existing ones
D. Directors have the right to buy new shares before anyone else
A. Section 561 CA 2006 gives existing shareholders statutory pre-
emption rights on an allotment of shares for cash, protecting them
from dilution.
10. How can a company alter its articles of association?
A. By a simple board resolution alone
B. By notifying Companies House without any shareholder vote
C. By passing a special resolution of the shareholders
D. Only with unanimous written consent of all shareholders
Page 3 of 62
, Solicitors Qualifying Examination (SQE1)
C. Section 21 CA 2006 requires a special resolution (75% majority)
to amend the articles, after which the amended articles must be filed
at Companies House.
Business Law & Practice: Finance, Insolvency & Tax
11. What is the key difference between a fixed and a floating charge?
A. A fixed charge cannot be registered at Companies House
B. A floating charge gives the lender immediate ownership of the asset
C. A floating charge always ranks ahead of a fixed charge
D. A fixed charge attaches to a specific identified asset and restricts
dealing with it; a floating charge hovers over a class of changing assets
D. A fixed charge fixes on specific property (e.g. land); a floating
charge covers a fluctuating class of assets like stock, crystallising
into a fixed charge on default.
12. Within what period must a registrable charge created by a company
generally be delivered to Companies House?
A. 21 days beginning the day after creation
B. 7 days
C. 3 months
D. 6 months
A. Under s.859A CA 2006, particulars of a charge must be delivered
to the registrar within 21 days of creation to avoid it being void
against a liquidator or administrator.
13. In a company liquidation, which of the following is paid first from
realised floating charge assets, ahead of the floating chargeholder?
A. Unsecured trade creditors
B. The costs and expenses of the liquidation and preferential debts
C. Subordinated loan creditors
D. Shareholders
B. Liquidation expenses and preferential debts (e.g. certain
employee claims) are paid out of floating charge assets in priority to
the floating chargeholder under the Insolvency Act 1986.
14. What must be shown to establish wrongful trading under s.214
Insolvency Act 1986?
Page 4 of 62
