1
BLP LATEST UPADATES REVISION NOTES FOR EXAM BLP REVISION
NOTES NEW EDITION ALREADY GRADED A+
1. A solicitor is advising a client who is deciding whether to operate a new
business as a sole trader, ordinary partnership, limited liability partnership,
or private company limited by shares. The client expects substantial growth,
wants limited personal liability, and anticipates raising additional finance
from investors. Which business medium is generally the most appropriate?
A. Sole trader, because it automatically provides limited liability.
B. Ordinary partnership, because partners never have personal liability.
C. Private company limited by shares, because it provides separate legal
personality and generally limits members' liability.
D. Informal association, because incorporation is unnecessary.
Answer: C
2. A client wishes to establish a private company limited by shares with two
shareholders and three directors. The solicitor explains that the company
will become a separate legal person once incorporated. Which document
forms part of the company's constitutional framework?
A. Articles of association.
B. Partnership agreement.
C. Shareholders' personal tax returns.
D. Directors' employment contracts only.
Answer: A
3. A company is being incorporated and the founders want to adopt the
statutory model articles without making bespoke amendments. Which
statement most accurately describes the model articles?
A. They automatically apply to every business operating in England and
Wales.
B. They are statutory default articles that can apply where appropriate to
the company.
C. They are contracts between the company and HMRC.
,2
D. They are compulsory only for public companies.
Answer: B
4. A private company has been incorporated and one shareholder wants to
understand the effect of the company's separate legal personality. Which
statement is correct?
A. The company and its shareholders are generally treated as the same legal
person.
B. The company's property automatically belongs to its shareholders
personally.
C. The company has no capacity to enter contracts.
D. The company is generally a separate legal person from its shareholders.
Answer: D
5. A client asks why incorporating a company can be commercially attractive
compared with trading as a sole trader. The solicitor explains that limited
liability generally means that:
A. Shareholders are never liable for any amount owed by the company.
B. Shareholders' liability is generally limited to the amount they have agreed
to contribute, subject to exceptions.
C. Directors are automatically protected from every personal liability.
D. The company cannot become insolvent.
Answer: B
6. A company wishes to allot new ordinary shares to an investor. The directors
have authority to allot the shares but are concerned that existing
shareholders may have statutory pre-emption rights. What is the principal
purpose of pre-emption rights?
A. To give existing shareholders an opportunity to maintain their
proportionate ownership when certain new equity securities are issued.
B. To prevent directors from ever issuing shares.
C. To require all shares to be sold through a stock exchange.
D. To give creditors priority over shareholders.
Answer: A
, 3
7. A private company with one class of ordinary shares wants to allot
additional ordinary shares. The directors ask whether they necessarily need
a separate shareholder resolution conferring allotment authority in every
case. Which statement is most accurate?
A. Directors can never allot shares without court approval.
B. A company with one class of shares may benefit from statutory authority
to allot under the Companies Act 2006, subject to the applicable
requirements.
C. Only shareholders can physically issue share certificates.
D. The company's auditors must approve every allotment.
Answer: B
8. A company wants to issue a new class of preference shares with rights
different from its existing ordinary shares. The solicitor explains that the
company must consider its constitution and the statutory requirements
governing the creation and variation of share rights. Which issue is most
important?
A. Whether the company's employees consent.
B. Whether the company's bank manager approves.
C. Whether the proposed rights are properly authorised and incorporated
into the company's constitution.
D. Whether the company's annual turnover exceeds VAT registration limits.
Answer: C
9. A private company wants to amend its articles to introduce a new provision
regulating transfers of shares. Which resolution is ordinarily required to
alter the articles?
A. Ordinary resolution.
B. Board resolution only.
C. Written notice to Companies House without any resolution.
D. Special resolution.
Answer: D
BLP LATEST UPADATES REVISION NOTES FOR EXAM BLP REVISION
NOTES NEW EDITION ALREADY GRADED A+
1. A solicitor is advising a client who is deciding whether to operate a new
business as a sole trader, ordinary partnership, limited liability partnership,
or private company limited by shares. The client expects substantial growth,
wants limited personal liability, and anticipates raising additional finance
from investors. Which business medium is generally the most appropriate?
A. Sole trader, because it automatically provides limited liability.
B. Ordinary partnership, because partners never have personal liability.
C. Private company limited by shares, because it provides separate legal
personality and generally limits members' liability.
D. Informal association, because incorporation is unnecessary.
Answer: C
2. A client wishes to establish a private company limited by shares with two
shareholders and three directors. The solicitor explains that the company
will become a separate legal person once incorporated. Which document
forms part of the company's constitutional framework?
A. Articles of association.
B. Partnership agreement.
C. Shareholders' personal tax returns.
D. Directors' employment contracts only.
Answer: A
3. A company is being incorporated and the founders want to adopt the
statutory model articles without making bespoke amendments. Which
statement most accurately describes the model articles?
A. They automatically apply to every business operating in England and
Wales.
B. They are statutory default articles that can apply where appropriate to
the company.
C. They are contracts between the company and HMRC.
,2
D. They are compulsory only for public companies.
Answer: B
4. A private company has been incorporated and one shareholder wants to
understand the effect of the company's separate legal personality. Which
statement is correct?
A. The company and its shareholders are generally treated as the same legal
person.
B. The company's property automatically belongs to its shareholders
personally.
C. The company has no capacity to enter contracts.
D. The company is generally a separate legal person from its shareholders.
Answer: D
5. A client asks why incorporating a company can be commercially attractive
compared with trading as a sole trader. The solicitor explains that limited
liability generally means that:
A. Shareholders are never liable for any amount owed by the company.
B. Shareholders' liability is generally limited to the amount they have agreed
to contribute, subject to exceptions.
C. Directors are automatically protected from every personal liability.
D. The company cannot become insolvent.
Answer: B
6. A company wishes to allot new ordinary shares to an investor. The directors
have authority to allot the shares but are concerned that existing
shareholders may have statutory pre-emption rights. What is the principal
purpose of pre-emption rights?
A. To give existing shareholders an opportunity to maintain their
proportionate ownership when certain new equity securities are issued.
B. To prevent directors from ever issuing shares.
C. To require all shares to be sold through a stock exchange.
D. To give creditors priority over shareholders.
Answer: A
, 3
7. A private company with one class of ordinary shares wants to allot
additional ordinary shares. The directors ask whether they necessarily need
a separate shareholder resolution conferring allotment authority in every
case. Which statement is most accurate?
A. Directors can never allot shares without court approval.
B. A company with one class of shares may benefit from statutory authority
to allot under the Companies Act 2006, subject to the applicable
requirements.
C. Only shareholders can physically issue share certificates.
D. The company's auditors must approve every allotment.
Answer: B
8. A company wants to issue a new class of preference shares with rights
different from its existing ordinary shares. The solicitor explains that the
company must consider its constitution and the statutory requirements
governing the creation and variation of share rights. Which issue is most
important?
A. Whether the company's employees consent.
B. Whether the company's bank manager approves.
C. Whether the proposed rights are properly authorised and incorporated
into the company's constitution.
D. Whether the company's annual turnover exceeds VAT registration limits.
Answer: C
9. A private company wants to amend its articles to introduce a new provision
regulating transfers of shares. Which resolution is ordinarily required to
alter the articles?
A. Ordinary resolution.
B. Board resolution only.
C. Written notice to Companies House without any resolution.
D. Special resolution.
Answer: D
