BUSINESS LAW AND PRACTICE EXAM QUESTIONS
/ PAPERS
Written Questions
2016-2017 Paper Open Book / 2020-2021 Specimen Paper
1. Question 1 –
a) Company looking to seek further investment – X has interest. X will be director
and shareholder. How will this affect existing voting position if she gets ordinary
shares in return of X’s investment, all directors/shareholders participate in
resolutions and no one is interested in those decisions. (6 marks)
Board level – no amendment to MA = decisions on BM will take simple majority
(MA7) and each director has one vote.
Existing position – 4 directors so to pass resolution – need atleast 3 in favour.
There is a chairperson – casting vote useful if there is a deadlock.
After X’s appointment – X will be executive / non-executive - has one vote. To
pass still need 3 in favour. But to prevent need 3 instead of 2. If all in attendance
– casting vote is less useful and voting position is diminished.
Members – if X receives ordinary shares – 50% of shareholding = can block all
ordinary and special resolutions if X has more shareholdings.
b) Options to company then give X voting rights in return of investment.
Lend the money to the company. Could require loan to be secured against
company’s assets. Company can do this – depends on existing debt and security
Company could issue non-voting shares e.g. preference shares. But shares need
to offer dividends, cumulating dividends – redeemable so can get capital sum
back.
c) X made a profit from a contract which company has approved of.
S175 CA 2006 – contract could have been an opportunity and therefore conflict
of interest.
Does not apply if exceptions listed in s175(4) apply – (b) applies as company
authorised X to take contract in her name.
See BM – is meeting quorate even though X took part who had an interest in the
resolution.
d) X wants advise on purchase of shares of company and whether it is a good idea.
Firm is not regulated by FMSA.
S19 FMSA = not involve yourself in regulated activity unless authorised/exempt.
4 question whether to undertake a regulated activity = are you in business, is
there a specified investment, is there a specified activity, is there an exclusion
2. Question 2
a) Income Tax
b) Income Tax
c) Security documentation – what does it mean.
First legal mortgage over properties and property being purchased with the loan
Fixed charge over proceeds of sale, properties acquired in the future, present
and future interests, present and future rights, licenses, guarantees, rents,
deposits, contracts, covenants and warranties relating to the properties, all
present and future goodwill and uncalled capital and all its equipment.
3. Question 3
a) Shareholder resolution for substantial property transaction
S190 CA 2006 – substantial property transaction
Is a non-cash asset (s1163 CA 06)
/ PAPERS
Written Questions
2016-2017 Paper Open Book / 2020-2021 Specimen Paper
1. Question 1 –
a) Company looking to seek further investment – X has interest. X will be director
and shareholder. How will this affect existing voting position if she gets ordinary
shares in return of X’s investment, all directors/shareholders participate in
resolutions and no one is interested in those decisions. (6 marks)
Board level – no amendment to MA = decisions on BM will take simple majority
(MA7) and each director has one vote.
Existing position – 4 directors so to pass resolution – need atleast 3 in favour.
There is a chairperson – casting vote useful if there is a deadlock.
After X’s appointment – X will be executive / non-executive - has one vote. To
pass still need 3 in favour. But to prevent need 3 instead of 2. If all in attendance
– casting vote is less useful and voting position is diminished.
Members – if X receives ordinary shares – 50% of shareholding = can block all
ordinary and special resolutions if X has more shareholdings.
b) Options to company then give X voting rights in return of investment.
Lend the money to the company. Could require loan to be secured against
company’s assets. Company can do this – depends on existing debt and security
Company could issue non-voting shares e.g. preference shares. But shares need
to offer dividends, cumulating dividends – redeemable so can get capital sum
back.
c) X made a profit from a contract which company has approved of.
S175 CA 2006 – contract could have been an opportunity and therefore conflict
of interest.
Does not apply if exceptions listed in s175(4) apply – (b) applies as company
authorised X to take contract in her name.
See BM – is meeting quorate even though X took part who had an interest in the
resolution.
d) X wants advise on purchase of shares of company and whether it is a good idea.
Firm is not regulated by FMSA.
S19 FMSA = not involve yourself in regulated activity unless authorised/exempt.
4 question whether to undertake a regulated activity = are you in business, is
there a specified investment, is there a specified activity, is there an exclusion
2. Question 2
a) Income Tax
b) Income Tax
c) Security documentation – what does it mean.
First legal mortgage over properties and property being purchased with the loan
Fixed charge over proceeds of sale, properties acquired in the future, present
and future interests, present and future rights, licenses, guarantees, rents,
deposits, contracts, covenants and warranties relating to the properties, all
present and future goodwill and uncalled capital and all its equipment.
3. Question 3
a) Shareholder resolution for substantial property transaction
S190 CA 2006 – substantial property transaction
Is a non-cash asset (s1163 CA 06)
