ICAEW Law Exam With Questions And 100% Correct
Answers Latest Update
Duties of Directors in Companies Act 2006 - Answer Act within powers and use powers
for purpose given
Promote success of the company- acting in good faith for benefit of the members as a
whole
Exercise independent judgment
Exercise reasonable care, skill and diligence
Avoid conflict of interest
Not accept benefits from third parties
Declare an interest in a proposed transaction
Consequence of breach of directors duties - Answer Director may have to make good
losses
Contracts entered into between company and director may be rendered voidable
Company may be able to recover property transferred
due to the breach (from him or from the third party unless they acquired it for value and
in good faith)
,Injunction may be granted to stop breach
Breach of disqualification order - Answer Criminal offence - could result in a fine and
imprisonment
Disqualified director is personally liable for the debts of the company while so acting
Grounds for disqualification - Answer Persistent breaches of the Companies Act
(3 convictions for default in five years)
= max. 5 years
Conviction of a serious offence in connection with the management of company
= max. 15 years disqualification
Investigation by Secretary of State finds director to be unfit to be concerned in
management of company
= max. 15 years
Liquidator's report finds director unfit
= min. 2 max. 15 years
Secreatary of State feels it is in the public interest
= max. 15 years
Breach of competition law
= max. 15 years
,Members rights - Answer Receive a copy of annual accounts
To requisition requirement the directors to call a general meeting
To appoint a proxy (to exercise their rights
Directors' actions that members must approve - Answer Service contracts for two years
or more
Substantial property transactions
Loans to directors
Ex gratia payments for loss of office
Substantial property transactions - Answer more than £100,000
or
more than 5,000 and more than 10% of company's net assets
Orders to wind up company if - Answer Company was originally formed for an illegal or
fraudulent purpose
There is total deadlock in the running of the company's affairs
Just and equitable
Shareholders have lost confidence in the management of the company
Notice for AGM - Answer 21 days unless all members agree to less
Business of AGM - Answer Consider accounts
Appoint auditors
Elect directors
Declare dividends
Notice for General Meeting - Answer 14 days unless 90% agree to less
, Notice for Class meeting - Answer 14 days unless 90% agree to less
Inquorated meeting - Answer If a quorum is not present
Quorum - Answer Minimum number of members that needs to be present at a meeting in
order to validate business
(generally 2)
Single member companies - Answer Single member can conduct business without the
need for notice or minutes
Must keep fill written record of any decision which should have been taken in a general
meeting
Record must be retained for 10 years
Two major sources of finance for a company - Share capital
Loan capital
Loan capital - A debenture is a document issued by a company containing an
acknowledgment of its indebtedness whether secured or unsecured
Share capital - A share is the interest of a shareholder in a company measured by a sum
of money
It is bundle of rights and obligations
Voting rights of a debenture holder (loan capital) - Ans Creditor of the company and
hence no voting right
Answers Latest Update
Duties of Directors in Companies Act 2006 - Answer Act within powers and use powers
for purpose given
Promote success of the company- acting in good faith for benefit of the members as a
whole
Exercise independent judgment
Exercise reasonable care, skill and diligence
Avoid conflict of interest
Not accept benefits from third parties
Declare an interest in a proposed transaction
Consequence of breach of directors duties - Answer Director may have to make good
losses
Contracts entered into between company and director may be rendered voidable
Company may be able to recover property transferred
due to the breach (from him or from the third party unless they acquired it for value and
in good faith)
,Injunction may be granted to stop breach
Breach of disqualification order - Answer Criminal offence - could result in a fine and
imprisonment
Disqualified director is personally liable for the debts of the company while so acting
Grounds for disqualification - Answer Persistent breaches of the Companies Act
(3 convictions for default in five years)
= max. 5 years
Conviction of a serious offence in connection with the management of company
= max. 15 years disqualification
Investigation by Secretary of State finds director to be unfit to be concerned in
management of company
= max. 15 years
Liquidator's report finds director unfit
= min. 2 max. 15 years
Secreatary of State feels it is in the public interest
= max. 15 years
Breach of competition law
= max. 15 years
,Members rights - Answer Receive a copy of annual accounts
To requisition requirement the directors to call a general meeting
To appoint a proxy (to exercise their rights
Directors' actions that members must approve - Answer Service contracts for two years
or more
Substantial property transactions
Loans to directors
Ex gratia payments for loss of office
Substantial property transactions - Answer more than £100,000
or
more than 5,000 and more than 10% of company's net assets
Orders to wind up company if - Answer Company was originally formed for an illegal or
fraudulent purpose
There is total deadlock in the running of the company's affairs
Just and equitable
Shareholders have lost confidence in the management of the company
Notice for AGM - Answer 21 days unless all members agree to less
Business of AGM - Answer Consider accounts
Appoint auditors
Elect directors
Declare dividends
Notice for General Meeting - Answer 14 days unless 90% agree to less
, Notice for Class meeting - Answer 14 days unless 90% agree to less
Inquorated meeting - Answer If a quorum is not present
Quorum - Answer Minimum number of members that needs to be present at a meeting in
order to validate business
(generally 2)
Single member companies - Answer Single member can conduct business without the
need for notice or minutes
Must keep fill written record of any decision which should have been taken in a general
meeting
Record must be retained for 10 years
Two major sources of finance for a company - Share capital
Loan capital
Loan capital - A debenture is a document issued by a company containing an
acknowledgment of its indebtedness whether secured or unsecured
Share capital - A share is the interest of a shareholder in a company measured by a sum
of money
It is bundle of rights and obligations
Voting rights of a debenture holder (loan capital) - Ans Creditor of the company and
hence no voting right
