Company Law for Business 266 All Topics Questions and Answers 100% Correct.(Tutors only)
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Module
CL266
Institution
CL266
Company Law for Business 266 All Topics Questions and Answers 100% Correct.(Tutors only)
Multiple Choice Questions and Answers Tutors Only
Topic 1: About Companies, company Law and Legal nature of Companies
1. From a shareholder‟s point of view, the purchase of shares in a Pty Ltd compa...
Topic 1: About Companies, company Law and
Legal nature of Companies
1. From a shareholder‟s point of view, the purchase of shares in a Pty Ltd company may
be an attractive option because:
a. The investor has limited liability.
b. The company has limited liability.
c. Both the investor and the company have limited liability.
d. The shares can be freely traded on a stock market.
2. Jim has purchased 25% of the shares in Zig Zag Pty Ltd, a small proprietary
company. The legal effect of this transaction is that:
a. Jim owes 25% of Zig Zag Pty Ltd‟s liabilities.
b. Jim owns 25% of the assets of Zig Zag Pty Ltd.
c. Jim has a 25% say in the management of the company.
d. Jim has acquired certain rights, such as voting rights and the right to receive a dividend
(once declared).
3. Select the statement that most accurately describes the key features of companies:
a. Companies must be incorporated (registered).
b. Companies have one or more members.
c. Companies have one or more
directors. d. All of the above.
4. A company is a separate legal entity. This means that:
a. The company is separate from its shareholders.
b. The company is separate from its directors/officers.
c. The company is separate from its shareholders, directors and
officers. d. All of the above.
,5. Concerning the management of a company, select the most appropriate statement:
a. Companies are generally managed by individual directors.
b. Companies are generally managed by the directors collectively.
c. Companies are generally managed by individual shareholders.
d. Companies are generally managed by shareholders collectively.
6. Concerning the application of the Corporations Act 2001 (Cth), select the most
appropriate statement:
a. The Corporations Act 2001 (Cth) applies uniformly throughout Australia.
b. The Corporations Act 2001 (Cth) only applies to companies formed in states and
territories that have adopted it.
c. The Corporations Act 2001 (Cth) is the only source of law applicable to
companies formed anywhere in Australia.
d. The Corporations Act 2001 (Cth) only applies to companies that have adopted it.
7. One of the following is not a role of ASIC:
a. To regulate partnerships.
b. To investigate breaches of corporate law.
c. To receive and process corporate information.
d. To maintain a national database of corporate information that is accessible to the public.
8. In the case of Salomon v Salomon & Co Ltd (1897) the High Court of England held that:
a. Mr Solomon acted as an agent of the company and was therefore liable for the
company‟s debt.
b. Mr Solomon acted as a trustee for the company and was therefore liable for
the company‟s debt.
c. The company was a separate legal entity (separate from its director) and it incurred
debts in its own right.
d. The company was not liable to its creditors because the losses were caused
by circumstances beyond Mr Solomon‟s control.
9. The case of Lee v Lee’s Air Farming Ltd (1961) illustrates that:
a. A company is a separate person from its founder(s) and director(s).
b. A company can contract with its founder(s) and
director(s). c. Both of the above are correct.
d. Only public companies can contract with their founder(s) and director(s).
, 10. Kathy needs more capital for her business and she is considering whether to enter into
a partnership or incorporate a small proprietary company in which she will be the sole
director and shareholder. This company structure gives her which of the following
advantages:
a. It is quicker and easier to establish than a partnership.
b. It allows her to limit her liability whilst leaving her in control.
c. It allows her to limit the company‟s liability for the debts it incurs.
d. All of the above are correct.
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