This exam test is written to expose managers in practice, experts, professionals and students to the reality of applying the concepts of business management
Mega Bank plc has a first fixed charge over the premises of Rosetta Interiors Limited. If,
on liquidation, the value of those premises is less than the sum owed to Mega Bank plc,
where will Mega Bank plc rank as regards to the shortfall? - Mega Bank becomes an
ordinary unsecured creditor as regards to the deficit.
True or false:
Would this transaction by the relevant company be set aside as a transaction at
undervalue?
GLG Limited (GLG) has just been place into administration. 26 months ago it sold a
property to an unconnected company for £63,000 less than market value. GLG's assets
were less than its liabilities as a result of the transaction. - TRUE
This transaction is within the 2 year 'relevant time' for transactions at an undervalue,
and the company was insolvent at the time
Which ONE of the following can the court NOT order under sections 238 or 289
Insolvency Act 1986?
A) The court can require any property transferred as a preference to be re-invested in
the company.
B) The court can impose a custodial sentence on any guilty parties.
C) If the proceeds of sale have been used to purchase property, the court can make an
order that such property be vested in the company.
D) The court can order the release or discharge of any security entered into. - B
Demon Electrical Limited went into creditors' voluntary liquidation last year. The
liquidation is now finalising and the dividend available for unsecured creditors. The
liquidator has realised £30,000 and has incurred expenses of £500 and fees of £2,000.
In addition, the preferential creditors are owed £20,000. Unsecured creditors amount to
£215,000. What is the dividend available to unsecured creditors? - 50p in the £
,-> The liquidator's fees and expenses and the preferential creditors are paid before the
unsecured creditors. Thus there would only be £107,500 to split equally among the
unsecured creditors. £107,500 divided by the £215,00 owed to the unsecured creditors
amounts to a liquidation dividend of 50p in the £.
Which of the following conditions need to be fulfilled if the transaction is going to be set
aside as a transaction at an undervalue under section 238 IA 1986?
A) That the company desired to help the purchaser?
B) That the transaction was made within 2 years of the onset of insolvency.
C) That the company received significantly less consideration than it gave. - B & C
There is no need to show that the company was motivated by any desire to improve the
position of the other party to a transaction at an undervalue.
Indicate whether the following statement is true or false:
Due to the fact that they enjoy the benefit of limited liability, LLPs are treated for tax
purposes as companies. - False
LLP's are treated like general partnerships for tax purposes.
In a company under the CA 2006 which one of the following is incorrect?
A) Following an allotment of shares, form SH01 at CH within 14 days of allotment.
B) Following allotment of shares, Form SH91 and any special resolutions must be filed
at CH within 15 days of allotment.
C) Following an allotment of shares, Form SH01 must be filed at CH within one month
of the allotment.
D) Whilst most ordinary resolutions do not need to be filed at CH. An ordinary resolution
to allot shares under s.551 must be filed within 15 days (s.29, 30 and 551(9). - C + D
Which ONE or MORE of the following is incorrect?
A) In general or limited partnerships, ordinary matters are decided by a majority of the
partners.
B) One of the advantages of the general and limited partnership is that they can be
created informally and do not need to be registered.
C) In general partnerships, limited liability partnerships and limited partnerships, a new
partner can only join the partnership with unanimous consent of the other parties.
D) Because LLP's have a separate legal personality from their members, the partners in
LLPs are classed as employees. - All of them are incorrect.
Firenze Trading Limited is a company with model articles incorporated in 2012. It's
share capital is 1,000 ordinary shares of £1 each. Which of the following number of
resolutions will be needed to allot new ordinary shares? - One special resolution
-> There are no constitutional restrictions.
, -> A private company with one class of shares already has authority to allot under
s.550.
Cyber IT Solutions Limited, Anatom Research Limited and Bosen Solutions Limited are
in partnership supplying IT services to the retail sector.
The follow events take place:
- On 26 February the firm enters into a contract to supply hardward components to a
customer.
- On 4th March Anatom Research Limited retires from the partnership and the other
companies agree to indemnify Anatom against liability on the contract.
- On 25th March the partnership defaults on the contract.
- On 28th March Toplap Solutions Limited joins the firm as a partner.
Who is liable? - The 3 partners at the time the contract was entered into.
Þ The indemnity does not affect 3rd party rights.
Which TWO or MORE of the following are advantages of a business as an LLP?
A) Partners have limited liability.
B) No formality necessary.
C) Separation of powers between managers and owners.
D) Ability to secure a loan by floating charge. - A+D
Which ONE of the following is NOT a factor which might realistically make a company a
more attractive business medium compared to a partnership or a sole trader?
A) An individual can incorporate a company.
B) Limited liability of the members.
C) Separate legal personality of the company.
D) The requirement to submit accounts to CH. - D
-Companies can arguably provide much more protection for their owners than
partnerships, and single member companies are possible. However, in a partnership its
financial affairs are kept private.
- The public nature of accounts is a disadvantage if a company wants to conceal its
financial state of affairs.
Lucinda and Jane have set up a business, Hunca Munca Pets which is a partnership
within section 1 of the Partnership Act 1890. They have each contributed £1,000 of the
capital to the business. They have agreed that Lucinda should be responsible for all the
purchases of stock, and that Jane should be responsible for sales in their shop.
How will they be liable for the debts? - Lucinda and Jane will be jointly liable for the
amounts owed to supplies of stock even if the purchases were only made by Lucinda.
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