Smith And Keenans Company Law 14th Edition Charles Wild, Stuart Weinstein - Solutions

3 Which of the following can petition the court for relief under CA 2006, s 994?A The company.B Members holding not less than 10 per cent in number of the company’s issued shares.C A member of the company.D A creditor of the company.
2 Tom is the majority shareholder in Ribble Ltd and is also a director. Recently Tom sold freehold land belonging to the company to his wife who is also a director, and two months later his wife sold it to the local council at a profit of £30,000. The sale was ratified by an ordinary
1 The directors of Ouse Ltd have been selling off certain of the company’s assets negligently at what the minority shareholders regard as too low a value. The directors have not made any gain themselves. What action can the minority shareholders bring on behalf of the company?A An action could be
5 Sven is a minority shareholder in the Finnish Company Ltd. Alf, Bob and Carl are the Chairman, Managing Director and Export Director respectively and together they control the company.Sven complains that:l The company has just sold a ten-acre site to someone (believed to be Alf’s father) for
4 ‘. . . I think that one useful cross-check in a case like this is to ask whether the exercise of the power in question would be contrary to what the parties, by word or conduct, have actually agreed. Would it conflict with the promises which they appear to have exchanged? . . . In a
3 Give an account of the legal procedure which must be followed in order to effect the registration of a new public limited company which is entitled to do business.(The Association of Chartered Certified Accountants)
2 The directors of Merchanting Ltd, a very successful business, have allocated most of the profits to themselves as remuneration and as donations to a charitable institution established by the founder of the company. Sheila, a shareholder, wishes to challenge the amount of the
1 In certain areas the Companies Act 2006 and to a limited extent the Insolvency Act 1986 give special protection to minority shareholders with various holdings of shares. The most important of these statutory provisions seems to be s 994 of the Companies Act 2006 which gives any member the right
5 At first sight, the statutory contract may be viewed as an effective method of enforcing a shareholder’s rights, especially when considered alongside s 630 and the application of General Equitable Principles. However, once other aspects of company law are examined and factored into this
4 Explain how the provisions of the Companies Act 1985 attempt to ensure that majority shareholders do not conduct the affairs of a company with complete disregard for the interests of minority shareholders.
3 ‘For a minority shareholder who has suffered a wrong at the hands of the majority to establish a case under the alternative remedy he must show both that he suffered “unfairly prejudicial conduct” and that this was suffered in his capacity as a member of the company.’Discuss.
2 Explain the rule in Foss v Harbottle and describe the limits to this rule.
1 Ben is a minority shareholder in App plc, whose directors are Charles, David and Edward.Though not the controlling shareholders the directors control the company in practice.(a) Last year one of the company’s employees was convicted of stealing property belonging to the company and was given a
1 A person who acquires an interest in the shares of a public company must notify the company of that interest when it equals or exceeds:A 20 per cent of the voting shares.B 10 per cent of the voting shares.C 5 per cent of the voting shares.D 3 per cent of the voting shares.
6 (a) ‘A company cannot issue shares at a discount.’Discuss.(b) False Ltd and Gorgon Ltd both have an issued share capital of £500,000 and a share premium account of £50,000. The directors of False Ltd have recently decided that it is overcapitalised and wish to return £55,000 to the
5 The following is a summarised balance sheet of C Ltd:Authorised Capital £ £100,000 Ordinary Shares of £1 each 100,000 10,000 – 10 per cent Redeemable Preference Shares of £1 each 10,000 110,000 Total Assets (including Cash at Bank of £50,000) 400,000 Liabilities 200,000 Net Assets 200,000
4 The Companies Act 2006 places upon public companies certain controls over the type and value of the consideration which such companies may receive for an issue of their shares. You are required to select any three of these controls and explain in each instance how the control restricts the
3 Privatus Ltd was a private company which owed the sum of £4,000 to Alex for goods which he had sold to it. As the company was short of cash, its directors allotted to Alex 6,000 £1 shares in the company credited as fully paid. The share certificate issued to Alex stated that the shares were
2 Every public company is required to maintain a register of ‘substantial holdings and interests’in shares which it has issued.(a) What duties are imposed upon persons to notify such holdings and interests?(b) What is the purpose of the requirement?(The Institute of Chartered Accountants in
1 Describe an Annual Return and state the particulars which must be given in the Annual Return of a company which has a share capital. (The Institute of Company Accountants)
6 George, a director and member, proposes to transfer his shares in Moorgate Ltd in breach of a pre-emption clause in the articles of Moorgate which provides that members will offer their shares to other members first and that the other members may purchase them. What action can the other
5 George, who is a creditor of Tees Ltd, can object to the court, regardless of the amount of his debt, about a resolution of the company which has the effect of:A Writing off goodwill against the share premium account.B Repaying debenture holders.C Writing off a deficit on profit and loss account
4 John is a director of Derwent plc, a listed company. The board of Derwent received at its last meeting a report by Joe, the finance director of Derwent, that Derwent’s profits would be up by 30 per cent and that this would appear in the press report of the annual results in two weeks’time.
3 Trent plc has issued convertible debentures to Bill at a discount. The legal position is:A the issue is valid but the right to convert to shares is void.B the issue is valid and so is the right to convert to shares.C the issue is void and so therefore is the right to convert to shares.D the issue
2 Which of the following is a permissible use of the share premium account under s 130 of the Companies Act 2006?A Writing off a premium on redemption of any ordinary shares.B Writing off goodwill.C Writing off a premium on the redemption of debentures.D Writing off a deficit on the profit and loss
1 Boxo plc was formed five years ago. It now proposes to issue 100,000 shares of £1 each to Alan in return for freehold land in Barchester. In order that the transaction should conform with company law:A There must be a valuation of the land by the company’s auditor.B There must be a valuation
7 Rich and Wealthy are partners in a firm which they wish to convert into a limited company, but they are undecided between incorporating with private status or public status. Advise them as to the advantages and restrictions of each type of company.
6 James agrees to pay £2m for a controlling interest in Sapphire plc providing the company transfers £3m deposited with its present bankers to Emerald Bank from which James has arranged to borrow £2m. After the transfer Emerald Bank honours the cheque drawn by James to pay for the shares in
5 Who is an ‘insider’ and what is ‘inside information’ for the purposes of the laws relating to insider dealing? What prohibitions are imposed on the activities of insiders? State the main exemptions to these prohibitions. (Author’s question)
4 (a) Explain what is meant by the term ‘capital maintenance’.(b) Discuss how the provisions of the Companies Act 2006 attempt to ensure capital maintenance by regulating:(i) the payment of dividends,(ii) the issue of shares at a premium.
3 (a) Druid Ltd has recently issued an additional one thousand shares. Five hundred of these were issued to its former employee, Edwin, in return for his past services and his agreement not to set up a competing business in the same locality. The other 500 were issued to Francis in return for the
2 ‘A survey of price movements . . . showed clearly that there was a general tendency for the price of shares in bid-for companies to rise sharply before the announcement of takeover bids, which is in itself prima facie evidence of “inside buying”. And there has been a continuing series of
1 Give an account of the statutory restrictions which seek to ensure that when shares are issued by a company, they are paid for either in money or in money’s worth. (Napier University)
6 In which of the following circumstances is Fred not a member of a company?A Fred subscribed the memorandum but his name is not as yet on the register of members.B Fred has been allotted shares and entered on the register but has not received a letter of allotment.C Fred has lodged a transfer with
5 Maurice has become bankrupt. What is the legal effect of his bankruptcy on his shareholding in Mersey Ltd?A Maurice retains his title and control of the shares but his trustee can file a stop notice.B Maurice retains his title but the control of the shares is transmitted to his trustee in
3 Conwy Ltd has a provision in its articles which allows a transfer of shares to be made orally.This provision is:A invalid.B valid.C voidable.D valid if the transfer is to an existing member.4 Botham dies and leaves all his shares in Thames Ltd to Gower. Under the articles the shares in Thames
2 What is the legal position of a person who buys shares on the faith of a share certificate issued by a company to a transferee on the basis of a forged transfer?A The person gets an equitable interest in the shares.B The transfer is valid and the person gets a good title if he has acted in good
1 When is it necessary to certify a transfer of shares?A Where there are pre-emption rights in the articles.B When a part holding of shares is being transferred to the transferee(s).C When shares are being transferred to an existing member.D On all transfers of unlisted shares.
5 Write notes on TWO of the following:(a) The name clause of the memorandum.(b) The transfer of shares.(c) Variation of class rights.(d) Promoters.
4 Sprouts Ltd wishes to change its name to Greenstuff Ltd and trade under the name of Brassica Wholefoods. What steps must be taken to achieve this result?(The Institute of Company Accountants)
3 (a) What is the procedure for varying the rights attached to a class of shares if the memorandum and articles are silent on the matter? What safeguards are there for a minority of that class?(b) Explain the liability of a person who presents a forged share transfer to the company for registration
2 Write explanatory notes on TWO of the following:(a) The doctrine of ultra vires.(b) Promoters.(c) Certification of transfer forms.(d) Ways in which shares may be mortgaged.
1 Edward owns a small number of shares in Severn Ltd, a private company. He wishes to transfer these shares to a charity but fears that the directors may object.For what reasons may the directors refuse to register such a transfer and for how long may they delay their decision? (The Institute of
6 What is the minimum percentage of shareholders required to make an application to the court to set aside an alteration of the objects clause of a company?A Not less than 15 per cent of the total number of shareholders.B Those holding not less than 15 per cent in nominal value of the issued share
5 Which of the following resolutions requires the directors of a private company to give a statutory declaration of solvency? A resolution to:A Commence a creditors’ voluntary winding-up.B Reduce the company’s share capital.C Approve the giving of financial assistance for the purchase of its
4 Under the provisions of the Companies Act 2006, where there is to be an allotment of unissued share capital for cash the notice of the offer to existing shareholders must remain open for not less than:A 28 days B 21 days C 15 days D 14 days
3 The shareholders of Test Ltd are Ann who holds 600 shares, Barbara who has 100 shares, and Clare and Diana who have 250 shares each. The shares carry one vote each. A resolution to exclude the statutory pre-emption right of the shareholders of Test Ltd, given that all members attend the meeting
2 The board of Mersey plc has authorised the allotment of shares to the public in contravention of the statutory pre-emption rights of Mersey’s shareholders. What is the legal position as regards the allotment?A It is invalid and the allottees have no right to compensation.B It is valid and the
1 The Companies Act 2006 gives shareholders a statutory right of pre-emption:A On the allotment of any shares.B Where shares are transferred from one member of a company to another.C On the transmission of shares on the death of a member of the same company.D On the allotment for cash of equity
5 Explain by reference to statutory and common law examples what is meant by the term ‘lifting the veil of incorporation’.
4 ‘Although they may not be in the strict sense agents or trustees for the company, promoters stand in a fiduciary relation to it.’ – Northey and Leigh.Discuss by looking at the promoter’s relationship with the company he is forming and the remedies available for failure to discharge the
3 Dee Ltd has an authorised and issued share capital of £15,000 in £1 shares. The directors have decided to issue for cash at par a further 10,000 £1 shares.What procedures must the directors follow to implement their decision?(The Institute of Chartered Accountants in England and Wales)
2 Describe and discuss the significance of each of the following:(a) The pre-emption rights of existing shareholders.(b) Preference shares.(c) Redeemable shares. (The Association of Chartered Certified Accountants)
1 (a) Sam has 2,000 fully paid shares in X Ltd. The articles of X Ltd give a first and paramount lien over shares in respect of any debts owed by a member to the company. On 3 January, Sam borrowed £1,500 from George and secured the loan by giving George his share certificate and a blank transfer
6 Alf and Bert formed a company called Tyne Ltd. They became the sole directors and took up 50 per cent of the shares, the other shares being allotted to 15 other people. Alf and Bert sold their business to Tyne Ltd for £130,000, although it was valued at £120,000. How should the profit be dealt
5 Prior to the incorporation of Ouse Ltd, Mark, its promoter, made a contract on behalf of the company. Who will be liable if the contract is breached?A Mark.B Ouse Ltd.C The shareholders of Ouse Ltd.D The directors of Ouse Ltd.
3 Tay plc has issued listing particulars containing a material misrepresentation. Relying on the particulars, Alf, Bert and Clare subscribed for shares. Alf sold half of his shares immediately.Bert went to an extraordinary general meeting of Tay and voted on a number of matters. Who can rescind the
2 Fylde plc has issued listing particulars containing a material misrepresentation in a report by an accountant who did not consent to the inclusion of the report in the form in which it was included. Fred purchased shares on the stock market from Joe who was an original subscriber under the
1 A public company wishes to have its shares listed on the London Stock Exchange. What percentage of its shares must be in the ownership of the public?A 10 per cent B 20 per cent C 25 per cent D 30 per cent
5 J is the managing director of Z plc, a listed company. She has recently seen the end of year accounts for Z plc which are to be published in three weeks’ time. These accounts show the company to have substantial liquid assets and J believes that Z plc is likely to attract takeover bidders when
4 (a) ‘The law treats a registered company as a separate legal person from its members. To this general rule there are several exceptions.’Examine the statement, giving two examples of circumstances in which the court will look at the reality behind the legal facade.(b) Dairy Products Limited
3 Harriet subscribed for shares in Overseas plc on the basis of the prospectus which showed that for the previous five years the company had earned substantial and increasing profits. Shortly after allotment she sold half her shares to Georgina at a large profit. The information in the prospectus
2 Explain ‘rescission’ and the loss of the right to rescind in respect of prospectuses.(The Institute of Company Accountants)
1 ‘The Financial Services and Markets Act 2000 has provided a more rational and fair procedure to compensate investors who are misled by a misrepresentation in a prospectus (or listing particulars)on an issue of shares by a company. Nevertheless, the common law remedies remain of
7 (a) Why must every company have a registered office? What information about the registered office must be published? To what extent can the registered office of the company be changed and what procedures must be observed when it is so changed?(b) In the absence of a company taking advantage of
6 H plc wishes to change its articles of association to add a clause which states ‘any director of the company may be removed from office if all other directors give notice in writing of their desire that the named director be so removed’. You are required to explain the procedure for
5 Give the facts in Macaura v Northern Assurance Co Ltd (1825) and explain the importance of its ratio decidendi. (University of Paisley)
4 Explain the rules applicable to the determination and payment of dividends.(The Institute of Company Accountants)
3 Fred, George and Harry, who run a business buying and selling antiques, have been advised to form a private company to run the business. They seek your advice on the major differences between their present general partnership and the proposed company, and in particular as to the rules relating to
2 The summarised draft balance sheet of a company as on 31 March 200X was as follows:£000 Fixed assets at cost less depreciation Land and buildings 1,500 Machinery 60 Fixtures 15 1,575 Net current assets 925 2,500 Ordinary share capital 1,600 Profit and loss account 900 2,500 An independent
1 Explain the rules of company law which regulate the making of distributions by public companies, private companies and investment companies. Indicate also the consequences which can follow the making of an unlawful distribution.(The Association of Chartered Certified Accountants)
5 The assets of Derwent plc are less than one-half of its called-up share capital. The directors must call an extraordinary meeting of the members to be held not later than 56 days from the date:A On which the auditor informed the directors in writing of the capital loss.B On which all the
4 What is the maximum permitted period between the passing of a resolution sanctioning a purchase of own shares partly from capital and the date of payment?A Fifteen days B One week C Five weeks D Seven weeks
3 The directors of Tyne Ltd intend a purchase by the company of its own shares from John, a member, but partly out of Tyne’s capital. They have made an appropriate statutory declaration and have also called an extraordinary general meeting of the members. Which of the following resolutions must
2 The directors of Humber Plc are intending that the company should purchase some of its own shares partly from capital. Amongst other things they must make a statutory declaration containing a statement that in their opinion the company will be able to carry on business as a going concern and will
1 Jock wants Trent Ltd to give a security over its assets to the Derwent bank so that the bank may lend Jock money to buy shares in Trent Ltd. The position regarding this proposal is:A It is lawful if the court approves.B It is lawful if approved by an ordinary resolution in general meeting.C It is
7 (a) The general legal principle is that a company has a separate legal existence from that of its members. In what circumstances does that general principle not apply? Give examples of such situations.(b) Walter is employed as a managing director by Clipse Ltd whose main object is to retail
6 Section 33 of the Companies Act 2006 provides that the company’s constitution shall, when registered, bind the company and the members to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the
5 (a) State the exceptions to the general rule that a public company must not give financial assistance to any person for the purpose of the acquisition of its own shares.(b) Milk Bottles Ltd is a profitable small family company whose principal activity is the retail distribution of milk. The
5 What type of resolution must be passed in general meeting in order that there may be a valid alteration of the company’s articles?A A special resolution with special notice to the company.B An ordinary resolution following special notice to the company.C A special resolution.D An ordinary
3 Where would a preference shareholder go to ascertain the rights attaching to the shares?A To the share certificate.B To the share certificate and the memorandum of association.C To the articles of association only.D To the articles of association and/or the terms of issue.4 What type of
2 Boxo Limited has varied the class rights of one of its classes of shares. What proportion of the owners of those shares who did not consent to or vote for the variation can make an application to the court to have the variation cancelled, and within what time must they apply?A The holders of not
1 Where rights are attached to a class of shares set out in a company’s statement of capital and initial shareholdings and the company’s constitution and the articles do not contain any provision regarding the way in which the rights may be varied then they may be varied by:A a special
6 ‘A secretary is a mere servant; his position is that he is to do what he is told, and no person can assume that he has any authority to represent anything at all . . .’ per Lord Esher in Barnett Hoares & Co v South London Tramways Co (1887).To what extent does the statement reflect the
5 Tom and Dick wish to form a company to manufacture wooden hen houses to be called Cluck Ltd. Explain the procedure for incorporation and commencement of business.(The Institute of Company Accountants)
4 With specific reference to the facts and principle of law in Salomon v Salomon & Co Ltd, discuss corporate identity and the occasions when it is set aside. (University of Paisley)
3 ‘A company is contractually bound by the actions of its directors when those directors act within their authority.’You are required to discuss this statement.(The Chartered Institute of Management Accountants)
2 Distinguish between preference shares, participating preference shares and ordinary shares.(The Institute of Chartered Accountants in England and Wales)
1 (a) Distinguish between ordinary and preference shares.(b) Shark plc has a share capital of £150,000. It is divided into 50,000 £1 preference shares and 100,000 £1 ordinary shares. All shares have been issued. The rights attached to the preference shares include the right to have capital
4 Bob, a non-executive director of Test Ltd, who has no responsibility for the purchasing department, makes a contract on behalf of Test (which is unknown to his fellow directors) to buy goods from a new supplier. What is the legal position of Test?A It is bound because all matters decided upon by
3 A managing director of a company has usual (or ostensible) authority to bind the company by his acts. Which of the following sets out the full limit of this authority?A All commercial activities relating to the running of the business.B All activities of the company whether commercial or not.C
2 A transaction with another company entered into by Tom, a director of Thames Ltd, with the authority of the board is outside the authority of the board under the articles of Thames Ltd but within its objects. The transaction is:A valid under s 40 of the CA 2006.B void as being beyond the powers
1 Delta plc and Ullswater Ltd have each recently received their certificates of incorporation.A Delta plc and Ullswater Ltd can now both commence trading and borrow.B Only Delta plc can trade and borrow.C Only Ullswater Ltd can trade and borrow.D Neither Delta nor Ullswater can trade or borrow.
6 The company secretary of Beech Ltd has in the past been permitted to order office equipment and stationery for the company but no single transaction has exceeded £500. Recently, without the knowledge of the directors, he ordered a computer installation costing £200,000. The board does not wish
5 Contrast the rules governing contracts purporting to be made on behalf of a company before it has been incorporated under the Companies Act with those governing contracts made by or on behalf of an incorporated company before it is entitled to do business.(The Institute of Company Accountants)
4 (a) What is the rule in Royal British Bank v Turquand (1856), and what defences against its application are available to a company?(b) Beetlecrush Ltd was a company involved in pest control. In 1999 Pellet was appointed as managing director of the company by a board resolution, which gave him
3 B is the managing director of T Ltd. He has decided that the company should have a new factory built. He arranges for P Ltd to carry out the building work on the usual standard term contract for the building industry which requires that T Ltd makes progress payments on a three-monthly basis.The
2 In what circumstances will an agent bind a company to a contract made with a third party?What effect does the company’s constitution have on the power of agents to bind companies to such contracts? (The Institute of Chartered Secretaries and Administrators)
1 (a) State the legal rules applying to a transaction within the powers of the company, but entered into by directors in excess of their authority.AND(b) Bob is chairman of Light Ltd. He functions as the company’s chief executive and makes most decisions regarding its business. He reports his
4 Under the Companies Act 1985, the capital clause of a company limited by shares was contained in the memorandum. Where is it located under the 2006 Act?A The memorandum of association.B The company’s constitution as defined by s 17 of the 2006 Act.C A statement of capital and initial

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Smith And Keenans Company Law 14th Edition Charles Wild, Stuart Weinstein - Solutions

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