Question 1

Which of the following duties is not one of the duties owed by a director?

Accepted Answer

A) A duty of care 
B) A duty to facilitate insolvent trading 
C) A duty to act for proper purposes 
D) A duty to disclose conflicts of interests 
A) A duty of care 
B) A duty to facilitate insolvent trading 
C) A duty to act for proper purposes 
D) A duty to disclose conflicts of interests B

Question 2

Directors of companies are not usually obliged to:

Accepted Answer

A) manage the business collectively. 
B) manage the business in accordance with the company's internal governance rules. 
C) exercise their functions as servants of the shareholders. 
D) manage the business in accordance with the company's constitution. 
A) manage the business collectively. 
B) manage the business in accordance with the company's internal governance rules. 
C) exercise their functions as servants of the shareholders. 
D) manage the business in accordance with the company's constitution. C

Question 3

The 'business judgement rule' is recognition of the fact that:

Accepted Answer

A) the Courts hold directors to an extraordinarily high standard of care. 
B) not every decision that causes loss or harm to a company amounts to a breach of duty by a director. 
C) when a director's act causes loss or harm to a company that director will generally be in breach of their duty to the company. 
D) third parties can assume that directors acting on behalf of the company are acting in accordance with the rules of its constitution. 
A) the Courts hold directors to an extraordinarily high standard of care. 
B) not every decision that causes loss or harm to a company amounts to a breach of duty by a director. 
C) when a director's act causes loss or harm to a company that director will generally be in breach of their duty to the company. 
D) third parties can assume that directors acting on behalf of the company are acting in accordance with the rules of its constitution. B

Question 4

Which of the following is not a consequence of registering a company charge on the Personal Property Securities ('PPS') register?

Accepted Answer

A) The charge will become enforceable against a liquidator. 
B) The charge will have priority over unregistered charges. 
C) The charge will have priority over other charges granted later. 
D) A charge will immediately 'crystallise'. 
A) The charge will become enforceable against a liquidator. 
B) The charge will have priority over unregistered charges. 
C) The charge will have priority over other charges granted later. 
D) A charge will immediately 'crystallise'.

Question 5

The disclosure obligations of a company that proposes to issue shares to members of the public will usually require it to:

Accepted Answer

A) issue a prospectus. 
B) complete a profile statement. 
C) submit an offer information statement. 
D) make available a copy of its constitution. 
A) issue a prospectus. 
B) complete a profile statement. 
C) submit an offer information statement. 
D) make available a copy of its constitution.

Question 6

DDT Delights Ltd sells fertilisers and chemicals for use by farmers in protecting crops from pests.Its CEO, Johno Stone, tells his best mate Robbo one Friday night over a beer that he has done some deals that seem to have made his wife Katrina 'wild' and she will 'not stop nagging him' about them.He says that Katrina had the nerve to tell him that if he didn't tell the company all about these deals, she would tell the company.Johno informs Robbo that he simply explained to his wife very patiently that the business was not her business and not a family affair, but his business, and she ought to just 'hush up' and get back to her knitting.In fact Mrs Stone does have cause for concern over all but one of her husband's deals.Which of the following is the only one that is not likely to represent a breach of his duty as CEO?

Accepted Answer

A) Johno learned about an investment possibility for DDT in Vietnam and told his son Dillon, a high school drop-out, about it.Dillon has gone to Vietnam to take up this opportunity for his own company. 
B) After Veronica, the Stone's daughter, wrote off her new car in a drink-driving accident, Johno paid to have the car repaired using DDT's money, and then arranged for DDT to buy it for use as a delivery vehicle. 
C) When Mrs Stone was 20 she applied for the job of secretary of DDT and was voted into that role by the Board of Directors on the strength of her impressive business credentials.Through her job she met and married Johno Stone. 
D) Johno paid Jackie, a struggling but talented graphic artist, to redesign the company logo and related artwork.He kept quiet about the fact that Jackie was his daughter when recommending that she be hired to do all the design work for DDT and he discouraged the other company directors from seeking tenders for the job. 
A) Johno learned about an investment possibility for DDT in Vietnam and told his son Dillon, a high school drop-out, about it.Dillon has gone to Vietnam to take up this opportunity for his own company. 
B) After Veronica, the Stone's daughter, wrote off her new car in a drink-driving accident, Johno paid to have the car repaired using DDT's money, and then arranged for DDT to buy it for use as a delivery vehicle. 
C) When Mrs Stone was 20 she applied for the job of secretary of DDT and was voted into that role by the Board of Directors on the strength of her impressive business credentials.Through her job she met and married Johno Stone. 
D) Johno paid Jackie, a struggling but talented graphic artist, to redesign the company logo and related artwork.He kept quiet about the fact that Jackie was his daughter when recommending that she be hired to do all the design work for DDT and he discouraged the other company directors from seeking tenders for the job.

Question 7

A 'floating charge' is security for a loan to a company that takes the form of a charge over:

Accepted Answer

A) fixed, identified property. 
B) property covered by personal guarantees. 
C) a class of assets (or sometimes all) of the company. 
D) fixtures only. 
A) fixed, identified property. 
B) property covered by personal guarantees. 
C) a class of assets (or sometimes all) of the company. 
D) fixtures only.

Question 8

A 'general meeting' is where decisions are made by:

Accepted Answer

A) shareholders. 
B) directors. 
C) creditors. 
D) all stakeholders including employees and members of the public. 
A) shareholders. 
B) directors. 
C) creditors. 
D) all stakeholders including employees and members of the public.

Question 9

Which of the following is not a step that is generally associated with listing a company?

Accepted Answer

A) Doing the things necessary to comply with the ASX Listing rules. 
B) Becoming a public company. 
C) Having one or more classes of shares granted Official Quotation for trading on the stock market. 
D) Appointing an ASX receiver or liquidator. 
A) Doing the things necessary to comply with the ASX Listing rules. 
B) Becoming a public company. 
C) Having one or more classes of shares granted Official Quotation for trading on the stock market. 
D) Appointing an ASX receiver or liquidator.

Question 10

Which of the following best defines the meaning of a 'share issue'?

Accepted Answer

A) An offer of shares made privately or to the public. 
B) A public offering of new shares in a company. 
C) A private placement of new shares to investors. 
D) An offer of rights, bonuses or dividends. 
A) An offer of shares made privately or to the public. 
B) A public offering of new shares in a company. 
C) A private placement of new shares to investors. 
D) An offer of rights, bonuses or dividends.

Question 11

Under common law, directors must not place themselves in a position where there is an actual or substantial possibility of a conflict of interest between their personal interest and their duty to act in the interests of the company without notifying the company.Which of the following phrases is not a description of what a 'conflict of interest' is?

Accepted Answer

A) Serving two masters 
B) Self-dealing 
C) Insolvent personal dealing 
D) Related party transactions 
A) Serving two masters 
B) Self-dealing 
C) Insolvent personal dealing 
D) Related party transactions

Question 12

Which of the following statements is not true regarding the usual role and function of various types of directors of a company?

Accepted Answer

A) A chief executive officer is the managing director of a company. 
B) An executive director is involved in the full time management of a company and is an employee of the company. 
C) A chief finance officer is a form of executive director who is part of the senior management of a company. 
D) Non-executive directors are directors who are not involved in the full time management of the company but are employees of the company. 
A) A chief executive officer is the managing director of a company. 
B) An executive director is involved in the full time management of a company and is an employee of the company. 
C) A chief finance officer is a form of executive director who is part of the senior management of a company. 
D) Non-executive directors are directors who are not involved in the full time management of the company but are employees of the company.

Question 13

Which of the following matters does a company's constitution not generally regulate?

Accepted Answer

A) The procedure for convening and conducting a board meeting. 
B) The appointment and removal of directors. 
C) The procedure for calling a general meeting of shareholders. 
D) The wages paid to employees of the company. 
A) The procedure for convening and conducting a board meeting. 
B) The appointment and removal of directors. 
C) The procedure for calling a general meeting of shareholders. 
D) The wages paid to employees of the company.

Question 14

Which of the following statements about a prospectus is not correct?

Accepted Answer

A) It is used by proprietary companies when they seek to raise funds. 
B) It must contain all relevant information that investors and their professional advisors would reasonably require to make an informed investment decision. 
C) It must not be misleading or deceptive. 
D) It is required for raising debt capital and equity capital. 
A) It is used by proprietary companies when they seek to raise funds. 
B) It must contain all relevant information that investors and their professional advisors would reasonably require to make an informed investment decision. 
C) It must not be misleading or deceptive. 
D) It is required for raising debt capital and equity capital.

Question 15

According to the 'indoor management rule' a person dealing with a company in good faith:

Accepted Answer

A) need never be concerned about whether or not the company is complying with its constitution. 
B) should assume that persons acting on behalf of the company are not acting in accordance with the rules of its constitution unless the contrary is proven. 
C) can generally assume that persons acting on behalf of the company are acting according to the rules of its constitution. 
D) cannot legally contract with a person who does not have authority to contract with them under the rules of their company's constitution. 
A) need never be concerned about whether or not the company is complying with its constitution. 
B) should assume that persons acting on behalf of the company are not acting in accordance with the rules of its constitution unless the contrary is proven. 
C) can generally assume that persons acting on behalf of the company are acting according to the rules of its constitution. 
D) cannot legally contract with a person who does not have authority to contract with them under the rules of their company's constitution.

Question 16

One of the main attractions of the company as a business structure is the limited liability that it affords directors.Sometimes the Court will however 'lift the corporate veil', disregard the separate personality of the company, and hold directors personally liable for the actions of the company.In which of the following circumstances is the Court least likely to do this?

Accepted Answer

A) Where the corporate form is being used to avoid an existing duty. 
B) Where the company is acting as the agent of the directors. 
C) Where the company is unable to repay a business loan. 
D) Where the insolvent trading provisions of the Corporations Act 2001 (Cth) apply. 
A) Where the corporate form is being used to avoid an existing duty. 
B) Where the company is acting as the agent of the directors. 
C) Where the company is unable to repay a business loan. 
D) Where the insolvent trading provisions of the Corporations Act 2001 (Cth) apply.

Question 17

A 'proxy' is:

Accepted Answer

A) the minimum number of voting members required to attend a meeting for it to be constitutionally valid. 
B) the forum for a meeting of shareholders of a particular class. 
C) the exact number of voting members required to attend a meeting for it to be constitutionally valid. 
D) a representative of someone unable to attend a meeting personally and entitled to vote on their behalf. 
A) the minimum number of voting members required to attend a meeting for it to be constitutionally valid. 
B) the forum for a meeting of shareholders of a particular class. 
C) the exact number of voting members required to attend a meeting for it to be constitutionally valid. 
D) a representative of someone unable to attend a meeting personally and entitled to vote on their behalf.

Question 18

Generally speaking it not true to say that:

Accepted Answer

A) shareholders in listed companies have more extensive voting rights than those in unlisted companies. 
B) shareholders in public companies have more extensive rights than those in proprietary companies. 
C) shareholders in proprietary companies have more extensive rights than those in listed companies. 
D) shareholders in public companies always have the right to appoint and remove directors whereas those in proprietary companies may not always have that right. 
A) shareholders in listed companies have more extensive voting rights than those in unlisted companies. 
B) shareholders in public companies have more extensive rights than those in proprietary companies. 
C) shareholders in proprietary companies have more extensive rights than those in listed companies. 
D) shareholders in public companies always have the right to appoint and remove directors whereas those in proprietary companies may not always have that right.

Question 19

An 'extraordinary general meeting' is:

Accepted Answer

A) a general meeting that is held bi-annually. 
B) a general meeting that is held annually. 
C) a general meeting that is called to pass a particular resolution or resolutions. 
D) a general meeting in which it is resolved that the company ought to be wound up. 
A) a general meeting that is held bi-annually. 
B) a general meeting that is held annually. 
C) a general meeting that is called to pass a particular resolution or resolutions. 
D) a general meeting in which it is resolved that the company ought to be wound up.

Question 20

What is the role of a shareholder in a company?

Accepted Answer

A) A manager 
B) A trader 
C) An owner 
D) An employee 
A) A manager 
B) A trader 
C) An owner 
D) An employee

Which of the following duties is not one of the duties owed by a director?

Directors of companies are not usually obliged to:

The 'business judgement rule' is recognition of the fact that:

Which of the following is not a consequence of registering a company charge on the Personal Property Securities ('PPS') register?

The disclosure obligations of a company that proposes to issue shares to members of the public will usually require it to:

A 'floating charge' is security for a loan to a company that takes the form of a charge over:

A 'general meeting' is where decisions are made by:

Which of the following is not a step that is generally associated with listing a company?

Which of the following best defines the meaning of a 'share issue'?

Which of the following statements is not true regarding the usual role and function of various types of directors of a company?

Which of the following matters does a company's constitution not generally regulate?

Which of the following statements about a prospectus is not correct?

According to the 'indoor management rule' a person dealing with a company in good faith:

A 'proxy' is:

Generally speaking it not true to say that:

An 'extraordinary general meeting' is:

What is the role of a shareholder in a company?

Business and the Law

The Australian Legal System

Politicians and Judges

How to Find, Understand and Use the Law

Deliberately Causing Harm

Carelessly Causing Harm

Contract Law: Formation of the Contract

Contract Law: Terms of the Contract

Contract Law: Enforcement of the Contract

Contract Law: Working With Agents

Dealing With Consumers

Dealing With Competitors

Protecting Ip

Managing a Business: Start-Up

Managing a Business: Business Ownership

Managing a Business: Making Payments and Recovering Debts

Managing a Business: Insurance and Taxes

Managing a Business: Employing Workers

Managing a Business: Closing Down

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Exam 16: Managing a Business: Companies and Corporate Governance

Which of the following duties is not one of the duties owed by a director?

Directors of companies are not usually obliged to:

The 'business judgement rule' is recognition of the fact that:

Which of the following is not a consequence of registering a company charge on the Personal Property Securities ('PPS') register?

The disclosure obligations of a company that proposes to issue shares to members of the public will usually require it to:

A 'floating charge' is security for a loan to a company that takes the form of a charge over:

A 'general meeting' is where decisions are made by:

Which of the following is not a step that is generally associated with listing a company?

Which of the following best defines the meaning of a 'share issue'?

Which of the following statements is not true regarding the usual role and function of various types of directors of a company?

Which of the following matters does a company's constitution not generally regulate?

Which of the following statements about a prospectus is not correct?

According to the 'indoor management rule' a person dealing with a company in good faith:

A 'proxy' is:

Generally speaking it not true to say that:

An 'extraordinary general meeting' is:

What is the role of a shareholder in a company?

Business and the Law

The Australian Legal System

Politicians and Judges

How to Find, Understand and Use the Law

Deliberately Causing Harm

Carelessly Causing Harm

Contract Law: Formation of the Contract

Contract Law: Terms of the Contract

Contract Law: Enforcement of the Contract

Contract Law: Working With Agents

Dealing With Consumers

Dealing With Competitors

Protecting Ip

Managing a Business: Start-Up

Managing a Business: Business Ownership

Managing a Business: Making Payments and Recovering Debts

Managing a Business: Insurance and Taxes

Managing a Business: Employing Workers

Managing a Business: Closing Down

Filters