Deck 8: General Defences

Question 1

A creditor would prefer to trade with a company that has

A) substantial share capital
B) minimal share capital
C) no share capital
D) any amount of share capital

Answer 1

A

Question 2

A company cannot offer financial assistance to purchase its own shares unless

A) the purchased shares are used to repay a loan utilized to obtain the same shares
B) the company guarantees a loan obtained with the purpose of buying the company's own shares
C) the company lends the money to a third party in order for them to purchase the shares
D) the assistance is not given for the purchase of shares and is given in good faith in the interests of the company

Answer 2

D

Question 3

On winding up, which of the following creditors ranks last?

A) Revenue
B) shareholders
C) secured creditors
D) unsecured creditors

Answer 3

B

Question 4

For the consequences of unlawful distributions the company can obtain remedies against

A) shareholders
B) directors
C) both
D) no-one

Question 5

What is the 'book value' of an asset?

A) the same as the market value
B) anything that differs from the market value
C) the cost of purchase of an asset by the company
D) the value if expressed in an amount of books

Question 6

Which of the following is not considered a disguised distribution?

A) a sale of company property to a member at an undervalue
B) corporate gifts to members
C) payment of excessive wages to employees who are also members
D) a payment made to members out of a company's distributable profits

Question 7

What is a dividend?

A) a payment made to members out of a company's distributable profits
B) any transfer of money between shareholders
C) payments to directors
D) any purchase of shares

Question 8

Which of the following is considered a distribution under s.829 Companies Act 2006?

A) every distribution of company assets to shareholders
B) a reduction of share capital
C) an acquisition of shares
D) the issue of bonus shares

Question 9

A company may purchase its own shares

A) never
B) always
C) by redeeming redeemable shares
D) by application to the Secretary of State

Question 10

Under s.641-644 Companies Act 2006, which of the following is not required for a reduction in the share capital of a private company?

A) court confirmation
B) solvency statement
C) special resolution
D) statement of capital

Question 11

The principle of capital maintenance can be identified with all but one of the following. Which one is unrelated?

A) minimal share capital rules
B) prohibition on companies reducing their share capital
C) distributions to shareholders solely out of profits
D) director's duty to act in the interests of the company

Question 12

What is the Cakes and Ale Case Law about?

A) no company can make truly gratuitous distributions of its assets
B) a company can make gratuitous distributions of its assets only regarding catering
C) a company can donate assets at will
D) directors can have free meals at company premises