Question 1

Which of the following is not a matter to be taken into consideration by the court when considering whether to allow a derivative action?

Accepted Answer

A)   whether the claimant is acting in good faith
B)   the importance that a person acting in accordance with s.172 would attach to the claim
C)   whether the company has decided to pursue the claim
D)   the view of the Crown Prosecution Service D

Question 2

What is the rule in Foss v Harbottle (1843) 2 Hare 461 about?

Accepted Answer

A)   the proper claimant for wrongs to the company is the company
B)   the proper claimants for wrongs to the company are the directors
C)   the proper claimants for wrongs to the company are the shareholders
D)   the proper claimants for wrongs to the company are the creditors A

Question 3

Who bears the costs of a derivative action?

Accepted Answer

A)   the shareholder who brings it
B)   the company
C)   the directors
D)   whoever is at fault B

Question 4

Where the directors have wronged the company, the decision on whether to litigate transfers to

Accepted Answer

A)   stakeholders
B)   shareholders
C)   non-executive directors
D)   the secretary of state

Question 5

Where wrong doing directors (in a case involving the sale of land) are also shareholders, which of the following are they not allowed to do?

Accepted Answer

A)   pass an ordinary resolution approving a sale
B)   ratify the breach
C)   defeat a resolution to sue the directors
D)   stop a legal action on the proper claimant principle

Question 6

In cases of reflective loss, who is the appropriate claimant?

Accepted Answer

A)   the company
B)   the shareholder
C)   the director
D)   the secretary of state

Question 7

Who can petition against unfair prejudice?

Accepted Answer

A)   a shareholder of the company
B)   a director
C)   a creditor
D)   the secretary of state

Question 8

What is meant by unfair prejudice?

Accepted Answer

A)   that the affairs of the company are managed in a way damaging to a director
B)   that the affairs of the company are managed in a way damaging to a creditor
C)   that the affairs of the company are managed in a way damaging to a shareholder
D)   that the directors disregard shareholder directions

Question 9

What is a derivative action?

Accepted Answer

A)   where a shareholder sues on behalf of the company
B)   where the company sues on behalf of a shareholder
C)   where a director sues on behalf of a company
D)   where the company sues on behalf of a director

Question 10

Who would be the appropriate party to bring a derivative action?

Accepted Answer

A)   a minority shareholder
B)   a majority shareholder
C)   a director
D)   the company

Question 11

The court must refuse permission to continue a derivative action if

Accepted Answer

A)   a person acting in accordance with s.172 would not seek to continue the claim
B)   the act or omission in question has been authorised or ratified by the company
C)   a or b
D)   a and b

Question 12

Where a shareholder has suffered loss due to actions violating her personal rights, the appropriate cause of action is

Accepted Answer

A)   a personal suit
B)   a derivative action
C)   winding up the company
D)   dismissing the directors

Question 13

Derivative actions cannot be brought against

Accepted Answer

A)   directors
B)   connected persons
C)   directors and connected persons
D)   third parties based on causes of action independent from the directors

Question 14

What is meant by reflective loss?

Accepted Answer

A)   that loss to the company also damages the directors
B)   that loss to the directors also damages the company
C)   that loss to the shareholders also damages the company
D)   that loss to the company also damages the shareholders as a result

Exam 14: Robbery, Burglary and Other Offences in the Theft Acts