Question 1

Which of the following details does not need to be recorded by a company in its register of members:

Accepted Answer

A)   The members' names;
B)   The members' address;
C)   The amount of shares owned by each member;
D)   The members' age;
E)   Whether the shares are fully paid and, if not, the amount outstanding. D

Question 2

It is a requirement that all proprietary companies have an annual general meeting.

Accepted Answer

A) True 
 B)False  False

Question 3

Explain the notice requirements for a members' meeting.

Accepted Answer

S 249L requires that the notice set out:
•the place, date and time for the meeting;
•the general nature of the meeting's business;
•details of any special resolution proposed; and
•information regarding the appointment of proxies.
S 250R provides that the business of an AGM may include the following even if not referred to in the notice of meeting:
•approving the financial report, directors report and auditors report;
•electing of directors;
•appointing the auditor; ad fixing the auditor's remuneration.

Question 4

Blue Belle Pty Ltd has six shareholders including Adriano who owns 15% of the voting shares. Blue belle Pty Ltd has no constitution and relies on the replaceable rules. Adriano calls a meeting of members under section 249F of the Corporations Act. While he complied with all the notice requirements, none of the other shareholders attend the meeting. Adriano can validly conduct business at the meeting because 15% of the voting shares are present at the meeting (i.e. the 15% owned by Adriano). Section 249F provides that the minimum amount of voting shares needed to be presented before conducting business is 10%

Accepted Answer

A) True 
 B)False

Question 5

Anja is 6 years old and attends a local primary school. As part of a school project, she bakes chocolate chip cookies and sells them to her neighbours. The cookies are delicious and the neighbours ask for more. Soon Anja is baking a large amount of cookies and selling them all over Australia. Anja's father, Jacob, is a lawyer and says Anja should incorporate the cookie business. Jacob said he would act as the director of the company and the shareholders would be Anja (75%) and Jacob (25%). Which of the following is correct:

Accepted Answer

A)   Jacob's plan doesn't work because Anja cannot be a shareholder as shareholders need to be at least 18 years old.
B)   Because Jacob is a promoter he does not need to consent to becoming a member.
C)   Unless there is something in the constitution that limits the transferability of shares, Jacob could transfer ALL his shares to Anja if they both agreed.
D)   As a minority shareholder, Jacob would have no right to enforce the constitution and replaceable rules of the company.
E)   If Anja's neighbour was curious as to who owned the shares in the company, there is no way she would be able to get a copy of the register of members of the company.

Question 6

How is decision-making normally divided between directors and members?

Accepted Answer

The answer of How is decision-making normally divided between directors...

Question 7

What is a share certificate?

Accepted Answer

The answer of What is a share certificate?...

Question 8

Explain the difference between a meeting convened under s 249D and a meeting convened under s 249F.

Accepted Answer

The answer of Explain the difference between a meeting convened...

Question 9

A company must keep its register of members either at the company's registered business, its principal place of business in the jurisdiction, a place within the jurisdiction where work maintaining the register is done or anywhere else that the directors believe is appropriate to keep the register.

Accepted Answer

A) True 
 B)False

Question 10

How does a person become a member?

Accepted Answer

The answer of How does a person become a member?...

Question 11

Give an example of a members' meeting not being held for a proper purpose, and cite a case.

Accepted Answer

The answer of Give an example of a members' meeting...

Question 12

Only individuals over the age of 18 can be members of a company.

Accepted Answer

A) True 
 B)False

Question 13

Jack, Keisha and Sunny are the only directors and shareholders of a company called BigBrand Pty Ltd. BigBrand buys and sells a variety of consumer goods in Australia. Jack is currently travelling overseas negotiating a deal with a supplier. Keisha calls a shareholders' meeting. Jack can participate in the meeting by using Skype.

Accepted Answer

A) True 
 B)False

Question 14

How are shares in a company transferred?

Accepted Answer

The answer of How are shares in a company transferred?...

Question 15

What is the role of the chair at a members' meeting.

Accepted Answer

The answer of What is the role of the chair...

Question 16

What are dividends?

Accepted Answer

The answer of What are dividends?...

Question 17

Lexi owns 65% of the shares of AusBank Ltd. AusBank runs a banking business and the directors have recently announced that they passed a directors' resolution to purchase an office building in Sydney for its headquarters. Lexi is furious when she hears about this announcement as she believes the company should be headquartered in Brisbane. She makes a request under section 249D of the Corporations Act in order to pass a shareholders' resolution to overturn the decision to buy the building in Sydney

Accepted Answer

A)   The directors must arrange and hold the meeting in accordance with section 249D.
B)   The directors can ignore the request because the meeting is being held for an improper purpose (i.e. to interfere with management decisions) .
C)   Lexi has no right to make a request under section 249D because she is a majority shareholder.
D)   If the directors decided to proceed with the meeting under section 249D, Lexi would have to pay the costs of the meeting.
E)   If the company's AGM was scheduled, Lexi could attend the AGM and with no notice ask the shareholders to vote on a resolution to overturn the decision to purchase the building in Sydney.

Question 18

What is the significance of the register of members?

Accepted Answer

The answer of What is the significance of the register...

Question 19

The constitution of a company can contain a provision which limits, restricts or prohibits the transfer of shares by shareholders.

Accepted Answer

A) True 
 B)False

Question 20

Dora and Valentina are directors of a company called Guadalajara Pty Ltd ("Guadalajara"). Notwithstanding that Guadalajara has been very unprofitable for many years, it still has large amounts of cash on its balance sheet. Dora and Valentina are getting a lot of pressure from the company's shareholders to pay a dividend. Under the Corporations Act in order for a dividend to be paid, Valentina and Dora must ensure that:

Accepted Answer

A)   The company has been profitable;
B)   There is sufficient cash to pay the dividend at the time the directors declare the dividend;
C)   The company's assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend;
D)   The payment of the dividend is fair and reasonable to the company's shareholders as a whole;
E)   The payment of the dividend does not materially prejudice the company's ability to pay its creditors.F)  All the above are correct.G)  (c) , (d)  and (e)  are required before the dividend can be paid.

Exam 5: Membership, Members Power and Dividends

Which of the following details does not need to be recorded by a company in its register of members:

It is a requirement that all proprietary companies have an annual general meeting.

Explain the notice requirements for a members' meeting.

How is decision-making normally divided between directors and members?

What is a share certificate?

Explain the difference between a meeting convened under s 249D and a meeting convened under s 249F.

A company must keep its register of members either at the company's registered business, its principal place of business in the jurisdiction, a place within the jurisdiction where work maintaining the register is done or anywhere else that the directors believe is appropriate to keep the register.

How does a person become a member?

Give an example of a members' meeting not being held for a proper purpose, and cite a case.

Only individuals over the age of 18 can be members of a company.

How are shares in a company transferred?

What is the role of the chair at a members' meeting.

What are dividends?

What is the significance of the register of members?

The constitution of a company can contain a provision which limits, restricts or prohibits the transfer of shares by shareholders.