BLAW211 ACTUAL TEST BANK QUESTIONS AND ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
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Course
BLAW211
Institution
BLAW211
BLAW211 ACTUAL TEST BANK QUESTIONS AND ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
special resolution - Answer-resolution on major decisions of a company (such as changing the company's articles or reducing its share capital) at a general meeting that must be passed by a certain majority, usuall...
BLAW211 ACTUAL TEST BANK
QUESTIONS AND ANSWERS
(VERIFIED ANSWERS) ALREADY
GRADED A+
special resolution - Answer-resolution on major decisions of a company (such as
changing the company's articles or reducing its share capital) at a general meeting that
must be passed by a certain majority, usually 75%
- can be higher if company constitution says
ordinary resolution - Answer-a resolution adopted by the general meeting and passed
by a simple majority
Derivative Action - Answer-Tools of minority shareholder whose position is being
abused or company being abused can go to court and ask permission to bring
proceedings on behalf of the company as those in control are not doing their job and are
financially disadvantaging the company
seperate legal entity - Answer-- the company is a separate legal person
- seperate from shareholders
- own right and liabilities
limited liability for shareholders (unless stated to be unlimited in constitution) - Answer--
any amount unpaid on share held by shareholder
- any liability expressly provided for in the constitution
- any liability for breach of directors duties where shareholder is deemed a director
- repayments in breach of solvency test
Recovery of Distributions - Answer-- when company distributes capital without satisfying
the solvency test may be recovered from shareholder unless:
a. the shareholder received the distribution in good faith and without knowledge of the
company's failure to satisfy the solvency test; and
(b)
the shareholder has altered the shareholder's position in reliance on the validity of the
distribution; and
(c)
it would be unfair to require repayment in full or at all.
shareholder guarantee - Answer-1. shareholders are not liable for debts of company
however major creditors often ask for directors and major shareholders of smaller
companies to personally guarantee debts.
,- a company's action is not invalid merely because the company did not have capacity
or power to act
- a company cannot avoid the consequences of a decision by asserting that their
internal processes were not complied with unless other party had knowledge that this
was the case (i.e. apparent authority)
- a person is not deemed to have knowledge of anything contained in the constitution
even though it is publicly available
Doctrine of ultra vires - Answer-- means that can act beyond powers in your constitution
and will be valid against outsiders but shareholders may still have rights against
directors which authorise ultra vires act
Division of Powers - Answer-
management Power (Board) - Answer-- business and affairs of company are managed
by or under direct supervision of board who has all powers necessary for managing,
and for directing and supervising the management of, the business
- subject to any modifications or limitations in the act or the company's constitution
Delegation of Directors Powers - Answer-- directors can generally delegate powers
except primary powers (unless restricted in constitution):
1. change of name
2. issue of shares
3. distribution
4. transfer of shares
5. change of registered office and address for service
- a board is responsible for the exercise of the delegated power
Shareholders' Powers - Answer-
Management Review - Answer-- at shareholder meetings and general meeting the
chairperson must allow a reasonable opportunity for shareholders to question and
discuss on management of company
choice of directors - Answer-- shareholders can appoint and remove directors by
ordinary resolution
ratification of actions of directors - Answer-
appointment of liquidator - Answer-- shareholders can appoint a liquidator and liquidate
the company with special resolution (75%)
demand a meeting - Answer-- a special meeting of shareholders entitled to vote on an
issue may be called at any time by shareholders with at least 5% of voting rights
, Unanimous Assent - Answer-- allows some procedures in act to be avoided if all entitled
people agree (shareholders and persons with rights and powers of shareholders)
the constitution of a company - Answer-- passed by shareholders and contain provsions
altering balance of powers
- contains names and addresses of directors and shareholders
- adoptions, rescinds, replacement or alterations require special resolution
- not compulsory
Entrenched Provisions - Answer-- provisions in company act that cannot be changed
e.g.
- company must have at least one shareholder, director and name
- directors must exercise powers for proper use
- requirements for special resolution (at least 75%)
- requirement to pass solvency test before distributing
Authorising Provisions - Answer-- some actions can only be taken if specifically
authorised by constitution
extending or limiting rights - Answer-- provisions that enable extending or limiting rigts
e.g. pre-emptive rights, when new shares are issued they must first be offered to
existing shareholders of the company
Directors - Answer-The people who have overall responsibility for managing the
company's business activities and strategic direction of company
Who is a director - Answer-- a person occupying position of director or those that
exercise directors powers and decisions that would usually fall to the board and
therefore accustomed to act in respect to their duties (comply with directors duties)
Personal Liability of directors - Answer-- a director can become personally liable through
breach of directors duties in company act or
- outside act such as negligence, defamation or
- fair trading act and financial markets conduct act
Directors Protection - Answer-- arrange Directors and Officers Insurance (D&O)
- requires authorisation in the company's constitution
- cannot get insurance against fines
Directors Duties - Answer-- companies act sets out directors duties
Act in Good faith - Answer-- a director of a company, when exercising powers or
performing duties, must act in good faith and in what the director believes to be the best
interests of the company.
- subjective (what the director believes is best interest)
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