Practice Multiple Choice in Class Test

MLC203: PRACTICE MULTIPLE CHOICE IN CLASS TEST

QUESTION 1:

Which of the following is the best description of the significance of the decision in Salomon v Salomon & Co Ltd (1897)?

1. The notion of limited liability should not apply to corporations owned and operated by a single person.
2. The concept of separate legal personality cannot be used by a sole trader to avoid liability to creditors.
3. A shareholder who is also involved in the management of the company is not entitled to the benefit of limited liability.
4. The benefits of incorporation extend to companies effectively under the control of a single person.

QUESTION 2:

Which of the following statements about the content of the Corporations Act 2001 (Cth) is not true?

1. The Corporations Act is itself only a brief piece of legislation. The specific details are contained in the Corporations Regulations.
2. The Corporations Act is divided into Chapters, and the Chapters into Parts, Divisions and sections.
3. The Corporations Act regulates fundraising by companies.
4. The Corporations Act regulates financial services, products and markets.

QUESTION 3:

Which of the following can be used by a company incorporated after 1 July 1998 as its internal governance rules?

1. Articles of association.
2. Memorandum of association.
3. The replaceable rules in the Corporations Act 2001 (Cth).
4. A constitution.

1. C only.
2. A and B.
3. C or D.
4. A, B, C or D.

QUESTION 4:

How does a company amend its constitution?

1. By an ordinary resolution of the board of directors.
2. By a special resolution of the board of directors.
3. By a resolution passed by at least 75% of the members.
4. By an ordinary resolution of the members.

QUESTION 5:

Under Corporations Act 2001 (Cth) s 140 the internal governance rules have effect as a contract:

1. Between a member and each other member.
2. Between a member and each director.
3. Between a director and each other director.
4. Between each director and the company.
5. Between the company and each member.

Which of these statements is correct?

1. A, B and C.
2. A, D and E.
3. B, C and E.
4. B, D and E.
5. C, D and E.

QUESTION 6:

Which of the following statements best describes the way in which the decision-making power is divided between the members and the directors?

1. Members have the power to make decisions about all matters other than those expressly reserved to directors by the internal governance rules or by company law.
2. The basis on which the decision-making power is divided is determined solely by the company’s internal governance rules.
3. The board of directors, and the members in general meeting, is each an organ of the company. Each has the power to make particular decisions and, with respect to those decisions, neither has to follow the instructions of the other.
4. Directors are the agents or delegates of the members and are therefore subject to the members’ overriding control.

QUESTION 7:

Which of the following is not an option available to members who disagree with decisions of the board of directors?

1. Pass a resolution at a members’ meeting overriding the decision of the directors.
2. Pass a resolution at a members’ meeting removing the directors from office.
3. Pass a resolution at a members’ meeting altering the company’s internal governance rules to restrict the directors’ power to act.
4. Sell their shares.

QUESTION 8:

Under the Corporations Act 2001 (Cth) Chapter 2E, member approval is required where a public company gives a financial benefit to a related party of the public company. Which of the following is least likely to be a related party of a public company under s 228?