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243 Cards in this Set
- Front
- Back
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What is the main common law remedy for the innocent party in the event of breach of contract?
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Damages
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Which is the most common remedy awarded for unfair dismissal?
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Compensation, because in most cases the working relationship would have been irrevocably damaged
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To be classed as an independent contractor much depends on three tests. What are they?
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* control test
* integration test * economic reality test |
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What's the main difference between a term which is a condition and a term which is a warranty?
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A condition, when breached, means the contract can be treated as ended.
A breach of warranty, means the contract still exists |
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What's an "onerous term" in a contract?
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It's a term which involves one party in an unfair position in the event of breach
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What is "executory consideration"?
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It's consideration which is still to be delivered
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In a company with 1,000 members, what is the MINIMUM number of members who must vote in favour in order to pass a special resolution, everyone votes and all members have the same number of votes?
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750 members must vote in favour
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In a situation where the Court is faced with having to interpret statute, which rule will the Court look to first?
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The Literal Rule
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The decision of a Court can be broken down into two elements.
One element is binding on subsequent judges. Name the other (non-binding) element |
Obiter Dicta
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With reference to "intention" what is the normal attitude of the Court to a contract between husband and wife?
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The Court will presume that there is NO intention to create legal relations
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What is "distinguishing" in the context of judicial precedence
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Where, in a later case, a court distinguishes the facts of the current case from those of an earlier case in the situation that that earlier case decision would have been binding
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Which case illustrates that "Silence cannot be acceptance"
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Felthouse v Bindley ( uncle, nephew and horse )
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Is summary dismissal ever justified?
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Yes, in cases of serious breach of contract by the employee
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In a company which complies with the UK Corporate Governance Code, what is the minimum number of non-executive directors for a large public company?
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The minimum number of non-executive directors for a large UK public company complying with the UK Corporate Governance Code is "at least as many non-executives as executive and ideally not less than 3″
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What sort of remedy is "quantum meruit"?
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Quantum meruit is a common law remedy
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When an employee is dismissed not for a statutory reason nor for a fair reason, this would be classified as what type of dismissal?
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Unfair dismissal
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What is the translation of "quantum meruit"?
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"For as much as it's worth"
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What case would you cite as an illustration of the principle that says
"An offer can be made to the World at large" |
Carlill v Carbolic Smokeball Company
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In tort, who are your legal neighbours?
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Your legal neighbours are those people who are so directly affected by your acts that you should have had them in mind as likely to be affected when you committed those acts
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What is the effect, in an action alleging tort, of novus actus interveniens?
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It is likely that the action would fail - the loss suffered was not entirely due to the original acts - something new intervened
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"As a general rule, an advert is taken to be an offer capable of acceptance".
Is that statement true? |
No, as a general rule, an advert is taken to be an invitation to treat.
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What's an innominate term?
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It's a term which could be a condition or it could be a warranty. But we don't know until it's broken
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Complete the following: " ***** will always be awarded if ***** is sufficient"
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Damages will always be awarded if damages is sufficien
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If you are the defendant in a civil law court case, what title is given to the other party?
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The plaintiff
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"In a tort case the defence volenti non fit injuria merely requires knowledge of the risk".
True Or false? |
It's false. For the defence to be successful it's necessary to show that the injured party was a willing participant in the risky activity
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What sort of remedy is "action of price"?
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Action for price is a common law remedy
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The case Williams v Carwardine is a case involving an advert of a reward offered for information.
This type of case is an exception to which principle? |
A reward case is an exception to the general principle that an advert is an invitation to treat and not an offer .
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Which case established the principle that acts over and above an existing natural duty already owed are sufficient to merit the title "consideration"?
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Ward v Byham
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There are three ways of incorporating a company. By "registration" and by "statute" are two.
What is the third way? |
By Royal charter
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The case DHN v Tower Hamlets is a case illustrating which principle?
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In a situation where the strict application of the concept of the veil of incorporation would lead to an injustice, the Court is prepared to lift the veil
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"Participation in an unofficial industrial action is not an automatically fair reason for dismissal".
Is that statement true? |
No, participation in an unofficial industrial action IS an automatically fair reason for dismissal
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In a "contract of service" is the contracted person an employee or is he an independent contractor
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the contracted person is an employee
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When an employee is dismissed in breach of contract and, as a result, they have suffered loss, this is classified as what type of dismissal?
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Wrongful dismissal
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In a situation where the Court is faced with having to interpret statute, the Court will apply the Golden Rule if the application of the Literal Rule would lead to *****.
What is *****? |
An absurdity
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What doctrine in law is illustrated by the case Central London Property Trust v High Trees House?
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The doctrine of promissory estoppel
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What principle is confirmed by the case Caparo v Dickman?
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A duty of care is owed to one's neighbours
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What is summary dismissal?
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Summary dismissal is where an employer dismisses an employee without giving any notice
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"The duty of care owed by accountants is greater when advising on take-overs than when auditing".
Is this statement true? |
It's true as illustrated by the case Morgan Crucible v Hill Samuel Bank
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In a "contract for services" is the contracted person an employee or is he an independent contractor?
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The contracted person is an independent contractor
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What is the closest translation of "res ipsa loquitur"?
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"The thing speaks for itself"
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What is the minimum number of directors required in a public company?
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2 is the minimum number of directors required in a public company
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What is "constructive dismissal"?
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Constructive dismissal is where an employer changes the terms of employment of an employee to such a degree that the employee feels that they cannot continue in employment
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What is being discussed in the sentence:
"It must be sufficient but need not be adequate" |
Consideration - must be sufficient to merit the title "consideration" ie it must have some value
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There are three essential elements of a contract. Two of them are "agreement" and "consideration".
What's the third element? |
Intention
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"Summary dismissal incurs the employer in no liability if ******" Complete the sentence
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A Summary dismissal incurs the employer in no liability if the employee has committed a serious breach of contract"
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What are exclusion clauses used for?
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They are an attempt to restrict or completely eliminate one party's liability for breach of contract
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In any answer to an exam question concerning damages, two cases are always mentioned. What are they?
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Hadley v Baxendale (remoteness) and Victoria Laundry v Newman Industries (measurement)
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In the context of consideration, what characterises "executed consideration"
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Where consideration is paid at the same time that the goods are delivered
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How may terms be implied into a contract?
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By statute, by the Courts or by custom
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What is anticipatory breach?
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Anticipatory breach is where one party gives notice in advance that they will not go ahead with the contract
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"Overruling" an earlier decision means what
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A higher court disagrees with a lower court's decision. It does not alter the earlier decision. It simply deprives it of its authority
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"A director who has reached the age of 70 is disqualified from continuing to hold office as a director of a company"
Is this statement true? |
No, a director who has reached the age of 70 may continue to serve as a director of a company but, in the case of a public company, the director must seek re-election every year
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Complete the following: "Past consideration is ********"
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Past consideration is no consideration
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Assault, battery and false imprisonment are all examples of which "wrong"?
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All three are examples of tort
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What principle did the case Chappell v Nestle establish?
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Consideration must have some value
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"To he who is willing, there can be no harm". How does that translate in the context of tort?
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Volenti non fit injuria
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What does the abbreviation "ltd" stand for?
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"ltd" is the abbreviation for "limited" and indicates that the company is a private company
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In tort, to whom does a person owe a duty of care?
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A person owes a duty of care to one's legal neighbours
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What is the meaning and effect of "ratio decidendi"?
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It means "the rationale for the decision" and the effect is that it is binding on subsequent judges hearing similar cases in courts of same standing or inferior courts
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What word is used to describe what has happened to the original decision when a case goes to appeal and the appeal is won?
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Reversing
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What is the highest court in the English legal system?
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The Supreme Court
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How would you briefly describe the defence of volenti non fit injuria?
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To he who is willing there can be no harm
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If an employee is a threat to national security, would their dismissal be classed as automatically fair?
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Yes
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What principle could be described as "The cornerstone of English Law"?
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The principle of "Stare Decisis" or "judicial precedence"
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With reference to the doctrine of promissory estoppel, complete the following: "When a promise is given and acted upon, then **********"
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When a promise is given and acted upon, then "the promissor cannot subsequently go back on that promise to the detriment of the promissee"
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What does the case Mahon v Osborne illustrate?
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A surgeon who leaves equipment inside the body of a patient is liable in negligence (res ipsa loquitur) unless they can prove non-negligence
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What is a "Mareva injunction"
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Mareva injunction is a freezing order applied to the assets of a suspected wrong-doer
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The case Watteau v Fenwick illustrates what point in agency law?
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The principle of apparent authority. Plaintiff, Watteau, sold goods to a pub manager, Humble, under the belief that Humble was actually the pub owner. Plaintiff learned that Defendant, Fenwick, was the actual owner and sought to collect from Defendant for the unpaid balance of goods purchased by Humble. Held. Defendant is liable for damages. Humble was acting with an authority that was inherently reasonable for an agent in that position. The situation is analogous to a partnership wherein one partner is silent but is still liable for actions of the partnership as a whole.
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"Special notice is required of an ordinary resolution in the event that an auditor is to be removed from office during their year of office"
Is this statement true? |
Yes, special notice is required of an ordinary resolution to remove an auditor from office during their year of office
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Performance of an existing contractual duty is not sufficient to be classed as consideration for a different contract.
Which case established that principle? |
Stilk v Myrick
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Name the three divisions of the High Court
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Queen's Bench Division, Chancery Division and Family Division
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Which remedy is the Court granting when the Court says (effectively!) "Just do it"?
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A Specific performance
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The "Boots case" illustrates what principle of law
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That goods on a supermarket shelf are invitations to treat and are not therefore offers capable of acceptance
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What sort of remedy is “rescission”?
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Rescission is an equitable remedy
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What is the minimum number of members required in a private company?
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1 is the minimum number of members required in a private company
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What is the limit of a member’s liability in a company limited by shares?
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A member’s liability in a company limited by shares is limited to the amount, if any, as yet unpaid on shares held by the member
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Is it possible that a partnership may be deemed by the Court to exist even though the two people involved have never spoken to each other?
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Yes, the Court may deem that a partnership by conduct exists where two people carry on a business in common and satisfy the definition of a partnership
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Is it necessary to know section numbers from statute for the F4 law examination
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NO, it is NOT necessary to know section numbers from statute for the F4 law examination
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“Where a public company enters a trading contract before it has obtained a trading certificate, the contract is void”.
Is that statement true? |
No, it is not true. An “innocent” third party can enforce the contract against the company
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Where a person has, historically, been allowed to act as though they were a Chief Executive Officer, the other directors would be ****** from denying that title. Complete the gap
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“estopped”
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What sort of remedy is “rectification”?
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Rectification is an equitable remedy
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Is it always true that once a company has been incorporated it has a separate legal identity?
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Yes, it is always true
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What does the abbreviation “llp” stand for?
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“llp” is the abbreviation for “limited liability partnership”
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“Tort is an example of breach of contract”
Is this statement true? |
It’s false – tort is NOT a breach of contract
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Is it true that an agency arrangement may be deemed by the Court to exist, even though the supposed principal and the supposed agent have never met nor know of each other’s existence
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Yes, for example where a person acts and is deemed to be an agent of necessity
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“Under the Limited Partnerships Act of 1907, the death of a limited partner does not bring about the end of the partnership”
Is this statement true? |
Yes. Neither notice, death nor bankruptcy of the limited partner has the effect of dissolving the partnership.
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What’s another word commonly used to express “apparent” as in “apparent authority”?
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Ostensible
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“One of the limited uses of the share premium account is to finance the issue of partly paid bonus shares to existing members”.
Is that statement true? |
No. One of the uses is to finance the issue of FULLY PAID bonus shares to existing members
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ICC is the abbreviation for:
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International Criminal Court or International Chamber of Commerce
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The case Daimler v Continental Tyre and Rubber is a case illustrating which principle?
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In a situation where the strict application of the concept of the veil of incorporation would lead to an injustice, the Court is prepared to lift the veil
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Is there such a beast as an unlimited company?
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Yes – but Heaven knows why!
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“The acts of a partner done in the course of the firm’s business do not bind the firm. Only the individual partner is liable”
Is that statement true? |
No. The acts of a partner done in the course of the firm’s business bind the firm and the partners
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In the definition of a contract, the word “agreement” can be divided into two distinct elements.
What are those elements? |
Offer and acceptance
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What sort of remedy is “damages”?
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Damages is a common law remedy
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Is it necessary for a firm registered under the Limited Liability Partnerships Act 2000 to have an annual audit?
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Yes, it’s part of the “price payable” for the benefit of limited liability
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The case R v Orr is a case illustrating which principle?
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In a situation where the strict application of the concept of the veil of incorporation would lead to an injustice, the Court is prepared to lift the veil
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The case Gilford Motor Company v Horne is a case illustrating which principle?
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In a situation where the strict application of the concept of the veil of incorporation would lead to an injustice, the Court is prepared to lift the veil
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There are three essential elements of a contract. Two of them are “consideration” and “intention”.
What’s the third element? |
Agreement
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Complete the following: “A partnership is the ***** which subsists between **** or more people ****** *** business in common with a view to *****”
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“A partnership is the relationship which subsists between two or more people carrying on business in common with a view to profit”
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Is it always true that a company exists from the date which is shown on the certificate of incorporation?
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Yes, the date on the certificate is conclusive proof that the company exists from that date – Jubilee Cotton Mills v Lewes
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Is it true that death of the offeror has the effect that the offer is no longer capable of acceptance?
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No! If the offer does not involve the personality of the offeror, then it’s the notification of the death which makes the offer no longer capable of acceptance (not the death itself)
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In which two ways may a member’s liability be limited?
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By guarantee and by shares
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In very rare cases the Courts are prepared to look to see who are the actual beneficial owners of a company. This is called “Lifting *** ****”
Complete the sentence |
Lifting the veil
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What does the abbreviation “plc” stand for?
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“plc” is the abbreviation for “public limited company”
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What sort of remedy is “injunction”?
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Injunction is an equitable remedy
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There are three ways of incorporating a company. By “Royal charter” and by “statute” are two.
What is the third way? |
By registration
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“When a partner in a traditional partnership dies, the partnership is automatically ended”.
Is this statement always true? |
Yes, it is always true.
The surviving partners can start a new partnership with immediate effect but the original partnership ceases on the death of a partner. |
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What are liquidated damages?
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Liquidated damages are a genuine pre-contractual estimate of damages
which would be suffered in the event of a breach and the amount is written as a term of the contract |
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“In some circumstances a principal may ratify the acts of an agent retrospectively”.
Is this statement true? |
Yes, it is true
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There are three ways of incorporating a company. By “Royal charter” and by “registration” are two.
What is the third way? |
By statute
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In company law, when the Chief Executive Officer dies, the company ceases to exist until a replacement CEO is appointed.
Is this statement true? |
No!
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Is a joint venture arrangement classed as a partnership?
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Yes, a joint venture is defined as “a partnership formed for a specific purpose, course of trade or voyage”
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Is it always true that as soon as a company has been incorporated it may commence trading?
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No. Following incorporation, a public company must obtain a trading certificate before it may commence trading
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Is it necessary to know the title of legislation / statute for the F4 law examination
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NO, it is NOT necessary to know the titles of statute for the F4 law examination
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Where a person has, historically, been allowed to act as though they were a Chief Executive Officer, the other directors would be estopped from denying that title.
Is this true? |
Yes, it is true
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In a company with 1,000 members, what is the MINIMUM number of members who must vote in favour in order to pass a special resolution?
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No! Just one! I didn’t say that everyone voted!
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The case Salomon v Salomon & Co Ltd confirmed conclusively a basic principle of company law.
What was that principle? |
The concept that a company is a separate legal entity, distinct from its owners and from those who manage its affairs
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So far as auditors are concerned, which tort is (unfortunately) most likely to affect them?
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The tort of negligence
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“Insanity of a partner is an automatic ground for the dissolution of a partnership”. Is this statement true?
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No. Insanity as a ground for dissolution is a matter for the Court to decide. It’s not automatic
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What sort of remedy is “specific performance”?
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Specific performance is an equitable remedy
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What sort of remedy is “rescission”?
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Rescission is an equitable remedy
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“A proxy appointed by a member of a company to represent the member’s wishes must be also a member of the company”
It this statement true? |
No, it is not necessary that a proxy be a member of the company
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A person who is to be appointed as liquidator must hold a specific qualification.
What is that qualification? |
A person who is to be appointed as liquidator must be a “qualified insolvency practitioner”
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A debenture may be secured by way of a fixed charge.
What characterises a fixed charge as compared with a floating charge? |
A fixed charge attaches to an individual asset whereby the borrower is not able freely to deal with that asset
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“If a person’s name appears in a Register of Members, this indicates that they are a shareholder of the company”
Is this statement true? |
No, if a person’s name appears in a Register of Members, this indicates that they are a member of the company, but not necessarily a shareholde
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“In the event that there are two similar charges on the same asset, the charge which is registered first has priority over the one registered second”
Is this statement true? |
No, the statement is not true. The one with priority is the charge which was created first, not necessarily the one which was registered first
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Is it reasonable for a director to claim that she could not be expected to promote the interests of the company?
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No, it is a statutory duty of directors to promote the interests of the company
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If pre-tax profit is $40,000, post-tax profit is $36,000, and there are 10,000 50 cent 6% preference shares in issue, how much is the preference share dividend for the year?
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$300 ie 6% * 10,000 * .50
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What sort of resolution is required to alter the Articles?
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A special resolution is required to effect an alteration to the Articles of a company
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In a company with 1,000 members, what is the MINIMUM number of members who must vote in favour in order to pass a special resolution and all members vote?
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No! Just one! I didn’t say that everyone had the same number of votes!
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Define “promoter”
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A promoter is one who undertakes to form a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose
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In a case where the plaintiff is referred to as “R”, who is “R”? (eg R v Clark)
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R” is the Monarch of the United Kingdom
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Where is the detail of quorum size specified?
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The detail of quorum size is specified in a company’s Articles
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What sort of resolution is required to be passed by the members to put their company into liquidation?
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A special resolution requiring a 75% majority voting in favour
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“The duties owed by a promoter are collectively known as ***** duties”
Complete the sentence |
The duties owed by a promoter are collectively known as fiduciary duties
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“On a liquidation, the floating charge debenture holders are paid in priority to all others. Their claim “floats” to the top of those people who are owed by the company”
Is this statement true? |
No, on a liquidation, the FIXED charge debenture holders are paid in priority to all others.
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What is meant by the expression “passing off” in the context of company law?
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“passing off” is where a company is established with a name similar to an existing company name and in a similar business such that confusion is likely to result.
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A debenture may be secured by way of a floating charge.
What characterises a floating charge as compared with a fixed charge? |
A floating charge does not attach to an individual asset but rather to a class of assets including current assets. The borrower is able freely to deal with the assets subject to the charge
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What does the word “proxy” mean in the expression “present in person or by proxy”?
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A proxy is appointed by a member to represent the member at a general meeting where the member is unable to attend
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“Called-up capital and paid-up capital are two ways of saying the same thing”
Is this statement true? |
No, called-up capital and paid-up capital are not the same thing
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Within how many days must a copy of a special resolution be filed with the Registrar of Companies after being passed at a general meeting of a company?
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Within 15 days
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In order that a company may reduce its share capital, it requires three authorities. What are they?
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In order that a company may reduce its share capital, it requires permission within the Articles, a special resolution and permission of the Court
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“A company’s Register of Members must be kept at the company’s registered office”
Is this statement always true? |
No, not true. A company may keep its register of members at the offices of the company’s registrars
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“The date on the certificate of incorporation is ***** proof that that was the date the company was created”.
Complete the sentence |
The date on the certificate of incorporation is conclusive proof that that was the date the company was created
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A person who is to be appointed as administrator must hold a specific qualification.
What is that qualification? |
A person who is to be appointed as administrator must be a “qualified insolvency practitioner”
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In an FTSE 350 company, for what period of time are directors appointed before they must seek re-election (if they wish to be re-elected!)?
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In an FTSE 350 company, all directors must retire each year and seek re-election (if they wish to be re-elected)
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“If a private company wishes to have a company secretary, the person appointed must be appropriately qualified”
Is this statement true? |
No, it is not true, no qualifications are necessary for a person to be appointed as a private company secretary
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A preference share has that name because of its preferential entitlements over equity shares.
One preference is that it shall receive its dividend before any equity dividend is paid. What is the other? |
In the event of a liquidation, preference shareholders shall be repaid their capital, in full, before the equity shareholders receive a single cent in repayment of their capital
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“At a general meeting of the company, the debenture holders’ votes are counted before those of the equity shareholders”
Is this statement true? |
No, this is not true. At a general meeting of the company, the debenture holders have no votes – they are creditors, not members
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What majority voting in favour is required to pass a special resolution?
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A majority of not less than 75% of votes in favour is required to pass a special resolution
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“A public company must have an appropriately qualified company secretary”
Is this statement true? |
Yes, a public company must have an appropriately qualified company secretary
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In order that a company may reduce its share capital it requires permission within the Articles and permission from the Court. It also needs a third authority.
What is it? |
In order that a company may reduce its share capital, it requires not only permission within the Articles and permission of the Court. It also requires a special resolution to be passed
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What is meant by the term “Articles of Association” of a company?
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The Articles of Association consist of the internal rules that relate to the management and administration of the company
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What was the case when the Court granted a liquidation order on the grounds that there was deadlock on the board?
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The case when the Court granted a liquidation order on the grounds that there was deadlock on the board was re Yenidji Tobacco
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A Register of Directors shall contain what information relating to the directors?
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Present and former names, address (ideally home address), nationality, business occupation, date of birth
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“A person who receives inside knowledge about a company from a director and who deals and makes a profit is guilty of the criminal offence of insider dealing”
Is this statement true? |
It is true if the person knew (or should have known) that the informer was an insider. If they didn’t know (or suspect) , then the person is not guilty of the offence
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If a firm of auditors wishes to resign, or not seek re-election, they must deliver to the company’s registered office a “statement of circumstances”
Is this statement true? |
No. If a firm of auditors wishes to resign, or not seek re-election, they must deliver to the company’s registered office either a “statement of circumstances” or a “statement of no circumstances”
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“At the time someone becomes a member of a company, it is as though they have entered a contract with **** and with ****”. Complete the sentence
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“At the time someone becomes a member of a company, it is as though they have entered a contract with the company and with all the other members individually"
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What sort of resolution is required if a company wishes to change the company name?
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A special resolution is required if a company wishes to change the company name
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“A person becomes a member of a company when they have successfully bought shares in the company”
Is that statement true? |
No, a person becomes a member of a company when their name appears in the Register of Members
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Which type of liquidation requires the directors to prepare a declaration of solvency?
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A members’ voluntary liquidation requires the directors to prepare a declaration of solvency
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To be valid, a charge must be registered with the Registrar of Companies within how many days of its creation?
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To be valid, a charge must be registered with the Registrar of Companies within 21 days of its creation
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There are two main grounds under which the Court may grant a liquidation order. What are they?
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The Court may grant a liquidation order:
* on the grounds that it would be just and equitable * on the grounds that the company is unable to pay its debts as they fall due |
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The duty to act with reasonable skill and care is an example of what type of duty?
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The duty to act with reasonable skill and care is an example of a fiduciary duty
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What is a Special Manager?
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Special Manager is a person appointed on application to the Court by the Official Receiver to take control of the company’s property during the liquidation process
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Is it possible for a member to have their liability increased even in a limited liability company?
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Yes, in a number of situations including if they give their written consent.
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“A person becomes a member of a company when their name appears in the Register of Members”
Is this statement true? |
Yes, a person becomes a member of a company when their name appears in the Register of Members
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Within how many months after incorporation must a private company hold its first annual general meeting?
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It is not a statutory requirement that private companies should have an annual general meeting
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“Where a private company wishes to appoint a company secretary, that appointee should, by law, be appropriately qualified”
Is this statement true? |
No, where a private company wishes to appoint a company secretary, it is not statutorily necessary that that appointee should have any qualifications. It could be your grand-mother!
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“On a liquidation, all debenture holders are paid in priority to the members.”
Is this statement true? |
Yes, on a liquidation, all debenture holders are paid in priority to all the members
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What matters must be disclosed in an “Application for registration” of a new company?
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Proposed name, country of domicile of registered office, liability of members, company status (plc or ltd) , postal address of registered office
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Special notice is sometimes required for what type of resolution in a company’s general meeting?
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An ordinary resolution sometimes requires special notice
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If a promoter enters into a contract on behalf of company which has not yet received its certificate of incorporation, is the company liable or, in fact, is anyone liable?
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The promoter is liable personally – the company doesn’t exist and therefore has no liability
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There is a limitation on the alterability of a company’s articles. They may only be altered if the alteration can be shown to be for the ***** of the company as a *****. Complete the sentence
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They may only be altered if the alteration can be shown to be for the benefit of the company as a whole
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For the purposes of the F4 examination, it is important to know the difference between “loan stock” and “debentures”.
Is this statement true? |
No, it is NOT necessary to be able to differentiate between loan stock and debentures in the F4 examination
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“An alteration to the Articles allowing a majority to acquire compulsorily the shares of a minority has been shown not to be for the benefit of the company as a whole”. Is this statement true?
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Yes, as illustrated by the case Dafen Tinplate v Llanelli Steel
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What is a quorum?
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A quorum is the minimum number of members necessary to be present at a general meeting of a company if resolutions are to be validly passed
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The constitution of a company is the combination of three elements.
What are those elements? |
The articles of association, resolutions which affect the articles and any agreements which affect the articles
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Is it true that the Court may, on application, direct that a public company be liquidated where the company has failed to obtain a trading certificate within 12 months of incorporation?
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Yes, it is true. It’s one of the six grounds for which the Court may make that compulsory liquidation order
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“The entry to balance the cash received on the event of a rights issue of shares is to a combination of the share capital account and the share premium account”
Is this statement true? |
Yes, the share capital account will be credited with the nominal value of the new issue and the share premium account with the excess proceeds over nominal value
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“It is a requirement of the UK Corporate Governance Code that directors should be remunerated in part based on their performance”
Is this statement true? |
Yes, it is a requirement of the UK Corporate Governance Code that part of the directors’ remuneration should be performance related
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An annual general meeting requires a notice period of how many days?
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An annual general meeting requires a notice period of 14 days
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If you were given investment advice by a director to “Get out of equities and invest in Government bonds”, would that qualify as passing on unpublished price- sensitive information?
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No, to be an offence, the information needs to be specific and not just general investment advice
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In company law, what does the abbreviation CDDA mean?
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In company law, the abbreviation CDDA stands for the Company Directors Disqualification Act
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What are Neds?
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Non-executive directors
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“Directors should act with such degree of skill, care and diligence as could reasonably be expected from a person of that age, experience and qualification”
Is this statement true? |
Yes, directors should act with such degree of skill, care and diligence as could reasonably be expected from a person of that age, experience and qualification
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“In a private company, any resolution may be passed as a written resolution”
Is this statement true? |
No, a resolution to remove a director or an auditor cannot be passed as a written resolution but any other resolution may be.
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“To provide for the dividend payable on the 6% redeemable preference shares is one of the few allowable uses of the share premium account.”
Is this statement true? |
No, the statement is not true. Providing the finance for a dividend is NOT an allowable use of the share premium account
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A public company must hold an annual general meeting every calendar year.
What other type of general meeting may a public company hold? |
A public company MAY hold general meetings which are not annual general meetings. These are called “other general meetings”
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What, by statutory definition, is a “shadow director”?
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A shadow director is defined as “a person in accordance with whose instructions the directors are accustomed to act”
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“In the context of shares in a company, the expressions “face value”, “par value” and “nominal value” mean the same.”
Is this statement true? |
Yes, “face value”, “par value” and “nominal value” do have the same meaning
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“It is an offence for a person who is an “insider” to use inside knowledge about a company and avoid buying shares in the company where they fear the price of the company’s shares will fall.”
Is this statement true? |
No, the offence of insider dealing refers to deals. It does not refer to non-dealing
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What constitutes “unpublished price-sensitive information”?
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Unpublished price-sensitive information is information about a company which is not in the public domain but which, when published, is likely to have a material affect on the market price of the company’s securities
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Where the directors of a company always act upon the advice of their auditor, is it the case that the auditor would be classed as a shadow director?
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No, a person acting in a professional capacity (auditor, legal advisor, banker) shall not be classed as a shadow director
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Whose responsibility is it to call / convene a general meeting of the members of a company?
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It is the directors’ responsibility to call / convene a general meeting of the members of a company, but they normally delegate that duty to the company secretary
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Money laundering is a three step process. What are they?
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* Placement
* Integration * Layering |
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At the first annual general meeting of a public company, what proportion of the directors must retire and (may) seek re-election
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At the first annual general meeting of a public company, all the directors must retire and (may) seek re-election
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In a relatively recent case, the Court granted a compulsory liquidation order on the grounds that the company was a “quasi-partnership”
What was that case? |
The case where the Court determined that the company was a “quasi-partnership” was Ebrahimi v Westbourne Galleries
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“The entry to balance the cash received on the event of a bonus issue of shares is to a combination of the share capital account and the share premium account”
Is this statement true? |
No, it is not true! There is no cash received on the event of a bonus issue!
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Re German Date Coffee Company is a case where the Court granted a liquidation order.
Why did the Court make that order? |
The Court made the order on the grounds that it was just and equitable – the sub-stratum of the company no longer existed
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In order that a company may reduce its share capital it requires permission within the Articles and a special resolution. It also needs a third authority.
What is it? |
In order that a company may reduce its share capital it requires permission within the Articles, a special resolution and also permission of the Court
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“Anybody may be appointed as the auditor of a private company”
Is this statement true? |
No, if a private company wishes to have an auditor, that appointee shall be appropriately qualified
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What is the essential and fundamental difference between a members’ voluntary liquidation and a creditors’ voluntary liquidation?
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In one word, SOLVENCY
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What is the minimum number of members required in a public company?
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1 is the minimum number of members required in a public company
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Is unpublished price-sensitive information which is greater than 6 months old really price-sensitive?
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Is unpublished price-sensitive information which is greater than 6 months old really price-sensitive?
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An ordinary resolution requires what size of majority voting in favour?
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A simple majority – ie one more vote in favour than votes agains
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What is meant by the expression “wrongful trading”?
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“Wrongful trading” is when directors allow the company to continue trading without there being a realistic prospect that it will be able to avoid an insolvent liquidation in the foreseeable future
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“To finance the issue of fully paid bonus shares to existing members” is one of the few allowable uses of the share premium account.
Is this statement true? |
Yes, “to finance the issue of fully paid bonus shares to existing members” is one of the few allowable uses of the share premium account.
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“Special notice is required of an ordinary resolution in the event that a director is to be removed from office”
Is this statement true? |
Yes, special notice is required of an ordinary resolution to remove a director from office
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“A company may only make distributions out of *** ***. *** *** are calculated as “*** *** ***” less “*** *** ***”
Complete the sentences |
A company may only make distributions out of distributable profits. Distributable profits are calculated as “accumulated realised profits” less “accumulated realised losses”
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“Whenever a company wishes to change auditors, they must pass an ordinary resolution with special notice”
Is this statement true? |
Yes, in every circumstance when a company wishes to change auditors the company must pass an ordinary resolution with special notice
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What is meant by “fraudulent trading”?
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“Fraudulent trading” involves establishing a company with the intention of defrauding creditors
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“A director who has reached the age of 70 is disqualified from continuing to hold office as a director of a private company”
Is this statement true? |
No, there is no upper age limit applied to directors of private companies
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“In a company which complies with the UK Corporate Governance Code, it is in compliance when the role of Chair and that of Chief Executive are held by the same person”
Is this statement true? |
No, the UK Corporate Governance Code requires that the roles of Chair and Chief Executive be split between two individuals of comparably equal strength and charisma
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“To write off preliminary and formation expenses” is one of the few allowable uses of the share premium account.
Is this statement true? |
Yes, “to write off preliminary and formation expenses” is one of the few allowable uses of the share premium account.
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Is it possible for the members of a private company to pass a written resolution to place their company into liquidation?
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Yes, provided a majority of 75% vote in favour, a private company can be put into liquidation by passing a written resolution
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There are three offences involved in the criminal offence of Money Laundering.
What are the three offences? |
The three offences in money laundering are:
* laundering * failure to report * tipping off |
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There are two statutory capital undistributable reserves.
What are they? |
The Share Premium Account and the Capital Redemption Reserve
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In the case of A Large Company plc, how many members represent a quorum at a general meeting?
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It’s whatever it says in the Articles
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If an insider in possession of unpublished price-sensitive information sells shares and avoids a loss but claims that the sale was to raise money to repay a private debt, is he guilty?
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Probably not, if he can persuade the Court that the sale was for reasons other than the avoidance of a loss
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A public company must hold its first annual general meeting no later than how many months after incorporation
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A public company must hold its first annual general meeting no later than 6 months after its first year end ie a maximum of 18 months after incorporation
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What happens if I fail properly to plan my answers in the exam?
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My answers will be disjointed and lack professionalism
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A special resolution requires how many days’ notice if it is to be validly passed?
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A special resolution requires 14 days’ notice if it is to be validly passed
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When a director is proposed to be removed from office, the director has the right to prepare “written **** of ***** *****”
Complete the sentence |
When a director is proposed to be removed from office, the director has the right to prepare “written representations of reasonable length and not defamatory in nature”
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What sort of resolution is required to be passed by a company in the event that a director should be removed from office?
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An ordinary resolution
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“The punishment for money laundering is a prison sentence of up to 14 years and / or a fine”
Is this statement true? |
Yes, the punishment for money laundering is a prison sentence of up to 14 years and / or a fine
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How much time should I spend planning each answer in the F4 law examination?
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Six and a half minutes to try and think of 10 correct, relevant, markable points
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Where a company is in financial difficulties, there may be a way other than liquidation by which a company could be rescued.
What is that process called? |
A way other than liquidation by which a company could be rescued is called an Administration
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Where does the Official Receiver fit into company law on liquidations?
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The Official Receiver will be appointed by the Court as Provisional Liquidator in the event of the Court granting a compulsory liquidation order
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Is it possible to hold an annual general meeting of a public company with only 2 days’ notice?
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Yes, it is possible to hold an annual general meeting of a public company with only 2 days’ notice provided short notice has been approved by the holders of 100% of the votes
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How is “corporate governance” defined?
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“Corporate governance” is a system whereby companies are directed and controlled
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“Insider dealing is a civil offence and is punishable by a fine”
Is this statement true? |
No, insider dealing is a criminal offence and is punishable by a term in prison and / or fine
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To what does the expression “comply or explain” refer within the UK Corporate Governance Code?
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The expression “comply or explain” refers to public quoted companies which must state within the financial statements that they have complied with the Code or, if not, why not.
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There are two types of voluntary liquidation.
What are the two types? |
A members’ voluntary liquidation and a creditors’ voluntary liquidation
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“Full disclosure of interests in contracts and transactions of a company should be made by directors to a sub-committee of the board at the earliest opportunity”
Is this statement true? |
No, full disclosure of interests in contracts and transactions of a company should be made by directors to the full board. It is not enough to disclose only to a sub-committee
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If a members’ voluntary liquidation is a voluntary action of the members, a creditors’ voluntary liquidation is a voluntary act of which group of people
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The members! It’s called a creditors’ voluntary liquidation because the creditors are not likely going to be paid their debts in full
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Is it allowable for a director who has recently declared herself to be bankrupt to continue in office as a director of a company?
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No, it is not allowable for a director who has recently declared herself to be bankrupt to continue in office as a director of a company
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In company law what is the literal translation of “ultra vires” in the context of directors’ actions
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“Ultra vires” literally translates as “beyond the powers”
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“In every situation when a public company issues shares for an amount lower than their face value, the company shall first of all get the permission of the Court”
Is this statement true? |
No! In no situation is a public company allowed to issue shares for an amount less than their face value
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“It is the members’ right in a general meeting to determine the level of the auditors’ remuneration”
Is this statement true? |
Yes, but it is normal that the members will authorise the board to negotiate the level of the auditors’ remuneration
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Is it true that directors have a statutory duty to avoid a conflict of interest?
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Yes, it is true that directors have a statutory duty to avoid a conflict of interest
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To which body of people does a whistle-blower turn in the event that the whistle-blower has concerns over alleged breaches of regulation / internal controls?
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A whistle-blower would refer their concerns over alleged breaches of regulation / internal controls to the Audit Committee
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Where a private company chooses to appoint a company secretary, is it possible for the sole director also to be the company secretary?
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No, where a private company chooses to appoint a company secretary, it is not possible for the sole director also to be the company secretary
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