Question 1

Which of the following statements is not true in relation to the shareholders' powers of governance?&#10;A) certain fundamental decisions have to be made by shareholders&#10;B) shareholders can direct the board by special resolution&#10;C) shareholders cannot remove directors from office&#10;D) when the board is unable to act, power returns to shareholders

Accepted Answer

Shareholders have the power to remove directors from office through a vote of no confidence or by bringing a special resolution to the general meeting.

Question 2

Non-executive directors are meant to&#10;A) replace executive directors&#10;B) monitor the behaviour of the board&#10;C) represent shareholders&#10;D) represent creditors

Accepted Answer

Non-executive directors are not meant to replace executive directors or represent shareholders or creditors. Their main role is to monitor the behaviour of the board and provide an independent perspective on the company's performance and strategy.

Question 3

Any person in accordance with whose directions the directors are accustomed to act is considered&#10;A) a shadow director&#10;B) a de-facto director&#10;C) a de-jure director&#10;D) an executive officer

Accepted Answer

A shadow director is a person who is not formally appointed as a director but whose instructions or directions are regularly followed by the board of directors. Therefore, a person in accordance with whose directions the directors are accustomed to act is considered a shadow director.

Question 4

What is the meaning of 'quorum'?&#10;A) a type of chair&#10;B) a type of corporate organisation&#10;C) the minimum of people necessary for a General Meeting to be held&#10;D) a gathering of shareholders

Accepted Answer

Quorum is the minimum number of members required to be present at a meeting in order for the meeting to be valid and have the power to make decisions. This is typically set out in the bylaws of a corporation or organization.

Question 5

What is the meaning of 'proxy'?&#10;A) a person appointed by a member entitled to vote on a General Meeting to attend and vote on their behalf&#10;B) a class of shares&#10;C) a new shareholder&#10;D) a shadow director

Accepted Answer

A proxy is a person appointed by a member entitled to vote on a General Meeting to attend and vote on their behalf.

Question 6

What is meant by special resolution?&#10;A) a decision by a majority of 51%&#10;B) a decision by a majority of 75%&#10;C) a decision by a majority of 90%&#10;D) a unanimous decision

Accepted Answer

A special resolution requires a higher majority of 75% to pass, compared to an ordinary resolution which requires a simple majority of 51%. A special resolution is used for important decisions that could significantly affect the company and its shareholders, such as amending the articles of association, changing the company's name or winding up the company.

Question 7

Which of the following is not a power given to shareholders by the Companies Act 2006?&#10;A) to change the articles by special resolution&#10;B) to change the articles by ordinary resolution&#10;C) to reduce share capital&#10;D) to remove directors from office

Accepted Answer

Shareholders can amend the articles of association by special resolution (75% majority) under Section 21 of the Companies Act 2006, but not by an ordinary resolution.

Question 8

The shareholders can direct the directors to take or refrain from taking certain actions&#10;A) by ordinary resolution&#10;B) by special resolution&#10;C) always&#10;D) if reasonable

Accepted Answer

Shareholders can direct the directors to take or refrain from certain actions by passing a special resolution, which typically requires a higher majority than an ordinary resolution.

Question 9

Article 3 of the Model Articles entitles&#10;A) any director to exercise the powers of the company&#10;B) any shareholder to exercise the powers of the company&#10;C) the directors collectively to exercise the powers of the company&#10;D) the shareholders collectively to exercise the powers of the company

Accepted Answer

Article 3 of the Model Articles states that the directors collectively are entitled to exercise the powers of the company. This means that the directors, as a group, have the authority to make decisions on behalf of the company and carry out its business activities. Shareholders may still have certain powers, such as the ability to appoint and remove directors or approve significant transactions, but the ultimate decision-making authority lies with the directors.

Question 10

Which of the following is not a requirement in becoming a director&#10;A) being over the age of 16&#10;B) never having been declared bankrupt&#10;C) having previous experience of running a company&#10;D) not been disqualified

Accepted Answer

Having previous experience of running a company is not a universal requirement for becoming a director. Requirements typically include age, legal capacity, and not being disqualified or bankrupt, but not necessarily previous experience.

Deck 9: Mental Capacity Defences