Question 1

What is meant by a demerger?&#10;A) the break up of businesses run by a single company&#10;B) the coming together of separate businesses&#10;C) the coming together of separate companies&#10;D) the parting of directors from the company

Accepted Answer

A demerger refers to the process of breaking up businesses run by a single company into separate entities. This can occur for a variety of reasons, such as a desire to streamline operations or unlock value for shareholders.

Question 2

Which of the following is not an example of matters for which the court may make an order under section 900 Companies Act 2006?&#10;A) the transfer of a business undertaking&#10;B) the allotting of shares&#10;C) the dissolution of a company without a winding up&#10;D) the dissolution of a company via a winding up

Accepted Answer

Section 900 of the Companies Act 2006 allows the court to make orders regarding various matters including the transfer of a business undertaking, the allotting of shares, and the dissolution of a company without a winding up. However, the dissolution of a company via a winding up is not covered under this section as it falls under a separate set of provisions in the Act.

Question 3

Which one of the following is not an example of restructuring a financially healthy company?&#10;A) returning capital to shareholders&#10;B) providing returns for directors&#10;C) demerging a company&#10;D) in anticipation of sale

Accepted Answer

Providing returns for directors is not an example of restructuring a financially healthy company as it prioritizes the financial gain of a specific group of individuals rather than the overall health and stability of the company. The other options, returning capital to shareholders, demerging a company, and anticipating sale, are all strategies that can be used to restructure a financially healthy company in order to optimize its operations and maximize profitability.

Question 4

Where are schemes of arrangement not used?&#10;A) in takeovers of companies&#10;B) in restructuring&#10;C) in corporate rescue activity&#10;D) in setting up new businesses

Accepted Answer

Schemes of arrangement are not used in setting up new businesses. They are a legal mechanism used for restructuring, corporate rescue activity and takeovers of companies.

Question 5

What can a scheme of arrangement be used for?&#10;A) to restructure debt&#10;B) to restructure the rights of shareholders&#10;C) to restructure debt and change the rights of the shareholders&#10;D) any of the above

Accepted Answer

A scheme of arrangement can be used for any of the above purposes, as well as other purposes such as mergers and acquisitions or to change company constitution requirements.

Question 6

What is meant by scheme of arrangement?&#10;A) a statutory procedure that facilitates changes being made to the rights of creditors without obtaining the unanimous approval of those affected&#10;B) a statutory procedure that facilitates changes being made to the rights of shareholders without obtaining the unanimous approval of those affected&#10;C) a or b&#10;D) the same as a demerger

Accepted Answer

A scheme of arrangement is a statutory procedure that can facilitate changes being made to the rights of both creditors and shareholders without obtaining their unanimous approval. It is a formal arrangement between a company and its creditors or shareholders that must be approved by the court. A demerger, on the other hand, is a corporate reorganization where a company splits into two or more companies. It is not the same as a scheme of arrangement.

Question 7

If a shareholder disapproves of the demerger which of the following can he require?&#10;A) that the directors buy his shares&#10;B) that the other shareholders buy him out&#10;C) that the liquidators buys out his shares&#10;D) that the company is wound-up

Accepted Answer

The answer of If a shareholder disapproves of the demerger...

Question 8

Which of the following is not a special resolution required by the section 110 procedure?&#10;A) a resolution to dismiss the directors&#10;B) a resolution to wind up the company&#10;C) a resolution to appoint a liquidator&#10;D) a resolution to approve a scheme of reconstruction

Accepted Answer

The section 110 procedure is used for the reconstruction or amalgamation of a company. The special resolutions required by this procedure include approving a scheme of reconstruction, authorizing the company to purchase its own shares, and authorizing the directors to take any steps necessary to implement the scheme. However, there is no requirement to pass a resolution to dismiss the directors as part of the section 110 procedure. Similarly, while the appointment of a liquidator or winding up of the company might be necessary in certain cases, these are not specific requirements of the section 110 procedure.

Question 9

Which of the following are not common commercial reasons behind demergers?&#10;A) a preliminary step before sale&#10;B) internal reconstruction of a corporate group&#10;C) tax advantages&#10;D) disagreements between directors

Accepted Answer

Disagreements between directors are not typically a common commercial reason behind demergers. The other options (A, B, and C) are more common reasons for companies to undergo demergers.

Question 10

What is a company voluntary arrangement (CVA)?&#10;A) a composition in satisfaction or a company's debts involving all creditors&#10;B) a composition in satisfaction or a company's debts involving all assenting creditors&#10;C) a composition in satisfaction or a company's debts involving all dissenting creditors&#10;D) a commitment to CSR

Accepted Answer

A CVA is a composition in satisfaction of a company's debts involving all creditors.

Deck 15: Fraud