Question 1

Damages for breach of duty to exercise reasonable care and skill by directors are based on&#10;A) contractual principles&#10;B) tort principles&#10;C) reasonable principles&#10;D) judicial discretion

Accepted Answer

Damages for breach of duty to exercise reasonable care and skill by directors are based on tort principles. This is because directors owe a duty of care to the company and its shareholders, and a breach of this duty can lead to a claim in negligence. In such a claim, damages will be awarded based on the harm suffered by the company or shareholders as a result of the director's breach of duty.

Question 2

Which of the following circumstances can result in the disqualification of a director?&#10;A) conviction for an indictable offence relating to a company&#10;B) consistently failing to submit accounts to the registrar of companies&#10;C) conviction for fraudulent trading&#10;D) any of the above

Accepted Answer

All three options can result in the disqualification of a director. Conviction for an indictable offense relating to a company, consistently failing to submit accounts to the registrar of companies, and conviction for fraudulent trading are all serious breaches of directors' responsibilities and can lead to their disqualification.

Question 3

What is a disqualification undertaking?&#10;A) same as a disqualification order&#10;B) an out-of-court procedure&#10;C) a court procedure&#10;D) a promise by directors not to be disqualified

Accepted Answer

A disqualification undertaking is an out-of-court procedure where directors agree not to act as directors of any company for a specified period of time. It is an alternative to facing a disqualification order in court.

Question 4

Which of the following is prohibited by s.232 Companies Act 2006?&#10;A) having liability insurance for directors&#10;B) indemnifying the director against liability to third parties&#10;C) indemnifying a director of a company who is an occupational pension scheme trustee&#10;D) exempting directors from liability

Accepted Answer

Exempting directors from liability is prohibited by s.232 of the Companies Act 2006, as it undermines the principle of director accountability.

Question 5

After a breach of duty a director can obtain relief by&#10;A) shareholder ratification&#10;B) court&#10;C) a &b&#10;D) the board

Accepted Answer

A director can obtain relief by either obtaining shareholder ratification or seeking relief from a court. The board itself does not have the power to grant relief. Therefore, the best choice is C, which includes both options.

Question 6

For which of the following issues cannot directors obtain relief from liability?&#10;A) fraud&#10;B) conflicts of interest&#10;C) self-dealing&#10;D) receiving payments from the company

Accepted Answer

Directors cannot obtain relief from liability for fraud as it involves intentional wrongdoing and deception, which is strictly against the law and corporate governance principles.

Question 7

Which of the following is not an available remedy for failing to obtain shareholder approval for specific transactions?&#10;A) the transaction is voidable&#10;B) the director may account to the company for any profits&#10;C) the director may have to indemnify the company&#10;D) the director is disqualified

Accepted Answer

Disqualification of a director is not a remedy for failing to obtain shareholder approval for specific transactions. The other three options are potential remedies, which may vary depending on the jurisdiction and specific circumstances.

Question 8

Equitable compensation for breach of duty by directors resembles&#10;A) damages in contract&#10;B) damages in tort&#10;C) indemnity&#10;D) insurance

Accepted Answer

The answer of Equitable compensation for breach of duty by...

Question 9

Which of the following is not an equitable remedy for breach of duty?&#10;A) return of property by the directors&#10;B) account of profits&#10;C) rescission of contracts&#10;D) damages

Accepted Answer

Damages are a legal remedy, not an equitable remedy. Equitable remedies include those listed in choices A, B, and C - return of property, account of profits, and rescission of contracts.

Question 10

A disqualification order does not prevent a person from&#10;A) being a director of a company&#10;B) acting as a receiver&#10;C) being a company secretary&#10;D) opening a shop

Accepted Answer

A disqualification order restricts a person from being a director of a company, acting as a receiver, and being a company secretary, but it does not prevent them from opening a shop or being self-employed in other ways.

Deck 13: Theft