LAW Ch-11

A private company wishes to alter its articles of association.

What resolution must be passed by the shareholders?

• 1. A special resolution

• 1. An ordinary resolution

• 1. An extraordinary resolution

• None

Which of the following statements relating to articles of association is/are correct?

(1) The articles of association of a company limited by shares contain the internal regulations of the company

(2) The articles of association form a contract between the shareholders and the company

• 1. 1 only

• 1. 2 only

• 1. Both 1 and 2

• 1. Neither 1 nor 2

Which of the following clauses in the articles of association of Dee Co would NOT be enforceable against the company as a breach of contract?

• 1. Shareholders shall be paid dividends in cash

• 1. All shareholders are entitled to attend and vote at general meetings of the company

• 1. Tom (a shareholder) shall be the company’s managing director for life

• None

In the context of the articles of association, which of the following statements is NOT correct?

• 1. They form a contract between the shareholders and the board of directors

• 1. They form a contract between the shareholders and the company

• 1. They form a contract between each shareholder and the other shareholders

• 1. They govern the internal running of a company

In relation to the Memorandum of Association, which of the following is correct?

• 1. It must always be signed by a minimum of two subscribers

• 1. It may include an objects clause, but this is not mandatory

• 1. It confirms that the company is unlimited or limited

• 1. It is a now a historical document that can never be changed

Which of the following applies to entrenchment of articles of association?

• 1. Any new entrenched provisions must be registered with the Registrar of Companies

• 1. It is no longer possible to create new entrenched articles of association

• 1. Entrenched articles of association can only be varied if a general meeting takes place

• None

Which of the following statements relating to the memorandum of association of a private company limited by shares is correct?

• 1. It may be altered by special resolution

• 1. It may be altered by a written resolution

• 1. It cannot be altered

• None

Which of the followings statements relating to the articles of association is/are correct?

(1) The articles cannot constitute a contract between the company and a third party

(2) Relevant terms of the articles may be implied into the contract

• 1. 1 only

• 1. 2 only

• 1. Both 1 and 2

• 1. Neither 1 nore 2

The articles of Dee Co, a property development company, states that the company has the power to further its objects and that the directors have authority to borrow up to £200,000.

The board has resolved to purchase a plot of land for £300,000. The Midwest Bank plc has agreed to make a loan of £250,000 to Dee Co to acquire the land.

Which of the following statements is correct?

• 1. The loan is void as Dee Co has acted ultra vires

• 1. As the directors have exceeded their authority, the bank cannot enforce repayment of the loan against Dee Co

• 1. As the directors have resolved to obtain the loan, the transaction is lawful

• 1. The loan is ultra vires and the directors will be personally liable unless their actions are ratified by the shareholders

A promoter is forming a company and delivering documents to the Registrar of Companies.

Which of the following must be included in the Memorandum of Association of the company?

• 1. The objects clause

• 1. A statement of initial capital

• 1. Subscribers’ declaration

• NONE