Corporate Law Quiz

What is a corporate transaction?

• Any significant event or agreement involving the transfer of assets or change in ownership

• A type of pre-incorporation agreement

• A minor financial activity within a company

• A legal document for shareholders

What is a pre-incorporation agreement?

• An agreement made after a company is incorporated

• A contract entered into by promoters before the company is formed

• An agreement between shareholders only

• A document that outlines the company's financial status

What does the doctrine of ultra vires refer to?

• Actions taken within the powers of a company

• The rights of shareholders to vote

• Contracts that are void because they exceed a company's powers

• The authority of directors to manage a company

What is the role of promoters in forming a company?

• To represent the company in legal matters

• To take necessary steps to form the company

• To manage the company after incorporation

• To provide ongoing financial support

What is the significance of the objects clause in a company's memorandum?

• It specifies the company's management structure

• It defines the company's financial obligations

• It limits the company's capacity to act

• It outlines the rights of shareholders

What does the doctrine of constructive notice imply?

• Parties are not responsible for internal company procedures

• Only shareholders are aware of the company's internal rules

• All parties are deemed to know a company's publicly available documents

• Third parties can ignore the company's articles of incorporation

What is the doctrine of indoor management?

• It protects the company from external claims

• It allows outsiders to assume internal procedures are followed

• It requires all contracts to be approved by shareholders

• It limits the authority of directors

In the case of Ashbury Railway Carriage and Iron Company Ltd v. Riche, what was the ruling regarding ultra vires acts?

• They are void from the beginning

• They are valid if approved by the board

• They can be enforced by third parties

• They can be ratified by shareholders

What happens if a company acts beyond its powers according to the doctrine of ultra vires?

• The action is void and cannot be ratified

• The action is valid if shareholders agree

• The action is valid if it benefits the company

• The action can be enforced by the company

What is the effect of restrictive provisions in a company's articles?

• They limit the authority of shareholders

• They do not affect the validity of corporate actions

• They require external approval for all actions

• They automatically void all corporate actions