Business - Incorrect MCQs

What is a Bushell v Faith clause?

A Bushell v Faith clause in the article of associations grants a director triple voting rights on resolutions to remove them as a director, even if the simple majority of shareholders voted in favour of it. This only applies when a director is also a shareholder.

Generally speaking, which resolution is required to remove a director?

Ordinary resolution.

Do pre-emption rights apply to private companies?

Yes - pre-emption rights under S561 CA 2006 apply to any company issuing new equity securities unless disapplied.

What is the next step after a company passes a special resolution to buy back its own shares out of capital?

The company must wait at least 5 weeks after the special resolution before completing the share buyback.

S723 CA 2006 requires share buy back to only take place between 5 and 7 weeks after the date of the SR to allow creditors the opportunity to object to the buy back.

Who does the right to circulate a written resolution apply to?

A shareholder or group of shareholders holding at least 5% of ordinary shares.

Who does the right to call a general meeting apply to?

A shareholder or group of shareholders holding at least 5% of ordinary shares.

Does a memorandum make up part of the company’s constitution?

No - but all companies must have one

Do shareholders have the power to call a poll vote after show of hands?

Yes: It can be demanded by two shareholders OR a shareholder who has at least 10% voting rights

If there are two fixed charges, in the order of priority, which will be granted first?

The one that was created first (not the date of registration)

When appointing a company secretary for a private company, how will this be done, and in how many days shall CH be notified?

Board resolution and within 14 days of appointment

When will a floating charge be considered ‘qualified’?

One that covers the whole or substantially the whole of a company’s assets and grants the holder the power to appoint an administrator.

If s303 Companies Act is used to request the directors to call a GM, how many days will they have to call it?

21 days

What does s303 of the Companies Act allow?

Shareholders representing 5% of the voting rights to serve notice on the company requiring it to call a GM within 21 days.

What happens if directors ignore a s303 notice?

If they ignore and take no action by 21 days or calls a GM longer than 28 days, the Shareholders can call a GM themselves under s305.

When a decision to ratify a director’s breach, who’s votes will be disregarded?

The votes of the member and anyone connected to them will eb disregarded.

What happens to a partnership if a partner leaves without a specific agreement on continuation?

It will technically be dissolved but a new partnership can be formed by the remaining partners to continue the business.

If a claim is served on a partnership, in what name should it be served in?

In the name of the partnership (in the name under which the partnership carried on business at the time the cause of action accrued).