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Corporate and Business Law (LW) Flashcards

6 cards from real ACCA AS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Corporate and Business Law (LW) flashcards as text

  1. Which of the following statements about a private company limited by shares is correct under the Companies Act 2006?

    Answer: It is not required to have a company secretary

    Under the Companies Act 2006, a private company is not required to appoint a company secretary (s270), nor is it required to hold an AGM (s336 applies only to public companies). The £50,000 minimum share capital applies to public companies only.

  2. In partnership law, under the Partnership Act 1890, which statement is correct regarding the liability of partners?

    Answer: Partners are jointly and severally liable for tortious acts of the firm

    Under the Partnership Act 1890, partners are jointly and severally liable for torts and wrongful acts committed by any partner acting in the ordinary course of business (s12). For contract debts, liability is joint. A new partner is not liable for pre-existing debts unless they agree to assume them.

  3. What is the effect of a exclusion clause that fails the 'reasonableness test' under the Unfair Contract Terms Act 1977?

    Answer: It is void and unenforceable

    Under UCTA 1977, certain exclusion clauses are subject to the reasonableness test (s11). If a clause fails the test, it is void and cannot be relied upon. The burden of proving reasonableness falls on the party seeking to rely on the clause.

  4. Under the Companies Act 2006, a special resolution requires what majority of votes?

    Answer: At least 75% of votes cast

    Section 283 of the Companies Act 2006 defines a special resolution as one passed by a majority of not less than 75% of the votes cast. Special resolutions are required for significant matters such as changing the company's articles or changing the company name.

  5. Which of the following correctly describes the doctrine of 'lifting the corporate veil'?

    Answer: It permits courts to disregard the separate legal personality of a company in exceptional circumstances

    Lifting the corporate veil is an exception to the Salomon v Salomon principle of separate legal personality. Courts may look behind the company to its members/controllers in exceptional cases, such as fraud, evasion of legal obligations, or where the company is a mere façade (Prest v Petrodel Resources).

  6. A director's duty to exercise reasonable care, skill and diligence under s174 Companies Act 2006 is measured against which standard?

    Answer: A dual objective/subjective standard — whichever is higher

    Section 174 applies a dual test: the general knowledge, skill and experience reasonably expected of a person in that role (objective), AND the actual knowledge, skill and experience of the specific director (subjective). The higher standard applies, so a director with specialist expertise is held to that higher standard.