SQE Business Law and Practice 2

Question 1

Which form is filed at Companies House to notify a change of registered office address?

Accepted Answer

AD01

Answer

Form AD01 is used to notify Companies House of a change to a company's registered office address.

Question 2

What is the key distinction between a fixed charge and a floating charge?

Accepted Answer

A fixed charge attaches to specific assets immediately; a floating charge hovers over a class of changing assets

Answer

A fixed charge attaches to identified assets at creation, while a floating charge covers a fluctuating pool of assets until crystallisation.

Question 3

Under the Insolvency Act 1986, what is the order of priority for distributing assets in a company liquidation?

Accepted Answer

Fixed charge holders → expenses → preferential creditors → floating charge holders → unsecured creditors → shareholders

Answer

In a winding up, fixed charge holders are paid first from their security, then liquidation expenses, then preferential creditors, then the prescribed part/floating charge holders, then unsecured creditors, and finally shareholders.

Question 4

What is 'wrongful trading' under the Insolvency Act 1986?

Accepted Answer

Continuing to trade when a director knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation

Answer

Section 214 IA 1986 makes directors personally liable if they continued trading after knowing (or ought to have known) insolvent liquidation was inevitable.

Question 5

Which Companies Act 2006 duty requires directors to promote the success of the company for the benefit of its members?

Accepted Answer

Section 172

Answer

Section 172 CA 2006 imposes a duty on directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.

SQE - Solicitors Qualifying Examination Practice Test

SQE - Solicitors Qualifying Examination Practice Test

SQE Business Law and Practice 2