SQE1 - Solicitors Qualifying Examination Part 1 Business Law and Practice Questions and Answers

Question 1

A private limited company has adopted the Model Articles of Association without amendment.
The company has three directors.
Two of the directors attend a board meeting to vote on a substantial property transaction.
One of the attending directors is also a majority shareholder in the company selling the property.
What is the legal position regarding the board meeting's quorum?

Accepted Answer

The meeting is not quorate because the interested director cannot be counted for the quorum on this matter.

Answer

The meeting is quorate as two directors are physically present, which satisfies the Model Articles.

Answer

The meeting is quorate, but any resolution passed is voidable at the option of the company.

Answer

The meeting is only quorate if the interested director declares their interest and the other director agrees to proceed.

Question 2

Which of the following business decisions requires a special resolution of the members of a private limited company under the Companies Act 2006?

Accepted Answer

Altering the company's articles of association.

Answer

Appointing a new director to the board.

Answer

Declaring a final dividend for the financial year.

Answer

Changing the company's registered office address.

Question 3

Three individuals form a general partnership to run a catering business but do not create a written partnership agreement. One partner, without the knowledge of the others, takes out a substantial loan in the business's name from a supplier to fund a personal holiday. The supplier was unaware of the loan's purpose. What is the liability of the other partners for this debt?

Accepted Answer

All partners are jointly liable for the full amount of the debt.

Answer

Only the partner who took out the loan is liable as it was for personal use.

Answer

No partners are liable as the loan was not for the benefit of the business.

Answer

The partners are liable, but only up to the amount of their capital contribution.

Question 4

A director of a UK public limited company is considering a business opportunity that came to her in her capacity as a director. The company has considered the opportunity but has decided not to pursue it. According to the Companies Act 2006, which duty would be breached if the director pursues this opportunity personally without proper authorisation?

Accepted Answer

Duty to avoid conflicts of interest.

Answer

Duty to exercise independent judgment.

Answer

Duty to exercise reasonable care, skill and diligence.

Answer

Duty to promote the success of the company.

Question 5

A UK limited company is facing severe financial distress. Its directors believe the business is fundamentally viable but needs protection from creditor action to allow for a restructuring plan to be implemented. Which insolvency procedure is most appropriate for this objective?

Accepted Answer

Administration

Answer

Compulsory Liquidation

Answer

Members' Voluntary Liquidation

Answer

Company Voluntary Arrangement (CVA)

Question 6

Which of the following statements accurately describes the procedure for passing a written resolution in a private limited company in the UK?

Accepted Answer

A written resolution requires the same percentage of votes to pass as a resolution at a general meeting (simple majority for ordinary, 75% for special).

Answer

A written resolution can be used to remove a director before the expiration of their term of office.

Answer

A written resolution is passed when a simple majority of members who have received it signify their agreement.

Answer

Public limited companies can use the written resolution procedure for routine decisions.