Question

Read the following and answer the related questions that follow it.

Auric plc is a mining company, whose main business consists of open cast
mining. It has Articles of Association that are in the form of model Articles. The
board of directors includes Penny, Howard and Emily.

At a recent board meeting, the directors considered an offer from Trek Mines
plc to sell land adjoining one of Auric plc’s mining sites for £550,000. The
board of Auric plc decided that the company should not accept the offer as it
doubted whether it could raise the finance needed to buy the land. Penny then
formed her own company, Gold Ltd, which purchased the land for £550,000. At
the same meeting, the directors discussed a proposed contract with Texas plc,
which is being considered to survey a plot of land recently purchased by Auric
plc. Howard owns 10% of the shares in Texas plc, but did not reveal his interest
at the board meeting.

Emily has an arrangement with Comic plc whereby she receives a 10%
commission for all orders placed with it by Auric plc. Six months ago, Auric plc
purchased some drilling equipment from Comic plc for £100,000, for which
Emily was paid £10,000 commission.

The shareholders of Auric plc have discovered these facts, and they have
passed an ordinary resolution directing the board of directors to commence
legal proceedings against Penny, Howard and Emily

1.Given the facts in the above scenario it may be that there has been a breach of the duty set out in s.172 of the Companies Act 2006.

Who do you feel has breached their duty? Tick all that apply

Group of answer choices

Emily

Penny

Howard

All the directors, Penny, Howard and Emily

2. The relevant duty contained in s175 CA 2006, states that: 'A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.‟

Which director do you feel has breached this duty?

Group of answer choices

Howard

All of the directors

Emily

Penny

3. Under s177 CA 2006, if a director has a direct or indirect interest in a proposed contract with the company, he has a duty to declare both the nature and extent of his interest to the other directors. This can be done either at a board meeting or by notice in writing or by giving a general
notice.

Which director do you feel has breached this duty?

Group of answer choices

All the directors

Howard

Penny

Emily

4. CA 2006, s176 is the duty not to accept benefits from third parties by reason of being a director or doing anything as a director.

Which director do you feel has breached this duty?

Group of answer choices

Howard

Penny

Emily

All of the directors

5. What is a quorum?

Group of answer choices

A person who votes on behalf of an absent natural person membe

The minimum number of members who must be present at a members’ meeting to properly conduct business

The number of members required to pass a special resolution.

The minimum number of members who must be present at a members’ meeting to properly conduct business which is set at 5 throughout the meeting under the legislation

6. Which of the following powers are generally conferred upon the board of directors

through the company’s internal rules?

Group of answer choices

Management power and the power to create/amend the internal rules

Power to issue shares and power to remunerate directors

Management power and the power over share transfers

Power over share transfers and the power to create/amend the internal rules

7. What terminology would you use to define a director of a company who is an officer of a

financial institution who has lent money to the company?

Group of answer choices

Non-executive director

Nominee director

Managing director

Alternate director.

8. Which of the following statement is correct?

Group of answer choices

An executive director is the head of all other directors

An executive director is a person appointed by a director to act in her or his place for a period of time

An executive director is a part-time director of the company who is not an employee

An executive director is both on the board of directors and a full-time employee of the company

9 Which of the following cases established the “indoor management rule”?

Group of answer choices

Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd

Royal British Bank v Turquand

Freeman v Lockyear v Buckhurst Park Properties (Mangal) Ltd

Northside Developments Pty Ltd v Registrar-General

10. Which of the following is not a type of authority given to an agent?

Group of answer choices

Express actual authority

Apparent authority.

Implied express authority

Implied actual authority

Answer 1

Question 1

The correct option is (d), i.e., all the directors, Penny, Howard and Emily.

Question 2

The correct option is (b), i.e., all of the directors.

Question 3

The correct option is (b), i.e., Howard.

Question 4

The correct option is (c), i.e., Emily.

Question 5

The correct option is (b), i.e., the minimum number of members who must be present at a members meeting to properly conduct a business.

Question 6

The correct option is (a), i.e., Management power and the power to create or amend the internal rules.

Question 7

The correct option is (b), i.e., Nominee director.

Question 8

The correct option is (d), an executive director is both on the board directors and a full time employee of the company.

Question 9

The correct option is (b), i.e., Royal British Bank v Turquand.

Question 10

The correct option is (c), i.e., implied express authority.