Online Test

Take an online test on various subjects and topics. Get instant results and improve your knowledge. Desklib offers a wide range of online tests for students.

Online test

Table of Contents
Q1................................................................................................................................................3
Q2................................................................................................................................................3
Q3................................................................................................................................................3
Q4................................................................................................................................................3
Q 5...............................................................................................................................................3
Q 6...............................................................................................................................................3
Q7................................................................................................................................................3
Q8................................................................................................................................................3
Q9................................................................................................................................................4
Q10..............................................................................................................................................4
Q11..............................................................................................................................................4
Q12..............................................................................................................................................4
Q13..............................................................................................................................................4
Q14..............................................................................................................................................4
Q15..............................................................................................................................................4
Q16..............................................................................................................................................4
Q17..............................................................................................................................................5
Q18..............................................................................................................................................5
Q 19.............................................................................................................................................6
Q20..............................................................................................................................................7
Q21..............................................................................................................................................7
Q 22.............................................................................................................................................7
Q23..............................................................................................................................................7
REFERENCES................................................................................................................................8

Q1
C) The manner in which control is divided between the legislature, executive and judiciary.
Q2.
Q3
(A) all of these
Q4
(A)
Q 5
Section 250N of the Corporation Act provides that the public company having more than 1
member is required to hold annual meeting at least once in a year. The timing for public
company AGM is 18 months of registration and then after 5 months after the completion of
financial year and failure to do so is an offence.
Q 6
Contract can be discharge by agreement through following ways:
 Mutual discharge in which both the parties discharge each other from performance of the
act.
 Release by one party, where one party completes the promise and agrees to release the
other party from further performance.
 Novation, putting new contract in place which can be between different parties.
 Merger of lesser agreement with the greater agreement.
 Discharge by accord and satisfaction where one party breaches the agreement and other
party releases the party in breach.
 Waiver of a contract, where the performance of the contract is no longer needed.
Q7
ASIC role is to maintain the company register and the business name so that it can be searched
online. It works on regulating and improving the performance of the financial system. It provides
all the requirements to be taken care of.
Q8
(A)

Q9
There is a presumption of an intention to enter into a legal contract for a commercial situation.
Such type of presumption can be rebutted only if there is express, clear and unambiguous
exclusion with respect to that exclusion of that intention of the related party.
Q10
Corporate personality means that the company is distinct from its member and is considered as
an independent legal corporate body which stated in the Salomon's case. Consequences of it is
that the members of the company cannot be held liable and all the debt and liability is of the
company and the company may sue and be sued by its own name.
Q11
(c)
Q12
Shareholders are the subscribers of the debentures of the company while the shareholders are the
subscribers of the shares of the company or the joint owner of the company. Shareholders are the
part of the AGM of the company whereas debenture holders are not involved. The relationship
differs as debentures is the part of the loan.
Q13
(b)
Q14
(a)
Q15
(D)
Q16.
Issue: Analyzing my(name) fiduciary duties and Ms Singh's request and what are my
duties and to whom I owe it.
Legal: By considering the case law Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378,
in which the Regal Ltd owned a cinema and also took the leases of two more cinemas through
the way of its subsidiary in order to create viable sale. The landlord demanded personal
guarantee of the director to which the director refuses (Lindgren, 2011). The landlord then
offered to up the share capital to £5,000 to which the Regal Ltd denied and just put in the share
capital of £2,000, all the 4 directors putted in the £500. After which, Me Gulliver, the Chairman

of the Regal got outside subscription of £500 and the board of the company asked Mr Garten to
add in the last £500. The directors sold the business incurring the profit of £3 per share. Shortly
after this, the buyers filed an action against the directors on the basis of breach of their fiduciary
duty and along with that the directors has not gained the complete consent from its shareholders.
Upon which the House of Lords held the directors of the company liable as they have made
profit in the course of their business and are also liable to account for the profits of the company.
Application: On applying the case law in the current situation, there are certain fiduciary
responsibility and duties which are required to be complied in good faith. It includes duty to act
honestly, avoid conflict, improper use of business assets, duty of not causing any damage to the
company. Therefore, it my duty towards the company and its members to act in good faith and
honesty. Otherwise, it will cause legal action against the director of the company.
Conclusion: Thus, it can be concluded that the director should not accept the offer of Ms
Singh for appointing Ms Sharda as it is the breach of the duty.
Q17
The audition standard ASA 240, states about the primary duty of the auditor which is to provide
an audit report in respect to the accounts and the financial statements of the company examined
by him and for preventing and detecting any fraud. The duty of the auditor is owed to the
members of the company by providing his opinion on the credibility of the financial statements
of the company.
Q18.
ISSUE
Mr Kaur started a software business and sold the assets of business to Kaur & Sons Pty
Ltd sold assets and goodwill. In exchange of the assets it issued shares worth 20000. Company
owes the amount of $10000 to Kaur. It relates to personal which becomes the property of
company. It is put at mortgage and Kaur becomes the secured party. Kaur becomes the
Managing Director at the date of settlement. Company borrowed $5000o which is still due and
after one year creditor sought to recover from Kaur
Issue here is whether creditors could claim from Kaur as personal liability?
Whether Kaur is related party to the company and transactions carried out within the provisions
of Act?
LAW

Corporations Act 2001
Directors Liability for company debts Section 197
Corporations Act provides that the director may be held liable for debts of company at time when
the company is not able to pay the debt itself.
Director of company could be held liable to compensate company for losses suffered from
breach of the certain duties of directors.
Duties and Liabilities of Director
Directors along with other duties are assumed to act in good faith, in best interest of company, to
avoid conflicts of interest between company and director to exercise due care & diligence, to act
honestly and avoid trading when unable to pay the debts.
Related Party Transactions
Section 208 requires the prior approval of member before any financial benefit is provided to
related party and benefit should be given within 15 months of approval. Related parties of
company include directors of public company.
APPLICATION
Applying the above rules of Corporations Act it could be said that the company is legal
entity separate from the directors and owners and they are not liable for the debts of company.
However, as provided by ASIC and act the directors may be held personally liable in case
company is not in a position to repay its creditors.
The relationship between Kaur and company is related party and the transaction of mortgage
loan will be considered as related party transactions and so the concerned provisions of
Corporations Act will be applicable.
CONCLUSION
It could be concluded from the above case that Kaur is related party to the company. It
has converted the owing for goodwill into secured loans for financial benefit. This is breach of
duty as directors for which it may be held liable. Further as per provisions of act creditors could
claim from their dues from Kaur being director as company is not able the debts. Creditors may
take legal actions against Kaur for repayment of debts.
Q 19.
When a company hides an illegal activity, it is called money laundering. Under such
circumstances, the court will take action beyond the corporate entity and it is an exception to the

common law and in this situation the court will lift the concept of corporate veil stating that the
company is merely the agent of its controllers and has no independent existence. Thus making
persons liable for their act.
Q20
(A)
Q21.
Directors are bound to comply with the duty of care and diligence in which it is required to act in
the best interest of the company and in good faith. The second thing is the fiduciary duty, which
involves acting honestly, do not make gain from the office and making use of power and
authority.
Q 22.
A contract in restraint of trade which interferes with the person's freedom for carrying out the
freedom. All the restraints are prime facie void. It will not be enforced until and unless, the
restraint is reasonable among the parties and also it is reasonable in the public interest. The court
will usually look after the areas of restraints, period of time and the type of business.
Q23.
c) Duty of care

REFERENCES
Books and Journals
Lindgren, K E., 2011, Vermeesch and Lindgren’s Business Law of Australia, 12th edn,
LexisNexis, Australia. ISBN: 9780409328172.