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CIMA
CIMA Certificate
BA4
Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

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Viewing page 11 out of 14 pages

Viewing questions 151-165 out of questions

Questions # 151:

Which of the following statements is correct in relation to the ability of a company to contract?

Options:

If a company has restricted the ability of its directors to contact and the directors ignore the restrictions, then the outsiders may not enforce the contract.

The shareholders of a company have the ability to enter into a contract on behalf of the company, irrespective of any restrictions on the directors.

If a company wishes to restrict the ability of its directors to enter into particular contracts it may do so by placing restrictions on the directors in its

articles of association

If the shareholders learn that the directors are about to ignore the restrictions placed upon their ability to contract by the company the shareholders are unable to prevent the directors from proceeding

Answer

Questions # 152:

If a business trades as “Exe and Co (Office Furniture)” which of the following is CORRECT?

(i) The business could be owned by a partnership

(ii) The business could be owned by a sole trader

(iii) The business could be owned by a private company limited by shares

Options:

(i) only

(i) and (ii) only

(iii) only

(i), (ii) and (iii)

Answer

Questions # 153:

The code of ethics of the professional body to which M belongs is very clear about the importance of non-discrimination on the grounds of race, gender, sexual orientation and religion. But, because of her particular religious convictions, M believes that homosexuality is wrong. This is an example of a tension between:

Options:

Corporate and professional values

Personal and professional values

Societal and professional values

Personal and corporate values

Answer

Questions # 154:

ABC plc has acted in breach of its health and safety obligations and this has led to a number of employees and members of the public being injured.

Which of the following is correct?

The breach could give rise to:

i. Civil claims on the part of the employees and members of the public

ii. Enforcement action by the Health and Safety Executive

iii. Criminal sanctions against ABC plc

Options:

(i) only

(i) and (ii) only

(ii) and (iii) only

(i), (ii) and (iii)

Answer

Questions # 155:

Which ONE of the following resolutions is no longer legally effective?

Options:

An elective resolution

A special resolution

An ordinary resolution

A written resolution

Answer

Questions # 156:

The board of Zed Ltd wishes to borrow money from Exe Bank plc. What authority will the board require to enable it to proceed?

Options:

A special resolution

A board resolution

An ordinary resolution

A written resolution

Answer

Questions # 157:

In the event of the directors of a company limited by shares ignoring a provision in its Articles of Association which is for the benefit of the shareholders, which of the following is correct?

Options:

The shareholders as a whole may sue the directors for breach of contract.

Any or all of the shareholders may sue the company for breach of contract.

Individual shareholders have no remedy against the company.

Individual shareholders may sue the directors for breach of contract.

Answer

Questions # 158:

Advocacy threats to compliance with fundamental principles are described as threats that may occur

Options:

as a result of the financial or other interests of a professional accountant or of an immediate or close family member

when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment

when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised

when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others

Answer

Questions # 159:

X, Y and Z are the only shareholders in XYZ Ltd each holding 1,000 ordinary £1 shares. X is the only director of the company. The articles of association of XYZ Ltd provide that “in the event of any proposal to dismiss a director by ordinary resolution, the votes of the director are to count 3 times.” Which ONE of the following is CORRECT?

Options:

X will be able to rely on the provision in the articles and outvote any proposal to dismiss him as a director.

The provision in the articles is void as it effectively means that X is irremovable as a director of XYZ Ltd.

The clause in the articles cannot be used by X as it is not an ordinary membership right.

The company would be able to pass a special resolution removing the provision in the articles and then dismiss X by passing an ordinary resolution.

Answer

Questions # 160:

Which of the following statements is correct in relation to the civil law?

Options:

All civil cases commence in the County Court.

A breach of the civil law does not enable an injured party to claim compensation.

A person may be prosecuted for a breach of the civil law.

A tort is a civil wrong.

Answer

Questions # 161:

Zed plc has appointed Wye and Co (accountants) as auditors of the company. If the audit is carried out negligently which of the following are entitled to claim against the auditors?

Options:

Zed plc only

Zed plc and the directors of Zed plc.

Zed plc, its directors and shareholders.

Zed plc, its directors and shareholders and any other person who has suffered loss as a result of the negligent audit.

Answer

Questions # 162:

Which of the following is NOT a 'financial stakeholder' of an organization?

Options:

Customer

Employee

Government

Competitor

Answer

Questions # 163:

Members of private companies often enter into so-called “shareholder agreements”. Which of the following elements of a shareholder agreement are NOT true of articles of association?

(i) A shareholder agreement is a private document not open to public inspection.

(ii) All the provisions of a shareholder agreement have contractual force.

(iii) The terms of a shareholder agreement can only be amended by unanimous consent and not by majority agreement.