1.

Which ONE of the following is the only true exception to the rule in Foss v Harbottle?

Where the act constitutes a fraud on the minority.

Where the act complained of is ultra vires.

Where the act infringes the personal rights of a member.

Where the act could only be done or sanctioned by the passing of a special resolution.

2.

The courts have identified a number of characteristics to help identify whether or not a company is a quasi-partnership. Which ONE of the following is not such a characteristic?

The shares of the company will not be freely marketable.

All the shares of the company will be owned by the company's directors.

There will be an agreement that some, or all, of the shareholders will be involved in management.

The company will be an association formed on the basis of mutual trust and confidence.

3.

What are the possible actions a minority shareholders who feels aggrieved can take? Tick all that apply.

Just and equitable winding-up (s122(1)(g) IA 1986);

Seeking to enforce a Shareholders Agreement

Calling a general meeting

Derivative action on behalf of the company (s260 CA 2006);

Petition for unfair prejudice (s994 CA 2006);

Personal action under s33 contract

4.

What are the suggested grounds for just and equitable winding-up? Tick all that apply.

Exclusion from management in a quasi-partnership where there was mutual agreement the aggrieved party would be included in management (Ebrahimi v Westbourne Galleries).

Loss of confidence in management (Loch v John Blackwood Ltd)

Deadlock (Re Yenidjie Tobacco Co Ltd)

Substratum has failed (Re German Date Coffee)

Fraud (Re Thomas Edwards Brimsmeads & Sons)

5.

The three elements listed below must be proven to successfully argue that the company must be wound-up because the shareholder has been excluded from management? True or false?

1. There was a personal relationship and mutual confidence; 2. An undertaking that all or certain shareholders would participate in management; 3. No restriction on transfer of members' interests preventing the petitioner leaving.

True

False

6.

Just and equitable winding-up will not be permitted by the court if there is another remedy? True or false?

True

False

7.

What are the elements of unfair prejudice under s994 CA 2006? Select all that apply

Unfair prejudice must arise from the conduct of the company;

The petitioning shareholder must show that somebody acted in bad faith

The petitioner must prove his interests qua member have been unfairly prejudiced;

There must have been some unfair prejudice.

8.

Legitimate expectation can form the basis of an interest to petition for unfair prejudice? True or false?

True

False

9.

Which ONE of the following is unlikely to constitute unfairly prejudicial conduct?

Mismanagement.

The payment of excessive remuneration.

The improper transfer of assets.

Preventing the members from obtaining the best price for their shares.

Exclusion from the management of a quasi-partnership company.

Non-payment of dividends.

10.

From when did the new rules on derivative actions come into force?

31 October 2006

1 October 2006

1 October 2007

31 October 2007

11.

The rule in Foss v Harbottle provides:

That the majority shareholders cannot abuse the minority shareholders

That only the majority shareholders of a company can commence a legal action where the company has been wronged

That the majority directors cannot abuse the minority shareholders.

That only the company can commence a legal action where the company has been wronged.

12.

Which of the statement is correct about statutory derivative action?

If the court grants leave to the company to commence a derivative action, that is confirmation that the directors have done a wrong to the company

In order to bring a statutory derivative action, a person must apply for leave of court

Only members can commence a statutory derivative action

Statutory derivative action can only be commenced if the wrongdoing directors have not acted in good faith