1. Which one the following wouldNOTbe considered a benefit of incorporation to the businessman?

a. -Constant disclosure to Companies Office of Jamaica

b. -Means of spreading income amongst the members of a family

c. -The opportunity for limited liability

d. -Increased borrowing powers by way of a floating charge

1. It is said that legislation of Company Law started in 1844 with The Joint Stock Companies Act of 1844. This Act:

a. -Initiated legislation of a company without obtaining a royal charter or sanction by a special Act of Parliament.

b. - Provided the members with limited liability

c. - Introduced the Memorandum and Articles of Association

d. - Stated that a company could operate only by a royal charter

1. Matthew Mark and Luke, three auto mechanics, were delighted to start an auto repair and auto parts business and decided that they would incorporate a private company to do so. It was to be called Mechanics Ltd. They were short on capital however so they approached ABC Ltd, a company, to be a shareholder in their private company. John, the company secretary and accountant for Mechanics Ltd decided that he will not file accounts because it was a private company. John wants to know if he is on good ground in not filing accounts. The correct response to John would be:

a. - Mechanics Ltd should not file accounts because it is a private company.

b. - Mechanics Ltd should file accounts because the auto repair business has a lot of fraud involved in it

c. - Mechanics Ltd should not file accounts because it will disclose confidential information

d. - Mechanics Ltd should file accounts even though it is a private company, because some of its shares are held by a company

1. Mr. John Binden was the sole shareholder and director at Breezes Sanitizing Ltd. While John was at work, he was heading to a meeting in the board room and he slipped and fell because there was some water left on the floor by a cleaner employed by Breezes. The company had taken out an Employers' Liability insurance to cover the company's liability to itsemployeesfor bodily injury and so John made a claim on the policy. The insurance company is refusing to honor the claim by saying that John is a director and shareholder of the company and therefore could no way be seen as an employee. John comes to you for advice. Using case law which of the following would be the best advice to John?

a.

John is not likely to be compensated under the insurance policy because the court would lift the veil due to fraud, as seen inGilford Motor Co. Ltd v Horne(1933)

b.

John is not likely to be compensated under the insurance policy because he does not have an insurable interest in the company's assets as seen in the case ofMacaura v Northern Assurance Co.(1925)

c. - John is likely to be compensated under the insurance policy because he does have an insurable interest in the company's assets as seen in the case ofMacaura v Northern Assurance Co.(1925)

d. - John is likely to be compensated under the insurance policy because the company and John were distinct legal entities and therefore capable of entering into legal relations with each other, as seen inLee v Lee's Air Farming(1961)

1. The two basic systems of legal classification of companies underThe Companies Act, 2004 are:

a.

Companies that are a public or private and companies with limited liability or unlimited liability

b.

Companies that are involved in manufacturing and companies that are involved in distributing

c.

Companies that are government owned and companies that are owned by private individuals

d.

Companies that are listed on the Stock Exchange and companies that are listed on the Junior Stock Exchange

1. The cases have shown that the courts have lifted the corporate veil for several reasons. Which of the following is not a reason for the courts to lift the corporate veil?

a.

fraud (where individuals use theSalomonprinciple to commit fraud)

b.

limit liability (where the members are granted limited liability after incorporation)

c.

group enterprises (i.e. where, instead of treating each company in the group as a separate entity, the group is considered as one entity)

d.

agency (i.e. where the company was merely the agent of the shareholders)

1. The doctrine of ultra vires stipulates that a company has the legal capacity to carry out only such acts or perform transactions that are expressed or within reasonably authorization by the company's objects clause in the memorandum of association. This doctrine has been effectively diminished by the following:

a. - Ashbury Railway Carriage and Iron Co. v Richie (1875) LR Hl 653

b. - Companies Act 2004

c. - Salomon v Salomon & Co.(1897)

d. - The Joint Stock Companies Act of 1844

1. The concept of separate legal personality can be a 'two-edged' sword. Which of the following statements best explains this?

a.

Even though a shareholder can have the protection of limited liability, if the company's assets were destroyed, by fire, a shareholder would be prevented from claiming on the insurance since he would not have an insurable interest in the assets even if he owned all the shares in the company

b.

Even though a shareholder has separate legal personality from a company, if the company's assets were destroyed, by fire, a shareholder would still be able to claim on the insurance if he owned all the shares in the company

c.

Even though a shareholder can have the protection of limited liability, if the company's becomes insolvent, a shareholder would in all cases have to sell his personal assets to pay the debts of the company benefits. This would not be effective if the company does not adopt the contract

d.

Even though a shareholder has separate legal personality from a company, if the company is sued for breach of contract the shareholder would have to pay damages awarded by the court.

1. One of the differences between a company and a partnership is that:

a. -A company's shareholders cannot limit their liability while partners can.

b.

One man can form a partnership while a company requires more than one.

c.

A company has separate legal personality from its owners while a partnership does not.

d.

A company can start up without any formalities but a partnership must have a deed.

1. One of the significant changes brought about by The Companies Act 2004 was that:

a.

Public companies could not have more than 20 members

b.

Incorporating a business required the filing of articles of incorporation only, instead of memorandum of association and articles of association

c.

Companies could now be seen as one and the same with the shareholders

d.

Private companies could now have unlimited membership