Company Law (Intro & Promoters)

What is the main purpose of the Companies Act 2016?

• To manage personal finances

• To establish tax laws

• To govern the incorporation of companies

• To regulate partnerships

What is a key advantage of investing in a public company?

• Guaranteed returns on investment

• Ability to make public invitations for shares

• Capped liability at the investment amount

• Unlimited liability for shareholders

What does the Certificate of Incorporation signify?

• The company's operational guidelines

• The company's market value

• The company's registration date and compliance

• The company's financial status

What is meant by 'corporate personality' as per the Companies Act?

• The requirement for companies to have shareholders

• The obligation to pay taxes

• The concept of a company as a separate legal entity

• The ability to operate without a legal framework

What is the primary role of a promoter in the formation of a company?

• To undertake the formation of a company

• To act as a shareholder

• To provide legal advice

• To manage the company's operations

What fiduciary duty do promoters owe to the company?

• To act solely in their own interest

• 
  To maximize personal profits

• To disclose any secret profits

• To avoid all business risks

In which case was it established that promoters can be held liable for actions on behalf of an unformed company?

• 
  Gluckstein v Barnes

• Erlanger v New Sombrero Phosphate Co

• Twycross v Grant

• Re Leeds & Hanley Theatres

What is a pre-incorporation contract?

• A contract that only promoters can enter

• A contract that is unenforceable

• A contract made after the company is formed

• A contract created before the company is officially incorporated

What must promoters do if they wish to avoid making a secret profit?

• Disclose profits to the company or board

• 
  Avoid any financial dealings

• Only engage in public contracts

• Keep all transactions confidential

What is the consequence of failing to disclose a conflict of interest as a promoter?

• The company can sue for damages

• The promoter may face criminal charges

• The company can file for bankruptcy

• The promoter is automatically disqualified