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CIMA Fundamentals of Ethics - Corporate Governance and Business Law Sample Questions:

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

A) 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
B) 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.
C) 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
D) 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.

2. Brian is the registered owner of 500 shares in Exe Ltd. Which of the following statements is correct?

A) Brian is only contractually bound to Exe Ltd and the other present shareholders of the company in respect of the provisions contained in the company's Articles of Association.
B) Brian is only contractually bound to Exe Ltd and the present directors in respect of the provisions contained within the company's Articles of Association.
C) Brian is only contractually bound to Exe Ltd in respect of the provisions contained in the company's Articles of Association.
D) Brian is contractually bound to Exe Ltd and the present and future shareholders in respect of the provisions contained within the company's Articles of Association.

3. Which of the following is not financial assistance for the purchase of a public company's own shares?

A) Allowing the use of a company's assets as security for a loan
B) A loan by a company outside the ordinary course of business
C) Releasing a shareholder from a debt owed to the company
D) The payment of a dividend which has the effect of putting a shareholder in funds and enabling him to purchase the company's shares

4. In relation to business names which of the following is CORRECT?
(i) Any business may trade under a business name.
(ii) If a business name is used the name of the owner of the business must be disclosed.
(iii) The business name of a private limited company must end with the word "Limited" or "Ltd".

A) (i) and (iii) only
B) (i) only
C) (ii) only
D) (i) and (ii) only

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

A) A tort is a civil wrong.
B) All civil cases commence in the County Court.
C) A breach of the civil law does not enable an injured party to claim compensation.
D) A person may be prosecuted for a breach of the civil law.

Solutions: