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

1. Zed plc contracted to build an apartment block for Exe Ltd. Which of the following would provide Zed with a valid excuse not to proceed with the contract?
(i) A key employee who was to manage the project has resigned.
(ii) The price of the materials to be used by Zed plc have increased to such an extent that the building can only be completed at a loss to Zed plc.
(iii) Planning permission has been refused.

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

2. Which of the following is incorrect?

A) A board usually reaches its decisions by majority vote.
B) The first directors of the company are those persons who are named as directors on Form IN01.
C) The board usually has the power to appoint a managing director.
D) A private company must have at least two directors.

3. Which of the following is incorrect in relation to the memorandum of association when registering a company limited by shares?

A) The memorandum must be in the prescribed form
B) The memorandum must state that the subscribers agree to take at least one share each
C) The memorandum must state the objects for which the company is being registered
D) The memorandum must state that the subscribers wish to form a company under the Companies Act
2006

4. Which of the following need NOT be submitted in order to register a private company limited by shares?
(i) Articles of association
(ii) The name of the company secretary
(iii) A statement of share capital

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

5. Which of the following is correct?
(i) A liquidated damages clause will be void if it amounts to a penalty clause.
(ii) A liquidated damages clause will apply where it is a genuine attempt to pre-estimate the loss caused by a breach of contract.
(iii) A liquidated damages clause is void if it is for an amount in excess of the actual loss caused by the breach of contract.

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

Solutions: