LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx

LIBRARY USE
lllillllllllllllll LA TROBE UNIVERSITY
3 2934 02374381 0
SEMESTER TWO EXAMINATION PERIOD
2010
student ID: Seat Number:
Unit Code: LST2LBA
Unit Name:
Paper Name:
Reading Time:
Writing Time:
Paper No: 1
Law of Business Association
Final
30 minutes
3 hours
No. of Pages (including cover sheet): 9

OFFICE USE ONLY (FACULTY/SCHOOL STAFF):
CAMPUS AW BE BU MI SH
Number
102
92
ALLOWABLE MATERIALS
Description
Open book, including electronic dictionary
Students may make notes during reading time (not on script
books or multiple
choice answer sheets)
INSTRUCTIONS TO CANDIDATES
1. This examination Is in three parts:
i. Part A: This Is a set of 20 multiple choice questions, worth 1
mark each. You may tear off the
answer sheet at the back of the examination paper. Write your
student number on the answer
sheet. Circle the appropriate letter for each question.
li. Part B: This comprises three questions worth 10 marks each.
Answer all questions.
III. Part C: Answer ONE of the two questions In Part C. It Is
worth 20 marks.

2. This examination is worth 70 marks, being 70% of the marks
for the course.
This paper MUST NOT BE REMOVED from the examination
venue
Part A
This Part of the examination consists of twenty (20) multiple
choice questions, each worth
one (1) marlc. The suggested time for completion is fifty
minutes; that is, two minutes and
thirty seconds for each question. Be very careftal not to spend
too much time on this section.
Students should circle the most appropriate answer to each
question in Part A on the Part A
answer sheet provided at the end of this examination paper. Y o
u may tear the answer sheet
off the examination paper. Remember to write your student
number in the space provided
at the top of the answer sheet.
Answer all twenty (20) questions from Part A . This Part is
worth 20 marks.
Question 1. [1 mark]
Under the High Court decision in Re Wakim, which courts have
the power to hear corporate
law matters?
a. Federal courts only.
b. State courts only.

c. Both State and federal courts.
d. Neither federal nor State courts.
Question 2 . . [1 mark]
Complete the following statement by choosing the correct
option.
Company law seeks to regulate the relationship between:
a. Participants in the company.
b. The company and the state.
c. The company and those with whom the company has dealings.
d. A l l of the above.
What is the difference between a "company" and a
"corporation"?
a. A company and a corporation are the same thing.
b. A company is a type of corporation which is formed under
the Corporations Act 2001
(Cth).
c. A corporation is a type of company which is formed under the
Corporations Act 2001
(Cth).
d. A corporation is a type of company which has separate legal
personality.
Choose the correct ending to the following statement:
A company may be liable for the tortious wrongdoings of:
a. Employees, i f these wrongdoings occur in the course of
employment;
b. Members, i f these wrongdoings occur at the member's home

address;
c. Criminals, i f these wrongdoings occur within Australia;
d. Creditors, i f these wrongdoings occur in the course of
insolvency.
Smiters Pty Ltd wants to increase its shareiiolder base by the
issue of more shares.
Which statement best states how shares may be offered? They
may be offered
a. personally to a restricted number of persons.
b. to the public, as long as there is no prospectus or other
disclosure document.
c. to the public, as long as they are not advertised.
d. to existing shareholders and employees only.
Which statement about meetings of members is not true of all
proprietary companies
with multiple members?
a. General meetings may be called by a director.
b. General meetings require 21 days notice (unless short notice
is agreed).
c. General meetings may be requisitioned by 5% of the
members.
d. A resolution may be passed by circulating it to be signed by
all members.
Assume Nan and B i g Ted choose to use a company for their
business. B i g Ted owns a shop.
Can he sell it to the company for double its value? Choose the

best answer:
a. No.
b. Only with the approval of the Court.
c. Yes, because the company is a separate legal entity.
d. Yes, because the company is a separate legal entity, but only
with full disclosure.
Question 8. [1 mark].
Where a director has a conflict of interest, the Corporations Act
requires him or her to:
a. Disclose the interest to A S I C ;
b. Resign from the company;
c. Write a letter of apology to the members;
d. Disclose the interest to the Board.
Question 9 . [1 mark]
Which of the following statement is NOT T R U E with regard
to share buybacks?
a. Share buy-backs result in a reduction of share capital
b. Share buy-backs are not permitted under the Corporations Act
2001
c. Share buy-backs are transactions by which a company buys
back its own shares from
existing shareholders
d. Share buy-backs are permitted i f they do not materially
prejudice a company's ability
to pay its creditors

According to the authority of The Bell Group Ltd (in liq) v
Westpac Banking Corp (no 9)
(2008) 70 A C S R 1 what particular duty does a director owe
where a company is insolvent or
approaching insolvency?
a. A duty to protect company assets by concealing or falsifying
information;
b. A duty to act bona fide in the interests of the company by
considering the interests of
creditors;
c. A duty to allow members to enforce their personal right
against the company;
d. A duty to avoid a conflict of interest.
Choose the correct ending for the following statement:
If Jo purchases some equipment on behalf of a company before
it is registered:
a. the contract binds the company and Jo is not liable.
b. the company can ratify the contract, in which case Jo is no
longer liable on the
contract.
c. the company can ratify the contract, in which case Jo remains
liable on the contract.
d. the company cannot ratify the contract and the contract is
void.
Consider the following statements -
A . Each partner has a right to take an active part in the
management of a partnership.
B . The partners are jointly and severally liable for the

contractual obligations of the
partnership.
C. Retiring partners can never be liable for debts of the
partnership.
D. Any partner can call for the dissolution of a partnership.
Which of the following apply to a simple partnership formed in
Victoria?
a. A and B
b. A and C
c. A and D
d. all four statements
Which of the following is not true about a floating charge?
a. A floating charge floats over the assets allowing the company
to dispose of them in
the normal course of business and replace them with assets of
the same class
b. A floating charge document may provide crystallization on
the happening of some
specified event
c. On crystallization the floating charge becomes a fixed charge
over the assets at that
time
d. A floating charge created by a company does not have to be
registered with the A S I C

Section 588G of the Corporations Act -
a. involves liability for insolvent trading by directors of
companies
b. states that a proprietary company is liable for its debts
c. determines which transactions are voidable when a company
becomes insolvent
d. outlines a liquidator's power
Question 15 [1 mark]
The Business Judgment Rule applies to:
a. The duty to avoid conflicts of interest
b. The duty to act for a proper purpose and bona fide for the
benefit of the company as a
whole
c. The duty to act with care and diligence
d. A l l of the above duties.
Question 16
The directors of a company intentionally engage in transactions
which deprive
their employees entitlements. What is the best avenue of redress
for the workers?
a. A n action under Part 2F. 1
b. A n action under Part 5.8A
c. A n action under Part 2F. 1A
d. A n action under sec 1324
Question 17 [1 mark]
Who administers a public company's internal affairs?
a. A S I C
b. A P R A

c. A C C C
d. The company Secretary
[1 mark]
workers of
What is the source of directors' duties?
a. Corporations legislation
b. the General Law
c. a. and b.
d. neither a nor b
Which is paid first in a winding-up:
a. A n amount secured by a registered charge.
b. A Court-ordered payment to a tort victim.
c. A n unsecured creditor.
d. A member's share of the net assets.
Question .20
Which is paid last in a winding-up:
a. A n amount secured by a registered charge.
b. A Court-ordered payment to a tort victim.
c. A n unsecured creditor.
d. A member's share of the net assets.
[Part B over]

PartB
Students should answer all three (3) questions in Part B . This
Part is worth 30 marks.
The suggested time for completion of Part B is one hour and
fifteen minutes; that is, 25
minutes for each question.
Students should refer to relevant statutory provisions and/or
case law wherever possible.
Question 1 [10 marks]
Jenny, Carla and David were the members of the Board of
Glamour Ltd. The Chief Executive
Officer of the company, Brian, is knovm as a 'bit of a ladies'
man'. Despite receiving 8
complaints from company staff alleging Brian has made
improper advances towards them,
nothing is done by the Board to address Brian's behaviour. The
complainants are told to 'just
tell Brian to go away. He means no harm'. The Board throws a
number of parties in which a
great deal of alcohol is consumed and Jenny, Carla and David
witness conduct by Brian that
could be characterised as sexual harassment. Reportedly, the 3
directors just laugh on each
occassion and remark it was just a case of 'Brian being Brian'.
However, a woman present at
the most recent party has brought an action for assault against
Brian and the company. Can
the company be liable for Brian's conduct?

Would the case law on piercing the corporate veil have helped
the victims of asbestos related
diseases recover from James Hardie Ltd (NL)? In your response
indicate what cases would
provide usefial precedents. Also consider what law reform
might resolve such situations.
Questions [10 marks]
A football club incorporated as a company has been fined, had
premierships cancelled,
premiership payments deducted and has been excluded form
premiership points for the rest of
the season. Assume this was an unfair punishment for the wrong
the club committed and that
the company has a good case against the company that runs the
Premiership. Four of the ten
directors of the football club decide to sue. The other six
directors do not want the club to
sue. What legal action can the four directors take and what
would they have to demonstrate in
order to take legal action?
[Part C over]
Parte
Students should answer one (1) question from Part C. This Part
is worth 20 marks. The
suggested time for completion is 45 minutes.
M i l l i e bought two shares in Ruff Pty Ltd for $100,000. M i l

l i e , now a non-executive director
of Ruff Pty Ltd, is unhappy with the state of affairs of the
company. The following events
have occurred:
• Ruff Pty Ltd's revenue has increased 200%
• M i l l i e has received no dividends to date and James and
John, the two executive
directors of Ruff Pty Ltd, have decided to pay no dividends this
year
. James and John have voted themselves a large pay rise and
bonus
• James and John have arranged for Ruff Pty Ltd to lease two
expensive cars for
their exclusive use.
M i l l i e attends her first directors' meeting and quesfions the
dividend policy and asks that her
objection to the lease of the cars be recorded.
James and John decide to remove M i l l i e from the board.
They hold a members' meeting and
remove M i l l i e from the board. They then send M i l l i e a
letter offering to buy her shares for
$100,000. M i l l i e is happy to sell her shares but thinks that
the price offered is too low.
Advise M i l l i e .
OR
Question 2. [20 marks]

Marcus was a director of a small proprietary company. The
company had given Marcus
several low interest loans to buy a house and land for private
purposes. In la;te 2004, the
company began experiencing financial difficulties but continued
to trade. At a meefing in
December 2004, Marcus and a newly-appointed director.
Barton, resolved to release Marcus
from all his debts to the company. Subsequently, a deed of
release was properly executed by
the company. Barton had been appointed in haste, was
unfamiliar with the company's affairs
and was prepared to follow Marcus' advice as to his duties.
In March 2005 the company went into liquidafion and a
liquidator was appointed. The
liquidator discovered that two years before, Marcus had given a
personal guarantee to the
A N Z Bank for a loan of $50,000 to the company. In both
January and February 2005, a sum
of $25,000 had been paid to the A N Z Bank in satisfaction of
the loan. The liquidator also
discovered that the company had probably been insolvent for at
least six months.
In view of these facts discuss the actions that could be brought
by the liquidator.
[End of examination]
Multiple Choice Answer Sheet
Circle your answer (a, b, c, or d) against the relevant question
numbers.

Do not forget to enter your student number on this sheet.
Student ID: Seat Number:
1. a
2. a
3. a
4. a
5. a
6. a
7. a
8. a
9. a
10. a
11. a
12. a
13. a
14. a
15. a
16. a

17. a
18. a
19. a
20. a
c d
c d
c d
c d
c d
c d
c d
c d
c d
c d
c d
c d
c d
c d

c d
c d
c d
c d
c d
c d
b
b
b
b
b
b
b
b
b
b
b
b

b
b
b
b
b
b
b
b
L A _ _ T M B E , U N i y E R S m LIBRARY LIBRARY USE
3 2934 02352987 0 LA TROBE UNIVERSITY
SEMESTER TWO EXAMINATION PERIOD
2009
Unit Code: LST3LBA Paper No: 1
Unit Name:
Paper Name:

Reading Time:
Writing Time:
Final
30 Minutes
3 Hours
I" " ' " '' ""' '"
' OFFICE USE ONLY (FACULTY/SCHOOL STAFF):
EXAMINATION PERIOD
j O SEMESTER ONE
j ^ SEMESTER TWO
I n SUMMER SCHOOL
[ H AW
i~Bu
CAMPUS
^ :KIBE
j IE! MI

^ SH
ALLOWABLE MATERIALS
Number Description
102 Open book, including electronic dictionaries.
5 1 No La Trobe University library books permitted
9 2 Students may make notes during reading time (not on script
books or multiple
choice answer sheets) i
1. This examination is in three parts:
i. Part A: This is a set of 20 multiple choice questions, worth 1
answer sheet at the back of the examination paper but, if you do
so, write your student number on
the answer sheet. Circle the appropriate letter for each question.
ii. Part B: This comprises three questions worth 10 marks each.
iii. Part C: Answer ONE of the two questions in Part C. It is
worth 20 marks.
2. This examination is worth 70 marks, being 70% of the marks
for the course.
venue.

Part A
one (1) mark. The suggested time for completion is fifty
thirty seconds for each question.
answer sheet provided at the end of this examination paper. You
may tear the answer sheet
off the examination paper but, if you do so, remember to write
your student number in the
space provided at the top of the answer sheet.
Answer all twenty (20) questions from Part A. This Part is
worth 20 marks.
Q u e s t i o n 1. [1 mark]
Which section of the Corporations Act 2001 (Cth) provides a
company with the legal capacity
and powers of an individual?
a. Section 588V
b. Section 198
c. Section 9
d. Section 124
Question 2 . [1 mark]
The constitution and replaceable rules DO NOT operate as a

contract between:
a. The company and each member
b. A member and each other member
c. The company and ASIC
d. The company and each director and company secretary
Q u e s t i o n 3 . [1 mark]
Which of the following is NOT a Replaceable Rule?
a. Section 194
b. Section 195
c. Section 198C
d. Section 202A
Under section 129(2), a person dealing with a company may
assume a person stated on ASIC
records to be appointed as a managing director is:
a. Properly appointed as director with the implied power of a
director
b. Properly appointed as a managing director with the implied
power of a managing
director
c. Properly appointed as a company secretary with the implied
power of a company
secretary

d. Really, really rich
What is a statutory derivative action?
a. An action brought by a member on behalf of the company
where the company or
directors are unable to do so.
b. An action that enables a member to recover the cost of legal
proceedings against the
company
c. An action that enables a member to enforce their personal
right against the company
d. An action brought by a member to force the company to sue
where the directors are
unwilling or unable to do so.
If a company pays dividends otherwise than out of profits, a
director
a. May be liable personally to a creditor because they have
breached the company's
constitution.
b. May be liable personally to a creditor as a result of a
derivative action for breach of
duty

c. May be liable personally to a creditor as a result of an action
in respect of insolvent
trading
d. May be liable personally as a result of an action in respect of
insider trading.
An insolvent transaction is voidable as such if:
a. It is entered into during the six months prior to liquidation of
a company
b. It is entered into during the two years prior to liquidation of a
company
c. It is entered into during the five years prior to liquidation of
a company
d. It is entered into during the ten years prior to liquidation of a
company.
Chapter 2E of the Corporations Act 2001 regulates:
a. Parties with relatives.
b. Transactions between public companies and related parties,
requiring full disclosure of
all such transactions
c. Transactions between public companies and related parties,
banning all such

transactions
d. Transactions between public companies and related parties,
requiring member
approval of most such transactions
Receivership is a form of external administration which assists:
a. Liquidators in selling off company assets
b. Liquidators in distributing proceeds to creditors
c. Secured creditors getting their money back
d. An administrator entering into a deed of company
arrangement with creditors.
Fred and Jo are setting up a business selling computer spare
parts. They want to know what
legal form of business they should use. Which of the following
statements is correct advice?
a. They should use a partnership because liability is limited in a
partnership.
b. They should use a company because it costs less to register a
company than to form
even a simple partnership.
c. They should use a company because they can then borrow
against a floating charge.
d. They should use an incorporated association because they
will not make profits for a
few years.

A company has the object of mining gold. This object is a
provision of its constitution. Does
it have to be a N. L. company?
a. Yes.
b. No.
c. Only if it issues partly paid shares.
d. Only if it has fewer than 50 employees.
Which of the following is a good reason for a Court to wind up
a company under sec 461?
a. The company has purchased all of its own shares.
b. The company has paid dividends otherwise than out of
profits.
c. One of the directors has acted in their own interests rather
than the interests of the
members as a whole.
d. The company has failed to hold an annual general meeting for
ten years.
If the company states in its disclosure document that it has
found a huge high grade gold ore
body, when it has not found anything of the kind, who can be
sued by a shareholder who
subscribes for shares relying on the statement?

A. the company
B. the directors
C. lawyers and accountants who drafted the disclosure
document in ignorance of the
falsehood
D. persons named as geological experts in the disclosure
document
Choose the correct combination from the alternatives listed:
a. A and B only.
b. A, B & C, but not D
c. A, B & D, but not C .
d. all of them.
a. An amount secured by a registered floating charge
b. A Court-ordered payment to a tort victim
c. An amount secured by a registered fixed charge
d. An amount payable to the Taxation Office.
Which is paid second in a winding-up:

Which is paid third in a winding-up:
A creditor has standing to sue for an injunction to prevent a
contravention of the Corporations
Act 2001 under section 1324 of the same
a. under no circumstances.
b. if the creditor's interests are affected by the contravention.
c. if the contravention would be oppressive, unfairly prejudicial
or unjustly detrimental
to the creditor's interests.

d. in respect of every contravention of the Corporations Act
2001.
Absent anything other than their appointment as a company's
auditor, to whom does an
auditor owe a duty?
a. Individual shareholders
b. The directors
c. Banks to whom the auditors are told the report is being sent
d. Investors who buy shares on the strength of the report
The Sons ofGwalia decision
a. Equated all claims by shareholders with those of unsecured
creditors.
b. Equated only some claims by shareholders with those of
unsecured creditors
c. Deferred all claims by shareholders to those of unsecured
creditors
d. Deferred only some claims by shareholders to those of
unsecured creditors
Question 2 0 . [1 mark]

a. ASIC
b. APRA
c. ACCC
[Part B over]
Parts
Students should answer all three (3) questions in Part B. This
fifteen minutes, that is 25
Discuss the proposition that the board of the James Hardie
group of companies did the
morally right thing in endeavouring to maintain shareholder
value when faced with continuing
and uncertain tort claims.
Coles Ltd leases a number of supermarkets in shopping centres

around Australia. In every
lease it is provided that Coles Ltd carmot transfer the lease
unless the person to whom the
lease is transferred is wholly owned by Coles Ltd. Coles Ltd
intends to transfer a number of
such leases to a company set up and wholly owned by itself It
ftirther intends, after
subleasing the premises, to sell all the shares in the new
companies to some other company
unconnected with itself, thereby avoiding the operation of the
bar on the transfer of leases.
Advise the shopping centre owners as to whether Coles Ltd
would be breaching the leases.
Harry, Moe and Joe were practising as a firm of solicitors
operating as a partnership. The
partnership agreement was to the effect that no partner could
incur expenses chargeable to the
firm unless it was done in the ordinary course of business. Joe
borrows money from Rich
saying it is to buy reference law books for the firm. However,
Joe takes the money and sails
off to South America never to be seen or heard from again.
Advise Rich whether he can bring
an action against Harry and Moe individually and separately,
Harry and Moe jointly, and/or
against the firm. Do not forget to consider whether Rich's rights
to take action are limited to
being against Joe.
[Part C over]

Parte
Q u e s t i o n 1. [20 marks]
PCW is a proprietary company the shares in which are divided
equally among four
shareholders all of whom also serve as directors of the
company. The constitution of the
company provides the following rules for the event that one of
the shareholders wishes to
transfer his/her shares.
• The other shareholders have the right to acquire the shares at a
price equal to
book value of the shares.
• To the extent that the other shareholders do not exercise the
right to acquire the
shares, the shareholder can dispose of his/her shares to a third
party subject to
the unanimous approval of the board of directors. .
For some time now there has been disagreement about matters
of business policy. One of the
shareholders (Mr Trubel) insists that the company pursue a
more aggressive business strategy,
while the remaining shareholders are content to follow a more
conservative approach. Fed up
with the trouble from Mr Trubel, the other three members vote
to remove him from the board
of directors and fill the position with a friendly party (the
company's accountant). Mr Trubel

wants to sever his connection with the business. However, Mr
Trubel refuses to sell on
grounds that the book value of the shares is only a fraction of
their net value as computed by
reference to other valuation methods such as capitalised
earnings or net asset backing. One of
the other members (Ms Kauf) announces her willingness to
acquire Mr Trubel's shares at a
price satisfactory to Mr Trubel. However, the other directors
refuse to consent to the transfer
on the grounds that the transfer would place too much power in
the hands of Ms Kauf
Discuss the possible rights and remedies of Mr Trubel and the
extent to which the exercise of
each would be successful in satisfying Mr Trubel.
OR
Sally has a small shareholding in Peat Pty Ltd which she
inherited from her father who was
the son of the founder of the company. She also lent $20,000 to
the company at an interest
rate which is above the current market rate. Eric, her cousin,
who is chairman and managing
director, was formerly the controlling shareholder, but had since
sold the majority of his
shares, retaining only a minority holding. The other
shareholders are Maurice, Anita and Fred,
who together hold 76% of the issued shares and are non-
executive directors. Sally thinks that
Eric has been corrupt, incompetent and inefficient in the
management of the company. Under
his management the company has:

a) entered into some unprofitable long term supply contracts
with a friend of his, Nigel;
b) acquired expensive real estate which has since diminished in
value due to the
downturn in the property market;
c) never paid a dividend;
d) paid large amounts of remuneration to Eric and other
members of the board; and
e) recently delayed paying creditors.
Until this year, Sally has been a director and had regularly
disagreed with Eric on matters of
policy. Because of constant fiction between them, the other
members of the board and
shareholders did not reappoint her to the board at the end of her
term of office under the
company's internal rules. Sally maintains that Maurice, Anita
and Fred acquiesced in Eric's
misconduct. She worries about the continuing solvency of the
company.
Advise Sally on her rights and remedies.

numbers.
Student ID:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

16.
17.
18.
19.
20.
1 1
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c

a b c
a b c
a b c
a b c
a b c
a b c
a b c
a b c
d
d
d
d
d
d
d
d
d
d

d
d
d
d
d
d
d
d
d
d
I I Seat Number: | ^ | ^ | |
LIBRARY USE
LA TROBE UNIVERSITY LIBRARY
LA TROBE UNIVERSITY
3 2934 02352983 9 .
SEJ ÎESTER TWO EXAI^IINATION PERIOD
2009

Unit Code: LST2LBA Paper No: 1
Unit Name:
Paper Name:
Reading Time:
Writing Time:
Final
30 Minutes
3 Hours
t
OFFICE USE ONLY (FACULTY/SCHOOL STAFF):
EXAMINATION PERIOD
I I SEMESTER ONE
3 SEMESTER TWO
I I SUMMER SCHOOL
n AW

i B U ^
CAMPUS
JT^'BE
~ ^ ^ ' " ^ ^ M l "
SH
ALLOWABLE MATERIALS
I " - . . . , . , _ - . . .- . . . _ . , . . . . , _ . . , .
j Number Description
102 ' Open book, including electronic dictionaries.
i • - -
' 51 No La Trobe University library books permitted
92 Students may make notes during reading time (not on script
books or multiple
: choice answer sheets)
I
1. This examination Is In three parts:
I. Part A: This Is a set of 20 multiple choice questions, worth 1
answer sheet at the back of the examination paper but, If you do
so, write your student number on
the answer sheet. Circle the appropriate letter for each question.

II. Part B: This comprises three questions worth 10 marks each.
ill. Part C: Answer ONE of the two questions in Part C. It is
worth 20 marks.
2. This examination Is worth 70 marks, being 70% of the marks
for the course.
venue.
Part A
one (1) mark. The suggested time for completion is fifty
thirty seconds for each question.
answer sheet provided at the end of this examination paper. You
may tear the answer sheet
off the examination paper but, if you do so, remember to write
your student number in the
space provided at the top of the answer sheet.
Answer all twenty (20) questions from Part A. This Part is
worth 20 marks.
Which section of the Corporations Act 2001 (Cth) provides a
company with the legal capacity

and powers of an individual?
a. Section 588V
b. Section 198
c. Section 9
d. Section 124
The constitution and replaceable rules DO NOT operate as a
contract between:
a. The company and each member
b. A member and each other member
c. The company and ASIC
d. The company and each director and company secretary
Q u e s t i o n 3 . [1 mark]
Which of the following is NOT a Replaceable Rule?
a. Section 194
b. Section 195
c. Section 198C
d. Section 202A
Under section 129(2), a person dealing with a company may

assume a person stated on ASIC
records to be appointed as a managing director is:
a. Properly appointed as director with the implied power of a
director
b. Properly appointed as a managing director with the implied
power of a managing
director
c. Properly appointed as a company secretary with the implied
power of a company
secretary
d. Really, really rich
What is a statutory derivative action?
a. An action brought by a member on behalf of the company
where the company or
directors are unable to do so.
b. An action that enables a member to recover the cost of legal
proceedings against the
company
c. An action that enables a member to enforce their personal
right against the company
d. An action brought by a member to force the company to sue
where the directors are
unwilling or unable to do so.

If a company pays dividends otherwise than out of profits, a
director
a. May be liable personally to a creditor because they have
breached the company's
constitution.
b. May be liable personally to a creditor as a result of a
derivative action for breach of
duty
c. May be liable personally to a creditor as a result of an action
in respect of insolvent
trading
d. May be liable personally as a result of an action in respect of
insider trading.
An insolvent transaction is voidable as such if:
a. It is entered into during the six months prior to liquidation of
a company
b. It is entered into during the two years prior to liquidation of a
company
c. It is entered into during the five years prior to liquidation of
a company
d. It is entered into during the ten years prior to liquidation of a
company.

Chapter 2E of the Corporations Act 2001 regulates:
a. Parties with relatives.
b. Transactions between public companies and related parties,
requiring full disclosure of
all such transactions
c. Transactions between public companies and related parties,
banning all such
transactions
d. Transactions between public companies and related parties,
requiring member
approval of most such transactions
Receivership is a form of external administration which assists:
a. Liquidators in selling off company assets
b. Liquidators in distributing proceeds to creditors
c. Secured creditors getting their money back
d. An administrator entering into a deed of company
arrangement with creditors.

Fred and Jo are setting up a business selling computer spare
parts. They want to know what
legal form of business they should use. Which of the following
statements is correct advice?
a. They should use a partnership because liability is limited in a
partnership.
b. They should use a company because it costs less to register a
company than to form
even a simple partnership.
c. They should use a company because they can then borrow
against a floating charge.
d. They should use an incorporated association because they
will not make profits for a
few years.
A company has the object of mining gold. This object is a
provision of its constitution. Does
it have to be a N. L. company?
a. Yes.
b. No.
c. Only if it issues partly paid shares.
d. Only if it has fewer than 50 employees.
Which of the following is a good reason for a Court to wind up
a company under sec 461 ?

a. The company has purchased all of its own shares.
b. The company has paid dividends otherwise than out of
profits.
c. One of the directors has acted in their own interests rather
than the interests of the
members as a whole.
d. The company has failed to hold an annual general meeting for
ten years.
If the company states in its disclosure document that it has
found a huge high grade gold ore
body, when it has not found anything of the kind, who can be
sued by a shareholder who
subscribes for shares relying on the statement?
A. the company
B. the directors
C. lawyers and accountants who drafted the disclosure
document in ignorance of the
falsehood
D. persons named as geological experts in the disclosure
document
Choose the correct combination from the alternatives listed:

a. A and B only.
b. A, B & C, but not D
c. A, B «& D, but not C
d. all of them.
d. An amount payable to the Taxation Office. y
Which is paid second in a winding-up:
Q u e s t i o n 16. . [1 mark]
Which is paid third in a winding-up:

A creditor has standing to sue for an injunction to prevent a
contravention of the Corporations
Act 2001 under section 1324 of the same
a. under no circumstances.
b. ifthe creditor's interests are affected by the contravention.
c. . ifthe contravention would be oppressive, unfairly prejudicial
or unjustly detrimental
to the creditor's interests.
d. in respect of every contravention of the Corporations Act
2001.
Absent anything other than their appointment as a company's
auditor, to whom does an
auditor owe a duty?
a. Individual shareholders
b. The directors

c. Banks to whom the auditors are told the report is being sent
d. Investors who buy shares on the strength of the report
The Sons ofGwalia decision
a. Equated all claims by shareholders with those of unsecured
creditors.
b. Equated only some claims by shareholders with those of
unsecured creditors
c. Deferred all claims by shareholders to those of unsecured
creditors
d. Deferred only some claims by shareholders to those of
unsecured creditors
Q u e s t i o n 2 0 . [1 mark]
a. ASIC
b. APRA
c. ACCC
[Part B over]

Parte
Students should answer all three (3) questions in Part B. This
fifteen minutes, that is 25
Discuss the proposition that the board of the James Hardie
group of companies did the
morally right thing in endeavouring to maintain shareholder
value when faced with continuing
and uncertain tort claims.
Coles Ltd leases a number of supermarkets in shopping centres
around Australia. In every
lease it is provided that Coles Ltd carmot transfer the lease
unless the person to whom the
lease is transferred is wholly owned by Coles Ltd. Coles Ltd
intends to transfer a number of
such leases to a company set up and wholly owned by itself It
ftirther intends, after
subleasing the premises, to sell all the shares in the new
companies to some other company
unconnected with itself, thereby avoiding the operation of the
bar on the transfer of leases.
Advise the shopping centre owners as to whether Coles Ltd
would be breaching the leases.

Harry, Moe and Joe were practising as a firm of solicitors
operating as a partnership. The
partnership agreement was to the effect that no partner could
incur expenses chargeable to the
firm unless it was done in the ordinary course of business. Joe
borrows money from Rich
saying it is to buy reference law books for the firm. However,
Joe takes the money and sails
off to South America never to be seen or heard from again.
Advise Rich whether he can bring
an action against Harry and Moe individually and separately,
Harry and Moe jointly, and/or
against the firm. Do not forget to consider whether Rich's rights
to take action are limited to
being against Joe.
[Part C over]
Parte
PCW is a proprietary company the shares in which are divided
equally among four
shareholders all of whom also-serve as directors of the
company. The constitution of the
company provides the following rules for the event that one of

the shareholders wishes to
transfer his/her shares.
• The other shareholders have the right to acquire the shares at a
price equal to
book value of the shares.
• To the extent that the other shareholders do not exercise the
right to acquire the
shares, the shareholder can dispose of his/her shares to a third
party subject to
the unanimous approval of the board of directors. .
For some time now there has been disagreement about matters
of business policy. One of the
shareholders (Mr Trubel) insists that the company pursue a
more aggressive business strategy,
while the remaining shareholders are content to follow a more
conservative approach. Fed up
with the trouble from Mr Trubel, the other three members vote
to remove him from the board
of directors and fill the position with a friendly party (the
company's accountant). Mr Trubel
wants to sever his cormection with the business. However, Mr
Trubel refijses to sell on
grounds that the book value of the shares is only a fraction of
their net value as computed by
reference to other valuation methods such as capitalised
earnings or net asset backing. One of
the other members (Ms Kauf) armounces her willingness to
acquire Mr Trubel's shares at a
price satisfactory to Mr Trubel. However, the other directors
refuse to consent to the transfer
on the grounds that the transfer would place too much power in
the hands of Ms Kauf.

Discuss the possible rights and remedies of Mr Trubel and the
extent to which the exercise of
each would be successful in satisfying Mr Trubel.
OR
Sally has a small shareholding in Peat Pty Ltd which she
inherited from her father who was
the son of the founder of the company. She also lent $20,000 to
the company at an interest
rate which is above the current market rate. Eric, her cousin,
who is chairman and managing
director, was formerly the controlling shareholder, but had since
sold the majority of his
shares, retaining only a minority holding. The other
shareholders are Maurice, Anita and Fred,
who together hold 76% of the issued shares and are non-
executive directors. Sally thinks that
Eric has been corrupt, incompetent and inefficient in the
management of the company. Under
his management the company has:
a) entered into some unprofitable long term supply contracts
with a friend of his, Nigel;
b) acquired expensive real estate which has since diminished in
value due to the
downturn in the property market;
c) never paid a dividend;
d) paid large amounts of remuneration to Eric and other

members of the board; and
e) recently delayed paying creditors.
Until this year, Sally has been a director and had regularly
disagreed with Eric on matters of
policy. Because of constant fiction between them, the other
members of the board and
shareholders did not reappoint her to the board at the end of her
term of office under the
company's internal rules. Sally maintains that Maurice, Anita
and Fred acquiesced in Eric's
misconduct. She worries about the continuing solvency of the
company.
Advise Sally on her rights and remedies.
numbers.
Student ID; | | | ^ | ^ | ^ | | n Seat Number: DD
1.
2.
3.
4.

5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
a
a

a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a

b
b
b
b
b
b
b
b
b
b
b
b
b
b
b
b
b
b

b
b
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c

c
c
c
c
d
d
d
d
d
d
d
d
d
d
d
d
d
d

d
d
d
d
d
d
e:Latrobe3293432934022695375.tifimage 1 of 10image 2 of
10image 3 of 10image 4 of 10image 5 of 10image 6 of 10image

7 of 10image 8 of 10image 9 of 10image 10 of 10
h:LatrobeUni3293432934022607750.tifimage 1 of 7image 2
of 7image 3 of 7image 4 of 7image 5 of 7image 6 of 7image 7
of 7

of 11image 3 of 11image 4 of 11image 5 of 11image 6 of
11image 7 of 11image 8 of 11image 9 of 11image 10 of 11image
11 of 11
of 10image 3 of 10image 4 of 10image 5 of 10image 6 of
10image 7 of 10image 8 of 10image 9 of 10image 10 of 10

LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx

LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx

Recommended

Recommended

More Related Content

Similar to LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx

Similar to LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx (20)

More from SHIVA101531

More from SHIVA101531 (20)

Recently uploaded

Recently uploaded (20)

LIBRARY USE lllillllllllllllll LA TROBE UNIVERSITY 3 293.docx