Corporations Law Questions: Answered
Part A – Short Answer Questions – 3 Questions (10 Marks in Total)
Word Limit = 150 words per question
You have joined a new accounting firm and one of your newest clients wishes to know the following-
Question 1 (3 Marks)
Explain the legal requirements that must be satisfied for a company to pay dividends, under the Corporations Act 2001.
Question 2 (3 Marks)
Explain the difference between a circulating and non-circulating security interest.
Question 3 (4 Marks)
Explain the effects the common law, Automatic Self-Cleaning Filter Syndicate Co v Cunnninghame (1906) has had on members powers over directors.Part B – Problem-Based Questions – 3 Questions (30 Marks in Total)
Word Limit = 300 words per question
Question 1 (10 Marks)
Your client’s IT director has recommended to the Board of their company that they replace the old IBM computers with Apple I Pads and Apple Macs. She argued that in the long term this would be beneficial to the company from a cost and efficiency view. The Board of directors agreed to the change. You subsequently discovered that she received from the Apple distributor a free trip to Apple headquarters in San Francisco. She took the trip and was also provided with 5 days paid accommodation in New York for her and her family. She did not disclose any of this to the Board of directors.
Please advise the company of the above and what the company should do. In your answer please refer to relevant common law and legislation.
Question 2 (8 Marks)
A shareholder in the company that owns 5% of the shares issued by the company has been complaining lately, that the directors had refused to pay dividends for the past 4 years and is concerned that in that time they have rewarded themselves with bonuses.
Please advise the company of the above and what the company should do. In your answer please refer to relevant case law and legislation.
Question 3 (12 Marks)
Lastly, your client has heard about how the COVID lockdown has been affecting many of his suppliers, and that several of them are going into liquidation. He knows that some of his transactions with them might be at risk so he wants to know what does “voidable antecedent transaction” mean?
Provide at least Four (4) types of transactions with their corresponding legislative provision as an example.