Shareholder Rights and Duties: Master the Legal Framework for Company Shareholders

Question 1

Which type of resolution requires approval by a majority of at least 75% of the votes cast?

Accepted Answer

Special resolution

Answer

Ordinary resolution

Answer

Extraordinary resolution

Answer

Written resolution

Question 2

Which type of share entitles the holder to receive a fixed annual payment?

Accepted Answer

Preference shares

Answer

Ordinary shares

Answer

Deferred shares

Answer

Redeemable shares

Question 3

Under Section 172 of the Companies Act 2006, shareholders have the statutory right to:

Accepted Answer

Inspect company records

Answer

Receive copies of all correspondence

Answer

Attend all board meetings

Answer

Sell their shares at any time

Question 4

The principle of 'one share, one vote' means that:

Accepted Answer

Each shareholder has an equal vote, irrespective of the number of shares they own

Answer

Shareholders with more shares have more votes

Answer

Only ordinary shareholders have voting rights

Answer

Shareholders can only vote in person

Question 5

A derivative action is:

Accepted Answer

A claim brought by a shareholder on behalf of the company

Answer

A claim brought by the company against a shareholder

Answer

A claim brought by one shareholder against another

Answer

A claim brought by the company against a third party

Question 6

Which of the following is NOT a fiduciary duty owed by directors to shareholders?

Accepted Answer

Duty to maximize company profits

Answer

Duty of care

Answer

Duty of loyalty

Answer

Duty of confidentiality

Question 7

The pre-emption right grants shareholders the option to:

Accepted Answer

Buy new shares issued by the company on a priority basis

Answer

Sell their shares back to the company at a pre-set price

Answer

Vote on the appointment of new company directors

Answer

Review the company's financial records

Question 8

The principle of 'piercing the corporate veil' can lead to:

Accepted Answer

Holding company directors personally liable for company debts

Answer

Issuing company shares to the public without regulatory approval

Answer

Acquiring a majority stake in another company

Answer

Distributing dividends without sufficient profits

Question 9

Which of the following is not a statutory right of shareholders in the UK?

Accepted Answer

Right to appoint directors

Answer

Right to vote in general meetings

Answer

Right to receive dividends

Answer

Right to inspect company records

Question 10

What is the purpose of the 'Quorum' requirement in company law?

Accepted Answer

To ensure there are sufficient shareholders present at a meeting

Answer

To prevent a small group of shareholders from dominating a meeting

Answer

To give all shareholders an equal voice in decision-making

Answer

To ensure meetings are conducted in a timely manner

Question 11

What is the legal duty of directors to act in the best interests of the company?

Accepted Answer

A fiduciary duty

Answer

A statutory duty

Answer

A contractual duty

Answer

A common law duty

Question 12

What is the difference between a legal and an equitable interest in shares?

Accepted Answer

Legal interest can be transferred without the consent of the company, while equitable interest cannot

Answer

Equitable interest is more secure than legal interest

Answer

Legal interest gives the shareholder voting rights, while equitable interest does not

Answer

There is no difference between legal and equitable interests

Question 13

Which of the following is NOT a right of shareholders in the United Kingdom?

Accepted Answer

Right to vote in the company's elections without prior notice **of meetings**

Answer

Right to attend and speak at general meetings

Answer

Right to inspect company records

Question 14

Under the UK Companies Act 2006, what type of majority is required for a shareholder resolution to be passed?

Accepted Answer

Simple majority **of votes cast**

Answer

Special majority of 75%

Answer

Unanimous vote

Answer

Special majority of 50%

Question 15

Which of the following is a primary duty of shareholders?

Accepted Answer

To act in the best interests of the company

Answer

To maximize their personal profits

Answer

To avoid conflicts of interest

Answer

To attend all board meetings

Question 16

What is the statutory basis for the right of shareholders to inspect company records in the UK?

Accepted Answer

The Companies Act 2006, section 117

Answer

The Shareholders' Rights Directive 2017

Answer

The Accounting Standards Act 2003

Answer

The common law

Question 17

What is the significance of the pre-emption right for shareholders?

Accepted Answer

It gives them the right to purchase new shares **in proportion to their existing shareholding**

Answer

It prevents the dilution of their voting power

Answer

It guarantees them a dividend on their shares

Question 18

What is the primary role of the Court in relation to shareholder rights?

Accepted Answer

To interpret and enforce the law relating to shareholder rights

Answer

To manage the day-to-day affairs of the company

Answer

To advise shareholders on their rights and duties

Question 19

In what circumstances may a shareholder's right to vote be restricted?

Accepted Answer

When they are in breach of a contractual obligation to the company **and such breach restricts their right to vote**

Answer

When they have not paid their dividends

Answer

When they are under the age of 18

Question 20

A shareholder seeking to prevent a company from issuing new shares that would dilute their existing holdings would most likely rely on which legal principle?

Accepted Answer

Pre-emptive rights

Answer

Right to dividends

Answer

Duty of care

Answer

Right to information

Question 21

Which of these is NOT a factor typically considered in determining whether a shareholder has a valid claim for unfair prejudice?

Accepted Answer

The shareholder's financial investment in the company.

Answer

The conduct of the company's directors.

Answer

The shareholder's reasonable expectations.

Question 22

In the context of shareholder voting rights, the 'quorum' requirement serves which of the following purposes?

Accepted Answer

Ensuring a sufficient number of shareholders are present to make valid decisions.

Answer

Allowing shareholders to vote on multiple issues at the same meeting.

Answer

Giving minority shareholders greater voting power.

Question 23

Which statement accurately reflects the general legal position on shareholder liability in a UK company?

Accepted Answer

Shareholders are typically liable only to the extent of their investment in the company.

Answer

Shareholders are liable for all debts of the company, even if they are not involved in its management.

Answer

Shareholders are liable for any losses suffered by the company, regardless of the cause.

Question 24

Which legal principle is primarily designed to protect the interests of minority shareholders from potentially oppressive conduct by majority shareholders?

Accepted Answer

Unfair prejudice.

Answer

Right to information.

Answer

Pre-emptive rights.

Answer

Derivative action.