lOMoAR cPSD| 11700591
lOMoAR cPSD| 11700591
Combined MCQ Test Bank (huiyi)
Law of Investments and Financial Markets (Royal Melbourne Institute of
Technology)
• Question 1
1 out of 1 points
What is a debenture under the Corporations Act 2001 (Cth)?
Selected
Answer:
A legally binding undertaking by a company to repay a debt
where that debt is money deposited with or lent to the
company.
Correct
Answer:
A legally binding undertaking by a company to repay a debt
where that debt is money deposited with or lent to the
company.
Response
Feedback: This is a summarised version of the Corporations Act 2001 (Cth) s 9
definition of debenture. Option 2 is incorrect: debentures relate to
debt, not equity. Option 3 is incorrect: a debenture may be secured by
a circulating security interest, but not necessarily.
• Question 2
1 out of 1 points
, lOMoAR cPSD| 11700591
Section 181 of the Corporations Act 2001 (Cth) requires directors and officers:
A. To act in good faith.
B. To act diligently.
C. To act in the best interests of the company.
D. To act for a proper purpose.
Selected Answer:
A,C and D
Correct Answer:
A,C and D
Response
Feedback: Section 181 of the Corporations Act 2001 (Cth) states that a director
or other officer of a company must exercise their powers and discharge
their duties in good faith in the best interests of the company, and for a
proper purpose. Section 181 does not require a director to act
diligently.
• Question 3
0 out of 1 points
Which of the following are characteristics of equity finance?
A. There is no expectation or requirement that the company will pay a
distribution (in the form of dividends) the payment of dividends is
within the discretion of directors.
B. Repayment of principal on a winding up only after all other legitimate
claims have been satisfied.
C. A share in any surplus assets in a winding up.
D. An expectation that capital will be returned prior to winding up.
Selected Answer:
, lOMoAR cPSD| 11700591
A, B and D only
Correct Answer:
A, B and C only.
Response
Feedback: Statement D is not a characteristic of equity finance: a return of
capital is generally not expected prior to winding up.
• Question 4
0 out of 1 points
As the law currently stands, it is only in exceptional circumstances that courts will
pierce the corporate veil. When will this occur at general law?
Selected
Answer:
None of the above.
Correct Answer:
Where the corporate form is being used to avoid an existing legal
duty.
Response
Feedback: Option 1 is an example of lifting the veil under statutory provisions,
not the general law. Option 3 in incorrectly expressed: the principle
should say “where the company is acting as the agent or partner of its
controller”
• Question 5
0 out of 1 points
Which of the following is a general law remedy available to a member of a company?
, lOMoAR cPSD| 11700591
Selected
Answer:
Taking legal action to obtain a remedy for oppressive conduct.
Correct
Answer:
Taking legal action because the majority members have breached the
equitable limitation on majority voting power.
Response
Feedback: The equitable limitation on voting power is a general law principle.
The other three remedies are statutory remedies.
• Question 6
0 out of 1 points
Which of the following parties are not bound by the terms of a deed of company
arrangement?
Selected Answer:
The administrator.
Correct Answer:
None of the above.
Response
Feedback: The deed is binding on all creditors whether they voted for it or
against it: s 444D. Section 444G binds the administrator, company,
lOMoAR cPSD| 11700591
Combined MCQ Test Bank (huiyi)
Law of Investments and Financial Markets (Royal Melbourne Institute of
Technology)
• Question 1
1 out of 1 points
What is a debenture under the Corporations Act 2001 (Cth)?
Selected
Answer:
A legally binding undertaking by a company to repay a debt
where that debt is money deposited with or lent to the
company.
Correct
Answer:
A legally binding undertaking by a company to repay a debt
where that debt is money deposited with or lent to the
company.
Response
Feedback: This is a summarised version of the Corporations Act 2001 (Cth) s 9
definition of debenture. Option 2 is incorrect: debentures relate to
debt, not equity. Option 3 is incorrect: a debenture may be secured by
a circulating security interest, but not necessarily.
• Question 2
1 out of 1 points
, lOMoAR cPSD| 11700591
Section 181 of the Corporations Act 2001 (Cth) requires directors and officers:
A. To act in good faith.
B. To act diligently.
C. To act in the best interests of the company.
D. To act for a proper purpose.
Selected Answer:
A,C and D
Correct Answer:
A,C and D
Response
Feedback: Section 181 of the Corporations Act 2001 (Cth) states that a director
or other officer of a company must exercise their powers and discharge
their duties in good faith in the best interests of the company, and for a
proper purpose. Section 181 does not require a director to act
diligently.
• Question 3
0 out of 1 points
Which of the following are characteristics of equity finance?
A. There is no expectation or requirement that the company will pay a
distribution (in the form of dividends) the payment of dividends is
within the discretion of directors.
B. Repayment of principal on a winding up only after all other legitimate
claims have been satisfied.
C. A share in any surplus assets in a winding up.
D. An expectation that capital will be returned prior to winding up.
Selected Answer:
, lOMoAR cPSD| 11700591
A, B and D only
Correct Answer:
A, B and C only.
Response
Feedback: Statement D is not a characteristic of equity finance: a return of
capital is generally not expected prior to winding up.
• Question 4
0 out of 1 points
As the law currently stands, it is only in exceptional circumstances that courts will
pierce the corporate veil. When will this occur at general law?
Selected
Answer:
None of the above.
Correct Answer:
Where the corporate form is being used to avoid an existing legal
duty.
Response
Feedback: Option 1 is an example of lifting the veil under statutory provisions,
not the general law. Option 3 in incorrectly expressed: the principle
should say “where the company is acting as the agent or partner of its
controller”
• Question 5
0 out of 1 points
Which of the following is a general law remedy available to a member of a company?
, lOMoAR cPSD| 11700591
Selected
Answer:
Taking legal action to obtain a remedy for oppressive conduct.
Correct
Answer:
Taking legal action because the majority members have breached the
equitable limitation on majority voting power.
Response
Feedback: The equitable limitation on voting power is a general law principle.
The other three remedies are statutory remedies.
• Question 6
0 out of 1 points
Which of the following parties are not bound by the terms of a deed of company
arrangement?
Selected Answer:
The administrator.
Correct Answer:
None of the above.
Response
Feedback: The deed is binding on all creditors whether they voted for it or
against it: s 444D. Section 444G binds the administrator, company,
