Monday 15 January 2024
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
If you are sitting SQE1 exams this week, best luck to you! For everyone else, I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question:
ABC Ltd is a private limited company engaged in manufacturing and distribution. The company has been facing financial difficulties and is considering options to restructure its operations. One possibility is to enter into a scheme of arrangement with its creditors to manage its debts. Which of the following statements best describes a scheme of arrangement?
- A legally binding agreement between the company and its creditors to restructure the company’s debts.
- A voluntary liquidation process initiated by the company to wind up its operations.
- A court order requiring the company to repay its debts within a specified time frame.
- An agreement between the company and its shareholders to change the company’s shareholding structure.
- A process by which the company transfers its assets to a new entity to avoid its existing liabilities.
Top Tip: The more you practice MCQs, the better you get at it. You can find the newsletter questions in the form of short videos on this link.
Relevant Reading: Find more practice MCQS in the ReviseSQE FLK1 question book. You can obtain the text* by following this link.
Answer and feedback to last week’s question: XYZ Ltd is a private limited company engaged in manufacturing and selling electronic devices. The company has recently faced financial difficulties and is considering restructuring its operations. As part of the restructuring process, the directors of XYZ Ltd propose to lay off a significant number of employees. Which of the following statements accurately reflects the legal requirements for conducting employee layoffs in a private limited company?
- The directors must follow employment laws and regulations (consultation requirements and the appropriate notice periods).
- The directors have the sole discretion to lay off employees without any legal requirements or obligations.
- The directors are only required to notify the affected employees of the layoffs without any further legal obligations.
- The directors must obtain approval from the shareholders before initiating any employee layoffs.
- The directors can proceed with the employee layoffs as long as they provide severance packages to the affected employees.
The correct answer is 1. The directors must follow the applicable employment laws and regulations, including consultation requirements and the provision of appropriate notice periods. In the context of a private limited company, the directors are required to adhere to the relevant employment laws and regulations when conducting employee layoffs. This includes following consultation requirements, such as informing and consulting with employee representatives or trade unions, and providing appropriate notice periods to the affected employees. Failure to comply with these legal requirements may result in legal consequences and potential claims against the company. The Directors do not need to consult the shareholders, and notices and any compensation requirements both need to be respected.
Thank you for subscribing and let me know how you are getting on in your preparation through our Facebook Group. Feel free to forward this email to anyone you think will benefit.
You will hear from me again soon.
All the best
Dr Ioannis Glinavos
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