Monday 2 October 2023
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Hope you had a great weekend. Please see below for the question, the answer to last week’s question and associated resources. This is the web version of the email you received.
Question:
A limited liability company has two directors, Alex and Ben. Alex resigns from the company, but does not inform Companies House of his resignation. Ben continues to act as the sole director and signs a contract with a supplier for the purchase of goods. The goods are office equipment consumables, like ink cartridges and printing paper, and the seller is one of the company’s regular suppliers. Which of the following is true?
A. The contract is void because Alex did not resign properly.
B. The contract is void because there is only one director in the company.
C. The contract is valid and binding because Ben is still a director of the company.
D. The contract is valid and binding only if Alex’s resignation was properly made.
E. The contract is valid and binding as it relates to the purchase of goods.
Top Tip: We have some breaking news this week. The SRA is changing the way pass scores are calculated for the January 2024 SQE1 sitting. There is going to be set pass score at 60% now. For details on how this is calculated and what it means see the video here.
Relevant Reading: Watch the video linked here for information on the process of appointment and removal of directors. For relevant sections in a text see ReviseSQE Business Law and Practice, Chapter 4. You can obtain the text by following this link.
Answer and feedback to last week’s question: Last week’s question was as follows:
Myriam is a shareholder of a public limited company and holds 2% of the shares in the company. Myriam is an environmental activist and seeks to influence sustainability measures in all her public and personal engagements. She is deeply dissatisfied with the company’s environmental policies and wants to bring this to the attention of the board, as she thinks that the company could easily do a lot more to contribute to the fight against climate change. Which of the following options is available to the shareholder? 1) Myriam can call a general meeting to discuss the environmental policy. 2) Myriam can raise the issue at an annual general meeting. 3) Myriam can request a copy of the company’s environmental policy under s.527 of the Companies Act 2006. 4) Myriam can demand that the company takes specific action to address the environmental policy. 5) Myriam can initiate legal proceedings against the company.
The correct answer is The correct answer is 2. A shareholder has the right to ask questions at a general meeting, including the annual general meeting, on any matter relating to the company’s business (see Chapter 3, Companies Act 2006). However, the shareholder cannot demand that the company takes specific action to address the environmental policy as they hold only a small percentage of the company’s shares. On the facts presented, it seems that there isn’t much for Myriam to bring action against the company (a derivative action). s.527 does not appear relevant to Myriam’s concerns. Answer 2 therefore is the most likely answer.
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You will hear from us again next week.
All the best
Dr Ioannis Glinavos
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