Applied Corporate Law Practice Questions - Governance Institute of Australia - Applied Corporate Law Postgraduate Exam - Applied Corporate Law Practice Questions - Governance Institute of Australia

Question 1

Which seminal case established the principle of separate corporate personality, confirming that a company is a separate legal entity distinct from its shareholders and directors?

Salomon v Salomon & Co Ltd [1897] AC 22 Salisbury v Fagan (1993) 11 ACSR 12 Lee v Lee's Air Farming Ltd [1961] AC 12 Macaura v Northern Assurance Co Ltd [1925] AC 619

Correct Answer:

Salomon v Salomon & Co Ltd [1897] AC 22

Question 2

Under Section 124(1) of the Corporations Act 2001 (Cth), what legal capacity and powers does a company possess upon registration?

A company has limited capacity defined strictly by its constitution, and any acts beyond those objects are void under the ultra vires doctrine. A company has the legal capacity and powers of an individual, both inside and outside this jurisdiction, as well as the power to issue shares and debentures. A company has the legal capacity of a partnership, requiring all directors to consent personally to execute binding agreements. A company's legal capacity is restricted to trading actions and does not extend to holding real property or granting floating charges.

Correct Answer:

A company has the legal capacity and powers of an individual, both inside and outside this jurisdiction, as well as the power to issue shares and debentures.

Question 3

In Lee v Lee's Air Farming Ltd [1961] AC 12, how did the Privy Council apply separate corporate personality to a worker's compensation claim?

It decided that worker's compensation only applies to non-corporate partnerships and was thus inapplicable to incorporated air farming businesses. It ruled that because Lee held 2,999 of the 3,000 shares, the company was a sham and he was personally liable for his own injuries. It held that the company was a separate legal entity, meaning Lee could act in one capacity as director to employ himself, and in another capacity as employee. It held that Lee's role as governing director precluded him from being an employee because a person cannot contract with themselves.

Correct Answer:

It held that the company was a separate legal entity, meaning Lee could act in one capacity as director to employ himself, and in another capacity as employee.

Question 4

What was the key ruling in Macaura v Northern Assurance Co Ltd [1925] AC 619 regarding a shareholder's relationship to corporate assets?

The separate corporate personality is disregarded when insuring physical assets, allowing sole shareholders to claim directly for corporate losses. A creditor of a company has a proprietary interest in the company's inventory and can maintain an insurable interest ahead of the company. Shareholders own a proportional percentage of corporate assets and can insure them under their personal insurance policies. A shareholder has no legal or equitable interest in the assets of the company, so they cannot insure corporate property in their own name.

Correct Answer:

A shareholder has no legal or equitable interest in the assets of the company, so they cannot insure corporate property in their own name.

Question 5

Under Section 131 of the Corporations Act 2001, who is personally liable for a pre-registration contract if the company is not registered, or is registered but does not ratify the contract within a agreed or reasonable time?

The promoter or person who entered into the contract on behalf of the yet-to-be-registered company, unless they are released under s131(4). The vendor of the contract is liable because they entered into a contract with a non-existent entity, making the transaction void ab initio with no recourse. The director of the parent company of the promoter is automatically liable for any pre-incorporation obligations. The company itself is automatically liable from the moment it is registered, regardless of whether it ratifies the contract.

Correct Answer:

The promoter or person who entered into the contract on behalf of the yet-to-be-registered company, unless they are released under s131(4).

Question 1

Exam overview

About this Exam

Prepare with the Applied Corporate Law Practice Questions - Governance Institute of Australia - Applied Corporate Law Postgraduate Exam practice quiz. This question bank includes 100 questions covering section, corporations, company, director, and court. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

More details

Additional Information

Applied Corporate Law Practice Questions - Governance Institute of Australia - Applied Corporate Law Postgraduate Exam

This practice set contains 100 questions from the matching question bank and focuses on section, corporations, company, director, and court. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

Quiz information

Frequently Asked Questions

The complete question count is available after full access is unlocked.

No fixed duration is currently configured for this quiz.

Question explanations are included where they are available in the quiz content, helping you review the reasoning after answering.

Yes. You can retake the practice test again as you continue studying during your available access period.

After your access is confirmed, you can continue into the complete practice exam from this quiz flow.

Unless explicitly stated otherwise, this page provides independent practice material for study and exam preparation and is not the official examination itself.

Keep studying

Correct Answer:

Correct Answer:

Correct Answer:

Correct Answer:

Correct Answer:

About this Exam

Additional Information

Applied Corporate Law Practice Questions - Governance Institute of Australia - Applied Corporate Law Postgraduate Exam

Frequently Asked Questions

Related Questions

AAT Level 4 Applied Management Accounting Practice Exam

Chartered Institute of Stockbrokers (CISI) Professional Practice Exam

Arizona State University (ASU) MKT302 Applied Marketing Management and Leadership Exam 1 Practice

Chi Institute Written Practice Exam

Arizona State University (ASU) SPE563 Philosophical Foundations of Applied Behavior Analysis in Educational Settings Practice Exam

Chimney Safety Institute of America (CSIA) Certification Practice Test