Corporate Governance and Shareholder Rights Quiz
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Questions and Answers

Joint stock company must have a minimum authorized capital of 500k riyals.

True

The liability of the shareholder in a joint stock company is unlimited.

False

The authorized capital of a joint stock company is the total value of shares owned by shareholders.

False

The issued capital of a joint stock company can exceed the authorized capital.

<p>False</p> Signup and view all the answers

The AOA of a joint stock company must include the company's term.

<p>True</p> Signup and view all the answers

The paid up amount of a joint stock company must be at least one quarter of the authorized capital.

<p>False</p> Signup and view all the answers

The management and the number of board members must be mentioned in the AOA of a joint stock company.

<p>True</p> Signup and view all the answers

True or false: A shareholder representing at least 3% of the company’s capital can ask the court to inspect the company if the conduct of board members or auditor is suspicious.

<p>False</p> Signup and view all the answers

True or false: Shares can only be issued at a higher value than their nominal value.

<p>True</p> Signup and view all the answers

True or false: The majority shareholder has the right to force the minority to accept an offer from a serious buyer for purchasing all the company’s shares for the same price given to the majority & under the same conditions.

<p>True</p> Signup and view all the answers

True or false: The company losses if the losses reach half of the issued capital.

<p>False</p> Signup and view all the answers

True or false: In a Limited Liability Company, the liability of the owners or partners is independent of the financial liability of the company.

<p>False</p> Signup and view all the answers

True or false: If the company is established by one person, the owner will not have the power & authorities of the manager and board of directors.

<p>False</p> Signup and view all the answers

True or false: The Memorandum of Association (MOA) must include the names of the company's employees.

<p>False</p> Signup and view all the answers

Partners can authorize other partners to attend on their behalf unless if the AOA states otherwise

<p>True</p> Signup and view all the answers

The company is liable for the manager’s acts that fall within the company’s objectives

<p>True</p> Signup and view all the answers

The GA will be held based on the MOA, at least once a year, 6 months before the company’s financial year ends

<p>False</p> Signup and view all the answers

If the equity shares are held by several people, the company can suspend their rights until they choose one to be the sole holder

<p>True</p> Signup and view all the answers

Non-managing partners can submit opinions to partners, and can request documents and records twice a year

<p>True</p> Signup and view all the answers

The partners holding all the shares may hold the GA regardless of the prior conditions

<p>False</p> Signup and view all the answers

Partners have the right to participate in discussions and voting, and have a number of votes based on the number of shares he has

<p>True</p> Signup and view all the answers

The GA will determine how profits are distributed to the partners after deduction if needed

<p>True</p> Signup and view all the answers

Managers or auditor or partners can request the meeting, the notification must be sent 21 days before the meeting

<p>True</p> Signup and view all the answers

Board members can serve for up to 6 years without re-election unless specified in the AOA.

<p>False</p> Signup and view all the answers

Board members are not required to disclose their interest in business transactions.

<p>False</p> Signup and view all the answers

Board members can be held liable for damages from business transactions even if they explicitly object during the meeting.

<p>False</p> Signup and view all the answers

Shareholders are not allowed to assign someone to represent them at GA meetings.

<p>False</p> Signup and view all the answers

Extraordinary GA meetings have the power to amend AOA without exceptions.

<p>False</p> Signup and view all the answers

Decisions at extraordinary meetings require a two-thirds majority vote.

<p>True</p> Signup and view all the answers

75% of shareholders with voting rights are required for all capital decisions.

<p>False</p> Signup and view all the answers

What is the minimum amount that the paid up capital of a joint stock company must be?

<p>One quarter of the authorized capital</p> Signup and view all the answers

Which of the following must be mentioned in the Articles of Association (AOA) of a joint stock company?

<p>The authorized and issued capital</p> Signup and view all the answers

What is the minimum authorized capital required for a joint stock company?

<p>$500,000$ riyals</p> Signup and view all the answers

How often must the General Assembly (GA) be held according to the text?

<p>At least once a year</p> Signup and view all the answers

What is the liability of a shareholder in a joint stock company?

<p>Limited</p> Signup and view all the answers

What can be done with the issued capital of a joint stock company if it's paid in full?

<p>It can be increased within the limits of the authorized capital</p> Signup and view all the answers

What should be included in the AOA of a joint stock company according to the text?

<p>The objectives of the company</p> Signup and view all the answers

In a Limited Liability Company (LLC), who can be appointed as a manager?

<p>One or more managers, who can be either partners or third parties</p> Signup and view all the answers

When can the partners appoint a new manager in an LLC if a vacancy arises?

<p>Within 15 days of knowledge of the vacancy</p> Signup and view all the answers

What is the frequency requirement for holding the General Assembly (GA) meeting in an LLC?

<p>At least once a year, 6 months before the company’s financial year ends</p> Signup and view all the answers

What rights do non-managing partners have in an LLC?

<p>Submit opinions to partners and request documents and records twice a year</p> Signup and view all the answers

How is capital mentioned in an LLC?

<p>In the Memorandum of Association (MOA)</p> Signup and view all the answers

What happens if equity shares in an LLC are held by several people?

<p>The company can suspend their rights until they choose one to be the sole holder</p> Signup and view all the answers

Who determines how profits are distributed to partners in an LLC?

<p>The General Assembly (GA)</p> Signup and view all the answers

What is required for calling a General Assembly meeting in an LLC?

<p>Notification must be sent 21 days before the meeting by managers, auditor or partners</p> Signup and view all the answers

Who has the right to represent an LLC Infront of courts and third parties?

<p>The manager appointed by MOA or Independent Contract</p> Signup and view all the answers

What is the maximum term of office for board members in a joint stock company?

<p>4 years</p> Signup and view all the answers

Under what conditions can board members be dismissed in a joint stock company?

<p>By the General Assembly (GA)</p> Signup and view all the answers

What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?

<p>$rac{1}{2}$ of shareholders</p> Signup and view all the answers

What percentage of shareholders with voting rights is required for certain capital decisions in a joint stock company?

<p>$75 ext{%}$</p> Signup and view all the answers

Who chairs shareholder General Assembly (GA) meetings in a joint stock company?

<p>Chairman or vice chairman</p> Signup and view all the answers

What must board members disclose regarding business transactions in a joint stock company?

<p>Both direct and indirect interests</p> Signup and view all the answers

What percentage of shareholders with voting rights is required for amending the Articles of Association (AOA) in extraordinary General Assembly (GA) meetings?

<p>$80 ext{%}$</p> Signup and view all the answers

Which type of shares must be registered to the holder’s name in a joint stock company?

<p>Ordinary shares</p> Signup and view all the answers

What happens if the losses of a joint stock company reach half of the issued capital?

<p>The board of directors must call for an extraordinary meeting to consider the continuation of the company</p> Signup and view all the answers

In a joint stock company, what can be done to lower the capital?

<p>The company buys and then gets rid of some of its own shares</p> Signup and view all the answers

What is required in the Memorandum of Association (MOA) of a Limited Liability Company (LLC)?

<p>Names of partners and headquarters</p> Signup and view all the answers

What rights do non-managing partners have in an LLC?

<p>$75 ext{%}$ share in profits after deduction if needed</p> Signup and view all the answers

What is required before lowering the capital in a joint stock company?

<p>The board of directors has to prepare a statement explaining why they’re doing it, what the company’s obligations are, and how the lowering might affect those obligations.</p> Signup and view all the answers

In a Limited Liability Company (LLC), who has the power & authorities of the manager and board of directors if it's established by one person?

<p>Owner will have power &amp; authorities of manager and board of directors.</p> Signup and view all the answers

What is the minimum required capital for a joint stock company?

<p>500k riyals</p> Signup and view all the answers

What is the minimum required paid up amount for the capital of a joint stock company?

<p>One quarter of the value</p> Signup and view all the answers

Which of the following must be mentioned in the Articles of Association (AOA) of a joint stock company?

<p>Details of commencement</p> Signup and view all the answers

What is the maximum term for board members in a joint stock company?

<p>$10$ years</p> Signup and view all the answers

What percentage of shareholders with voting rights is required for certain capital decisions in a joint stock company?

<p>$75%$</p> Signup and view all the answers

True or false: The company losses if the losses reach half of the issued capital.

<p>True</p> Signup and view all the answers

What can be done with the issued capital of a joint stock company if it's paid in full?

<p>It can be increased within the limits of authorized capital.</p> Signup and view all the answers

What is the maximum term of office for board members in a company?

<p>4 years</p> Signup and view all the answers

In a joint stock company, what percentage of shareholders with voting rights is required for certain capital decisions?

<p>80%</p> Signup and view all the answers

When can board members and members with interests be held liable for damages from business transactions?

<p>If they fail to disclose interest</p> Signup and view all the answers

What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?

<p>$rac{1}{2}$ of shareholders</p> Signup and view all the answers

What is the liability of board members and members with interests for damages from business transactions?

<p>Unlimited liability</p> Signup and view all the answers

Who chairs shareholder General Assembly (GA) meetings in a joint stock company?

<p>Chairman or vice chairman</p> Signup and view all the answers

What is the minimum authorized capital required for a joint stock company?

<p>$500,000</p> Signup and view all the answers

In a joint stock company, what can be done to lower the capital?

<p>Cancel some shares equal to the amount they want to lower</p> Signup and view all the answers

What is required before lowering the capital in a joint stock company?

<p>Board of Directors has to prepare a statement explaining the reasons for lowering the capital</p> Signup and view all the answers

What happens if the losses of a joint stock company reach half of the issued capital?

<p>The company must call for an extraordinary meeting to consider continuation of the company and take measures to resolve the losses or terminate the company</p> Signup and view all the answers

What rights do non-managing partners have in a Limited Liability Company (LLC)?

<p>They can request documents and records twice a year</p> Signup and view all the answers

Which type of shares must be registered to the holder’s name in a joint stock company?

<p>'Ordinary' shares</p> Signup and view all the answers

What is required in the Articles of Association (AOA) of a joint stock company?

<p>Nominal value of each share</p> Signup and view all the answers

What is required for calling a General Assembly meeting in an LLC?

<p>Notification sent 21 days before meeting</p> Signup and view all the answers

In a Limited Liability Company (LLC), who can be appointed as a manager?

<p>Any partner or third party</p> Signup and view all the answers

What must be mentioned in the Memorandum of Association (MOA) of a Limited Liability Company (LLC)?

<p>All of the above</p> Signup and view all the answers

What is required for calling a General Assembly meeting in an LLC?

<p>Notification sent 21 days before the meeting</p> Signup and view all the answers

What happens if equity shares in an LLC are held by several people?

<p>The company can suspend their rights until they choose one to be the sole holder</p> Signup and view all the answers

What is required in the Articles of Association (AOA) of a joint stock company?

<p>All of the above</p> Signup and view all the answers

Who chairs shareholder General Assembly (GA) meetings in a joint stock company?

<p>The partner holding majority shares</p> Signup and view all the answers

What is the maximum term of office for board members in a joint stock company?

<p>5 years</p> Signup and view all the answers

What rights do non-managing partners have in an LLC?

<p>They can call for GA meetings</p> Signup and view all the answers

What is the minimum required capital for a joint stock company?

<p>500k riyals</p> Signup and view all the answers

What is the minimum amount that the paid up capital of a joint stock company must be?

<p>One quarter of the authorized capital</p> Signup and view all the answers

What must be mentioned in the Articles of Association (AOA) of a joint stock company?

<p>Name of the company, headquarters, objectives, authorized &amp; issued capital, number and classes of shares, management and number of board members, company’s term, details of commencement, other provisions</p> Signup and view all the answers

What happens if the losses of a joint stock company reach half of the issued capital?

<p>The company losses</p> Signup and view all the answers

What is required before lowering the capital in a joint stock company?

<p>Approval from extraordinary General Assembly (GA) meeting and court approval</p> Signup and view all the answers

What is the maximum term for board members in a joint stock company?

<p>6 years without re-election unless specified in AOA</p> Signup and view all the answers

Which type of shares must be registered to the holder’s name in a joint stock company?

<p>Registered shares</p> Signup and view all the answers

What is the maximum term of office for board members in a joint stock company?

<p>4 years</p> Signup and view all the answers

In a joint stock company, what percentage of shareholders with voting rights is required for certain capital decisions?

<p>75%</p> Signup and view all the answers

What happens if board members and members with interests explicitly object during the meeting regarding damages from business transactions?

<p>They are still held liable</p> Signup and view all the answers

What must board members disclose regarding business transactions in a joint stock company?

<p>Both direct and indirect interests</p> Signup and view all the answers

What is required for calling Extraordinary General Assembly (GA) meetings?

<p>Procedures for calling meetings and setting quorum</p> Signup and view all the answers

What is the liability of board members and members with interests for damages from business transactions?

<p>Unlimited liability</p> Signup and view all the answers

What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?

<p>Simple majority of shareholders present or represented</p> Signup and view all the answers

What must the board of directors do if the company's losses reach half of the issued capital?

<p>Announce the losses within 60 days of their knowledge and call for an extraordinary meeting within 180 days.</p> Signup and view all the answers

What can a majority shareholder do in a joint stock company?

<p>Force the minority to accept an offer from a serious buyer for purchasing all the company’s shares.</p> Signup and view all the answers

What is required before lowering the capital in a joint stock company?

<p>Preparation of a statement explaining the reasons for lowering capital and its impact, to be read out at the General Assembly Meeting.</p> Signup and view all the answers

What is true about shares in a Joint Stock Company (JSC)?

<p>Shares can be split &amp; merged into lower &amp; higher nominal value.</p> Signup and view all the answers

What is true about a Limited Liability Company (LLC)?

<p>The liability is independent of the financial liability of each partner.</p> Signup and view all the answers

'Redeemable' shares in a Joint Stock Company (JSC) refer to shares that:

<p>'Redeemable' means they can be bought back by the company at a future date or under certain conditions.</p> Signup and view all the answers

Which statement regarding the appointment of LLC managers is most accurate?

<p>Managers can be appointed by one or more managers, partners, or third parties, and the appointment is under the Memorandum of Association (MOA) or Independent Contract.</p> Signup and view all the answers

When can partners appoint a new manager in an LLC if a vacancy arises?

<p>Within 15 days of knowledge of vacancy</p> Signup and view all the answers

What rights do non-managing partners have in an LLC?

<p>Non-managing partners have the right to participate in discussions and voting, and can request documents and records twice a year.</p> Signup and view all the answers

What is required for calling a General Assembly meeting in an LLC?

<p>Managers, auditors, or partners can request the meeting, and the notification must be sent 21 days before the meeting.</p> Signup and view all the answers

What happens if the equity shares are held by several people in an LLC?

<p>The company can suspend their rights until they choose one to be the sole holder.</p> Signup and view all the answers

What is mentioned in the Memorandum of Association (MOA) regarding management of an LLC?

<p>The MOA or the partners will determine the method of management, and the manager will represent the LLC in various legal matters.</p> Signup and view all the answers

What is determined by the General Assembly (GA) in an LLC?

<p>The GA will determine how profits are distributed to the partners after deduction if needed.</p> Signup and view all the answers

When can board members dismiss managers in an LLC?

<p>Partners can dismiss managers, but if a manager is one of the partners, he cannot vote when it comes to his dismissal. Partners can go to court to request removal of a manager.</p> Signup and view all the answers

What rights do managing partners have in terms of appointment and dismissal of managers in an LLC?

<p>Managing partners have authority to appoint and dismiss managers based on majority vote during General Assembly meetings.</p> Signup and view all the answers

Study Notes

  • Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.

  • Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.

  • Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.

  • Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.

  • Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.

  • Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.

  • Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.

  • Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.

  • Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.

  • Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.

  • Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.

  • Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.

  • Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.

  • Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.

  • Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.

  • Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.

  • Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.

  • Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.

  • Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.

  • Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.

  • Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.

  • Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.

  • Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.

  • Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.

  • Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.

  • Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.

  • Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.

  • Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.

  • Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.

  • Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.

  • Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.

  • Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.

  • Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.

  • Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.

  • Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.

  • Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.

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Test your knowledge of corporate governance and shareholder rights with this quiz. Learn about the responsibilities of board members, auditors, and shareholders in ensuring transparency and accountability within a company.

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