30 Questions
Promoters are responsible for forming a company but not for starting it
False
There are 4 kinds of promoters mentioned in the text
True
A professional promoter is specialized in the job of promoting the company
True
An entrepreneurial promoter only forms the idea and does not bring the company into existence
False
One of the functions of a promoter is to choose suitable people as first directors
True
Promoters have 5 duties according to the text
False
Board members who vote against any resolution will not be liable when they explicitly express their objection during the meeting.
True
Being absent from the meeting is not an excuse to be relieved from liability, unless the absent member has either been unaware of the resolution or was unable to object after being aware.
True
The shareholder GA meetings will be chaired by the chairman of the board or the vice chairman, if the chairman is absent. If both are not possible, the shareholders will vote for a board member to chair the meeting.
True
A shareholder has the right to attend the GA meetings even if the AOA says otherwise and may even assign someone other than a board member to attend on his behalf.
True
Different means of technology may be used to hold the meetings.
True
The call for the assembly meeting should be made 21 days before the meeting.
True
Companies can never be held liable for crimes that do not require a mental element like intention
False
The corporate veil refers to the separation between a company and its shareholders, allowing the company to own property, sue and be sued in its name, and have a never-ending existence
True
Lifting the corporate veil means that the court acknowledges the existence of the corporation and upholds its separate legal identity
False
For benefit of revenue is a statutory ground on which the corporate veil may be lifted
False
Joint stock company's capital must not be less than 500k riyals, and the paid up amount may not be less than one quarter of the value
True
Board members of a joint stock company can serve for a term exceeding 4 years unless otherwise stated in the Articles of Association
False
Failure to disclose can result in the sale being rejected or the promoter being required to give back profits.
True
Pre-corporation contracts are void unless authorized by the terms of incorporation and communicated to the company.
True
The MOA sets out the name, registered office, objective, liability, capital, and association of the company.
True
The name clause requires a unique and permitted name, with 'limited' or 'private limited' as the last word.
True
The Doctrine of Ultra-vires refers to acts beyond the powers given by the MOA or AOA.
True
The Ashbury Railway case illustrates the application of the Doctrine of Ultra-vires when the company's objectives in the Memorandum differed from the work agreed in the contract.
True
True or false: The Doctrine of Constructive Notice aims to protect the company from outsiders trying to trick it and to hold them accountable for contractual liabilities.
True
True or false: The Doctrine of Indoor Management offers protection to outsiders who deal with the company, assuming compliance with internal management and procedures.
True
True or false: In the case of Salomon v. Salomon, the company was treated as a separate legal entity from its owner, even though the owner held most of the shares.
True
True or false: A company's property and debt belong to the company, not the owner.
True
True or false: Companies can contract with members, directors, and outsiders.
True
True or false: In the case of Lee's Air Farming Ltd, Mrs. Lee was entitled to compensation for her husband's death because he was the managing director when he gave himself orders as a pilot.
True
Study Notes
- The directors of a company entered into a contract for financing a foreign railway line, which was later rejected by the company.
- Riche, the contractor, sued the company for breach of contract.
- The contract was held void as ultra-vires, meaning it was beyond the company's authorized objectives and couldn't be made valid by ratification.
- The Doctrine of Constructive Notice states that a person is expected to inspect the company's Memorandum of Association (MOA) and Articles of Association (AOA) before dealing with the company.
- This doctrine aims to protect the company from outsiders trying to trick it and to hold them accountable for contractual liabilities.
- The Doctrine of Indoor Management offers protection to outsiders who deal with the company, assuming compliance with internal management and procedures.
- Exceptions to this doctrine include knowledge of irregularity, suspicion, forgery, acts outside apparent authority, non-existence of agency, and acts ultra vires the company.
- The MOA and AOA outline the company's objectives, powers, and internal regulations that govern its relationship with outsiders and its internal management.
- In the case of Salomon v. Salomon, the company was treated as a separate legal entity from its owner, even though the owner held most of the shares.
- A company's property and debt belong to the company, not the owner.
- Companies can contract with members, directors, and outsiders.
- Companies can commit torts and crimes.
- In the case of Lee's Air Farming Ltd, Mrs. Lee was entitled to compensation for her husband's death because he was the managing director when he gave himself orders as a pilot.
Test your knowledge of ultra vires and breach of contract with this quiz. Explore a case where a contract was deemed void as it fell outside the company's objectives, leading to a breach of contract lawsuit.
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