Which of the following statements is correct in relation to the "maintenance of capital" principle?

• A.A company cannot use its share capital, and may only return it to its members with the permission of the court.
• B.In general, a company can use its share capital for any reason whatsoever, as long as it ensures that there is sufficient remaining to meet the company's debts.
• C.In general, a company is not able to freely return its share capital to its members.
• D.A company cannot use its share capital which must be set aside as a fund for creditors.

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CIMA's report on 'Practical Proposals to Improve Corporate Governance Disclosure' explores a range of ideas Which of the following statements is correct?

• A.In focusing on improving corporate governance disclosure the board activities should be linked into key aspects of the corporate performance and strategic development to enable users to evaluate the effectiveness of the board
• B.In focusing on improving corporate governance disclosure the board should evaluate its own effectiveness by focusing on how its actions have improved profit.
• C.In focusing on improving corporate governance disclosure the skills, experiences and personalities of the board should explain how the board ensures robust decision-making
• D.In focusing on improving corporate governance disclosure the information provided should be standardised to enable shareholders to compare performance with other companies.

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The board of Zed Ltd wishes to borrow money from Exe Bank plc. What authority will the board require to enable it to proceed?

• A.A board resolution
• B.A written resolution
• C.A special resolution
• D.An ordinary resolution

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Which of the following is incorrect?

• A.A company cannot be registered with the same name as a company already on the register.
• B.In order to register a company, promoters must include a Memorandum of Association in the documents submitted to the Register of Companies.
• C.For a company with a share capital, the application for registration must contain a statement of capital and initial shareholdings.
• D.The directors of a newly registered company cannot also act as directors of another company.

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Corporate governance codes may either be rules-based or principles-based Which of the following statements correctly describes a rules-based approach to corporate governance?

• A.A rules-based approach instils the code into law but encourages compliance with the spirit of the law.
• B.A rules-based approach instils the code into law but leaves the sanctions for non-compliance to be decided and enforced by the shareholders.
• C.A rules-based approach requires that a company complies with the rules or explains why it has not.
• D.A rules-based approach instils the code into law with appropriate penalties for transgression.

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