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CELE SQE1 模拟练习

Examination Timing: 00H03M46S

Isabella founded a business five years ago as a sole trader, importing gourmet foods from Southern Europe and supplying local speciality shops. Last year, she wanted to expand her business but needed more capital. Consequently, she involved her cousin Edward and convinced him to invest in her business. To do so, he insisted on reorganising the business into a corporate structure and subscribing for shares. 


Edward also insisted that his two nephews, Richard and Henry, be appointed as directors. Isabella agreed, so Southern Delicacies Ltd. was incorporated with an issued share capital of 100,001 shares at £1 each. Edward subscribed for 50,000 shares, paying £25,000 upfront with the remaining £25,000 unpaid. Isabella had her existing business valued at £50,000 by independent experts and sold it to the newly incorporated company in exchange for 50,000 shares. Isabella’s daughter, Emma, subscribed for the remaining share and paid £1. Isabella, Richard, and Henry were named as the initial directors. Emma managed the business administration but held no official position in the company. 


Isabella has been accustomed to making all the business decisions independently, and she finds it challenging to have Richard and Henry interfering constantly. She seeks your advice on her rights and responsibilities within the company and particularly wants to know who is responsible for the company's management.


Which one of the following best summarises the correct advice?

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The Companies Act 2006 assigns the legal authority and duty for managing the company to the directors. In this scenario, Richard, Henry, and Isabella, being directors, collectively hold the responsibility for the company's management. Although certain matters can be reserved for shareholders in a general meeting through the company's articles of association, this scenario does not suggest such reservations. Additionally, while employment legislation mandates consultation with employees on specific issues, it does not alter the primary responsibility of the directors for the company's management. 


Key Point: According to the Companies Act 2006, the directors are vested with the authority and duty to manage the company. This statutory framework ensures that directors, rather than shareholders, are principally accountable for day-to-day management decisions unless specific provisions in the articles of association state otherwise. This separation of roles ensures clear governance and operational efficiency within a corporate structure.

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