NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

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NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

Postby Richtubor » Thu Nov 28, 2019 5:52 am
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NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

21 Guilds of merchants were formed for

supervision of trade

22 Why is it important for company activities to be made public?

To prevent fraud

23 An application to incorporate a company by registration must contain certain information. Which
ONE of the following pieces of information is not required?

The names of the company's proposed Executive Managing Directors.

24 Who was prepared a report on the law of partnership in 1837


25 Under the Joint Stock Companies Act 1856, a company may be formed by .....

7 or more persons

26 Which of the following differentiates a partnership from a company in terms of management

Every partner has the right to take part in management but not so with companies

27 One of the following is not a characteristic of statutory companies

There is no board of directors

28 The Arts Foundation wishes to register a company. Assuming that their application is granted, how
will the company name be written to show that it is limited by guarantee?

Arts Foundation Ltd/Gty

29 Barr. Kalu runs Kalu Chambers, a law firm established in 1990. At inception, Barr. Kalu was the
only employee of the firm. Today, the firm has offices in London, Dubai, Lagos, Abuja and Port Harcourt.
It also employs over 40 lawyers and over 60 support staffs, the law could be

No need to register since he uses his real name

30 Before 1720, the form of authorisation of company formation was by

Grant of a charter

31 Pursuant to S.19 CAMA, the maximum number of partners in a firm of Solicitors is

No maximum number

32 The Registrar of Companies was created under the .........

Gladstone Act

33 ............ metamorphosed into memorandum and article of association in the present day

Deed of settlement

34 In ........ the Attorney General􀳦??s application was dismissed because the law he sought to invoke
had not been invoked for the past 8 decades

R. V. Dodd

35 According to Adam Smith, joint stock companies are not appropriate for one of the following.


36 Which of the following were more popular in the 17th century?


37 Why was the Bubble Act referred to as a 􀳦??dead letter law􀳦???

Because in spite of it, companies sprang up through other means

38 Tha Provisions of CAMA 2004 apply to

All incorporatd Companies

39 A company is an association of a number of people for a common object of economic gain or
profit􀳦??. Identify the problem with this definition.

Not all companies are formed for profit

40 The case of Salomon v A Salomon & Co Ltd established a number of principles. Which ONE of the
following was not a principle established in Salomon?

That a person who owns the vast majority of a company's shares is to be regarded as the principal of the
company or that the company is a trustee for his benefit
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Re: NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

Postby Richtubor » Thu Nov 28, 2019 5:52 am
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1 When does a company become a corporation?

From the date on the certificate of incorporation

2 In .............. the court applied the agency rule and held that the Plaintiff could claim compensation

Smith, Stone and Knight Ltd. V. Birmingham Corporation

3 All Bright Schools Ltd. and Perfumed Mobile Toilets are neighbours. It was discovered that some
noxious liquid emitting from Perfume Mobile Toilet􀳦??s cleaning yard is flowing into All Bright School.
This was brought to the attention of Chief Lagbaja, the owner of Perfumed Mobile Toilets but nothing
was done about it. The situation has become unbearable and Mrs. Akowe, the founder of All Bright has
resolved to seek legal redress. She has engaged your services to file the suit for them. Who are the parties?

All Bright Schools Ltd. V. Chief Lagbaja (trading in the name and style of Perfumed Mobile Toilets

4 Grease Oil Unlimited was incorporated in 1999. The shareholders are John (with 98% shares) and
Janet (with 2% shares). Advise Janet on her liability.

She is liable for Grease Oils debts without any restrictions

5 In the Banque De L􀳦??Afrique case, it was held that

The debts of the company are not the debts of its members

6 Jide is the Chairman, Board of Directors, Chief Executive Officer and majority shareholder of Midas
Gold Ltd. He is also a major creditor to the company. The loan from Jide was used to construct the
company headquarters which was also insured in the name of the company. The headquarters was
destroyed by flood and Jide approached the insurance company for relief. Dissatisfied with their response,
he sued the insurance company. Is his suit likely to succeed?

No because members of a company do not have proprietary right in a company􀳦??s assets

7 In 1825, Rev. Holy was the Archbishop of Canterbury and Head of the Church of England. He died in
1826 after which he was succeeded by Rev. Holiness. Who will be the custodian of all the properties of the
Church of England after the death of Rev. Holy?

The Church of England

8 EFCC arrested Lady Bank, the Director/Chief Executive Officer of River Bank Plc. for financial
crimes. In the course of investigations, it was discovered that the company􀳦??s books had been tampered
with and cost of several properties housing branches to River Bank were inflated and the cost written in
favour of River Bank. Also, it was found out that Lady Bank had awarded several loans to herself and her
cronies from the funds of River Bank. The CBN decided to liquidate River Bank to settle all its liabilities.
Shareholders are opposed to this because it will render their shares of no value. They contend that as
shareholders, River Bank􀳦??s properties belong to them. Advise them

They have no proprietary interest in River Bank􀳦??s properties

9 Give an example of the perpetual succession of a company

If the majority shareholder dies, it remains in existence and the shares pass on to the shareholder􀳦??s

10 One of the following is not a characteristic of a 􀳦??sham􀳦??

A company with a wholly owned subsidiary that does no separate business

11 When a court looks beyond the corporate personality of a company to the members of the company,
it is .............

Lifting the veil

12 Adamu has been appointed by the CAC to investigate the affairs of Money Land Ltd. In the course of
his investigation he found out that Money Land Ltd. was a subsidiary of Cash Country Plc until 31st July
2013. He has applied to have Cash Country investigated but has been refused access on the grounds that
Cash Country Plc is not under investigation by the CAC. Advise him

Pursuant to Section 316 CAMA, Adamu can investigate Cash Country since it was early a holding company
to Money land

13 In line with the ........... a chain of subsidiaries will be treated as a single entity

Group enterprise theory

14 In relation to the 'veil of incorporation' that is a feature of a limited company's separate legal
personality, in which of the following circumstances will a court NOT lift the veil to identify the true
nature of the relationship.

ii) Where the company has been established to circumvent contractual agreements.

15 Which of the following illustrates the principle that lifting the veil cannot be done just to achieve
justice without considering the corporate structure

Ord. v Belhaven Pubs Ltd.

16 Chief and Lady Maka are the only shareholders of Precious Nig. Ltd. The are also the directors
together with their only son Precious. Owing to protracted illness, Chief Maka died on 6th June 2012. The
family decided to give him a befitting burial and buried N50,000,000.00 in the name of the company for
that purpose. The burial took place on Oct. 2nd 2012 and was well attended. The company is still in
business till date with Lady Maka as sole shareholder. Advise on their liability, if any

Pursuant to S. 93 of CAMA, every dierector and officer of Precious Limited is liable for the company􀳦??s
debts from 6th June 2012 till date.

17 Section .............. CAMA was Section 309 of the 1968 Companies Act


18 Shiny Bank Plc. was in serious debt and facing imminent liquidation. At a Board of Directors
meeting it was decided that the company should be wound up. However, before this was brought to the
notice of the shareholders, the directors carried on business as usual and borrowed N500 million to
distribute to themselves as retirement benefits. In line with Williams Leitch Bros. Ltd., the court will infer

The company is carrying on business with intent to defraud

19 Which of the following is NOT a feature of a limited company?

The directors' immunity fromcriminal sanctions

20 Under the Enterprise Promotion Act, the corporate veil of a company may be lifted if

Nigerians are being used to defeat the purpose of the Act
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Re: NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

Postby Richtubor » Thu Nov 28, 2019 5:56 am
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61 Chris was forming a company and entered a contract for sale of 2,000,000 litres of fuel to Manuel at
N100 per litre. The contract was signed in the name of the company. Shortly afterwards, the price of fuel
was reduced to N97 per litre and the Manuel refused delivery. Advise Chris on the status of the contract.

It is a nullity

62 Which of the following cases illustrates the difference between powers and objects of a company.

Introduction Ltd. V. National Provincial Bank Ltd.

63 To ensure that a promoter reaps the fruits of his labour, one of the first things a company must do
upon incorporation is to

Ratify the acts of the promoter

64 There are a number of differences between a public company and a private company. Which ONE of
the following is not a valid difference?

A public company must have at least two members, whereas a private company need only have one member.

65 One of the following cases recognises the validity of pre-incorporation contracts.

Firgos Nig. Ltd. V. Zetters Nig. Ltd

66 What is 'limited liability?'

Limited liability refers to the ability of a member to limit his liability

67 Why was Salomon allowed to claim an inflated price for the company in Salomon V. Salomon?

Because the members knew all the facts of the sale and acquiecesed

68 Why will a promoter be barred from recovering promotion expenses from the company?

Because, pursuant to Kelner V. Baxter, a company cannot enter into any contract before it is formed

69 In meetings to conclude a deal, Ahmed often ensures the other party is aware of power differences
and encourages them to find an advantageous position for personal gain. What negotiation strategy is he


70 The objects of Oyoyo Ltd. are make up services, sale of cosmetics/beauty products and beauty
consultancy. In the course of the MD􀳦??s job at the Lagos Beauty Fair, she was offered the contract of
procuring 3 Hummer Limousine Jeeps to convey dignitaries to the Most Elegant Beauty Contest coming
up the next week. The contract was signed with much publicity between Oyoyo Ltd and Most Elegant
Beauty Limited. Oyoyo Ltd. borrowed N100million for this purpose and purchased the cars but due to the
recession, Most Elegant Beauty Ltd. cancelled the contest and refused to take delivery of the cars. Advise
the MD on the nature of the contract.

The contract is void becaue it is ultra vires

71 In the course of incorporating a company, it was decided that the company should purchase land on
Banana Island. Lucky, the promoter of the property had property in Banana Island which he purchased
for N5million. He informed the directors of the company that he is owner of the property and sold it to the
company for N50million. One of the directors later found out that Lucky paid N5million for the land and
threatened to report Lucky if Lucky did not give him a share of the profit. Following Lucky􀳦??s refusal,
he disclosed it to the other directors who sought to claim from Lucky for excessive sale to the company.
Will the claim succeed

No because having made it clear to the directors that the land is his, he need not disclose what he paid for the

72 How may a promoter escape liability for any profit made in the course of his incorporation of a

By disclosing his interest fully

73 In line with Section 62 CAMA and their fiduciary duty, a promoter must observe ...............

utmost good faith towards the company

74 Ahmed and Musa formed Try It Ltd. and were appointed directors of the company of which the
shareholders were their nephews Taju and Nuru. Before the company was formed they had entered into
contracts on its behalf and have sought your advice on Try It Ltd􀳦??s obligations under the said
contracts since they are now Directors of the company

The company is not bound

75 Which ONE of the following types of company cannot lawfully be created?

A public limited company without a share capital.

76 One of the following is a secret profit made by promoters

profits made by selling property at an excessive sum

77 Chief Massive wanted to form a Company and engaged the services of a law firm run by his son, Oni
to prepare and file all necessary documents. To enable Oni carry out his duties, Chief Massive disclosed
sensitive information about the Company􀳦??s affairs to him. The company was successfully
incorporated but became embroiled in a dispute. The aggrieved parties have decided to go sue the
promoters of the company for relief. They have joined Oni in the suit alleging that he is a promoter. Is this

No because Oni merely offered professional services

78 When does a promoter􀳦??s fiduciary duty to the company start?

Immediately the promoter commences preliminary steps towards the incorporation of the company

79 Ahmed is a promoter of a company. Before the company is fully incorporated, he enters into a
contract on its behalf with a third party. Under the common law, would a valid contract exist and, if so,
who would be the parties to the contract?

A contract would exist and it would be between Ahmed and the third party.

80 For several reasons, it is important to be able to determine whether or not a person is a promoter.
Which ONE of the following reasons is not a valid reason?

Promoters who sign their name on behalf of an unformed company can face criminal liability if the company
is not subsequently fully incorporated
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Re: NOUN TMA Past Questions & Solutions: CLL533 - Company law and business association I

Postby Richtubor » Thu Nov 28, 2019 5:57 am
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41 Which ONE of the following statements is true?

A person can be a shareholder, but may not necessarily be a member

42 How has the likelihood of identical registration been minimized in Nigeria?

By computerized databases

43 Which of the following laws provides for a minimum of 1 person to form a company?

CAMA 2004
CAMA 1999
Companies Act 1968
*** None of the options

44 One of the following is not a necessary step for conversion from private to public company.

Submission of sample stationery of the company

45 XYZ Company holds 50% of voting securities of ABC company, then ,XYZ is

Holding Company

46 In Akinlose & Others V. AIT & Others, the court found the association illegal because

It had over 100 members and was not registered

47 If a company restricts to transfer its shares, then it is:

Private Company

48 S. 27(3) CAMA requires that

Every memorandum of association must be stamped as deed

49 Every Shareholder Is

Member of the company

50 How can you prove that all requirements and prerequisites for incorporation have been met?

Production of certificate of incorporation

51 In R. V. Registrar of Companies Exp. H. M.􀳦??s Attorney General, why was the company

Because it was contrary to public policy to register a company for the purpose of prostitution

52 In ........., registeration of a company was refused on grounds that its proposed business was ultravires

Lasisi V. Registrar of Companies

53 In line with Section 62 CAMA and their fiduciary duty, a promoter must observe ...............

utmost good faith towards the company

54 State one difference between the 1968 Companies Act and CAMA with respect to number of

No dichotomy of minimum number of members in the latter Act

55 Which ONE of the following types of company cannot lawfully be created?

A public limited company without a share capital.

56 Section ........... of CAMA provides the minimum number of persons that may form a company


57 Chris intends to register a company called 􀳦??Christus Chamber of Commerce􀳦??. What type of
company should he register?

A company limited by guarantee

58 Trust Bond Plc. would like to make their shares available for sale to the public. How can this be

Have the shares listed in the Nigerian Stock Exchange

59 What is corporate personality?

Corporate personality means that the company as an entity is regarded by the law as a person.

60 Concerning a company's liability, which ONE of the following statements is true?

Where liability requires a level of knowledge, the liability of employees and directors can be attributed to the
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