Gerald's part of the exam Flashcards
70% (25 cards)
What is a company in NZ law?
A separate legal person that can own property, sue, and be sued.
What duties do directors owe to a company?
Act in good faith, use reasonable care and skill, avoid reckless trading.
What is reckless trading?
Running the business in a way that could cause serious loss to creditors.
What is the director’s duty of care?
To act with the care and diligence a reasonable person would use.
What is a company constitution?
An optional rulebook for how the company is governed.
What are mandatory rules in a constitution?
Rules that apply no matter what the constitution says (e.g., director duties).
What are default rules in company law?
Rules that apply unless changed by the constitution.
What are optional rules in a constitution?
Extra rules a company can choose to include (e.g., dividend rules).
What are pre-emptive rights?
The right of shareholders to buy new shares before outsiders can.
What can a minority shareholder do if treated unfairly?
Apply to the court for protection against unfair conduct.
What is a derivative action?
When a shareholder sues on behalf of the company for wrongdoing.
What is a buy-out right?
A shareholder can ask to be bought out if major changes are made they disagree with.
Can shareholders access company information?
Yes, they can request financial records and meeting minutes.
What is a partnership?
A business between 2 or more people working for profit.
Do partnerships have legal personality?
No — the partners are personally liable.
What does ‘joint and several liability’ mean?
Each partner can be held responsible for the whole debt.
How is a partnership formed?
By agreement or behaviour — especially sharing profits.
Can one partner bind the others?
Yes — partners are agents of each other in business matters.
How can a partnership end?
Agreement, notice, death, or breach of contract.
What is the Financial Markets Authority (FMA)?
NZ’s regulator for financial markets and services.
What does the FMA do?
Monitors financial markets, enforces the law, protects investors.
What is the Financial Markets Conduct Act (FMCA)?
A law that controls how capital is raised and how investments are offered.
What’s the purpose of the FMCA?
To promote confident and informed participation in financial markets.
What does the FMCA require for offers of financial products?
Clear and honest information for investors.
