Stuff To Add

Question 1

European Commission

Answer 1

Formed of commissioners from member states- fulfil executive function

Question 2

European Parliament

Answer 2

Members elected from member states- supervises other EU institutions.

Question 3

European council

Answer 3

Formed of heads of states from member states.

Question 4

European court of justice

Answer 4

Applies EU law and provides decisions and rulings that are binding on the parties in the case

Question 5

Secondary sources of law in the EU

Answer 5

All have force of legislation
Regulation-become part of law of each member nation
Directives-issues to member states to change their law wishing a specified period. Issued by council and commission.
Decision-addressed to an entity (person/state/Company). Immediately binding.

Question 6

Main bodies of the FEE

Answer 6

3
General assembly
Council
Executive

Involved in:
Money laundering
Banking and insurance
Company law

Question 7

Courts structure

Answer 7

Bottom-
1. Magistrates court
2. County Court
3. Crown Court
4.High Court
5.the Court of Appeal
6.the Supreme Court
7.the European Court of Justice
Top

Question 8

Ratio decidendi + Obiter Dicta

Answer 8

For courts to bind they need to be binding by a higher court.

Rad: reason for decisions being made. these are binding.
0D: space comments made by deciding judge in passing.

Question 9

Shariah law

Forbidden things

Answer 9

Apostasy-conversion to another religion.
Blasphemy- criticism of the Prophet Muhammad.
Diet-pork is prohibited.

Question 10

Types of threat (CIMA guidelines)

Answer 10

Self-interest: obvious
Self-review: error due to bad re-evaluation of own or colleagues work.
Advocacy: Risk that an accountant promotes a clients position too much.
Familiarity: long or close relationship with client. Too ready to be nice/accept
Intimidation: put lots of pressure on them.

Question 11

Vicarious liability

Answer 11

Liability for torts of others because of relationship.

Arises:

1. Relationship employer-employee.
2. Employees tort during employment.

Question 12

Notice of dismissal

Answer 12

One month-2 years: 1 week minimum
2-12 years: 1 week per year
12 years+ : 12 weeks

Question 13

Time off work

Answer 13

Employees Allowed for:

Trade union duties 
If redundant -look for other job
If Trade union official-paid time off
If for public duties- iE army/magistrate
Employees suspended on medical grounds

Question 14

Sick pay

Answer 14

Pay employees for up to 28 weeks.

Paid for time of whilst recovering from occupational disease.

Question 15

Limited liability partnership requirements:

Answer 15

Files notices with registrar, such as when members leave and an annual return.
Sign file accounts
Assign auditors if appropriate

Question 16

Promoter duties and rights

Answer 16

Promoter is person who Forms a company.

Duty to

1. Account of any benefits he gets
2. Not put themselves in a position of conflict
3. Provide full info on all transactions

Avoid liability by:

1. Draft contract before company is formed
2. If finalised, allowe for novation(new contract that overrides)
3. Can buy off the shelf company
4. Form company ahead of business activities.

Question 17

Ultra vires

Answer 17

Means beyond capacity.

Scenario 1:
An act restricted by the company’s objects permitted by a director.
This is allowed if third party acted in good faith.
ALSO
Scenario 2:
When delegates legislation is declared to be void. Because delegates body abused power.
Beyond c

Question 18

Professional qualities of an accountant:

Answer 18

1. Independence: “independent mind”
   Ignoring things that don’t affect completion of work
2. Scepticism(not taking things at face value)
   Question information given to them
   Makes sense? Other supporting? Where did it come from? Why was it given to me?
3. Accountability
   Accountable for judgements and decisions
4. Social responsibility
   Integrity/respect/courtesy/due care

Question 19

Board structures in different countries

Answer 19

Mainly Unitary: UK and USA

Mainly Two tier board: France and Germany.
1 supervisory
Responsible for: safeguarding stakeholder interests
2 management comittee
Responsible for: independently running the business/meets regulation/prepares resolution/provides financial services stements.

Question 20

IFAC: International Federation of accountants

Answer 20

Mission: to develop high standards of professional accountants and enhance quality of services.

Ethical standards.

Question 21

International standardisation organisation (ISO)

Answer 21

Business process standardisation.

Largest issuer of international standards.
With members from 162 countries.

You can be ISO:
Certified/registered
Compliant

To do with process.

Question 22

Tort

Answer 22

Tort-a civil wrong. Can be sued for compensation/damages.

Can be complete strangers.

Not a breach of contract.
Not a crime.

Question 23

A representation

Answer 23

Statement or fact made by one party to the other before the contract, and made to induce the other part to enter into it.

Misrepresentation- same as above but false.

Question 24

Contra Proferentum rule.

Answer 24

“Against he who is relying”

If an exclusion clause is unclear, it will be interpreted against person relying on it.

Because liability can only be excluded by clear words.

Question 25

Statement of Written Particulars:

Answer 25

"Contract" must be given within two months of beginning. Any changes should be notified within 1 month. ``` Include: Name of ee and er Date of start Service from previous employer part of this employment. Pay I was in place of work Any holiday Sick leave Pensions Length of notice Title job ```

Question 26

Written resolution

Answer 26

``` Any decision By private company can pass except removing a director or an auditor before the term of office has expired. ```

Question 27

Directors

Answer 27

Statutory duties: Act within their powers Promote the success of the company Exercise independent judgement Exercise reasonable skill, care, diligence Avoid conflicts of interest Not to accept benefits from third parties Declare an interest in proposed transaction

Question 28

Types of directors | Number of directors

Answer 28

5 1. Shadow directors-avoid legal responsibility. 2. Alternate directors-vote/attend on behave of another. 3. Executive directors-performs specific role. 4. Non-executive directors-not perform in general management. 5. Managing director-carries out day to day activities. ``` #: Every company at least 1 Public: minimum is 2. Minimum 1 real person. Company can be a director-sends one member to represent company-(for board meeting etc. ```

Question 29

Powers of a managing director

Answer 29

CEO MD same thing in CIMA exam MD has apparent authority, actual authority is whatever the board gives them. No other director has this authority.

Question 30

Rule of majority

Answer 30

Minorities are unable to sue on behalf of the company. The company should see you on behalf the company through majority of its shareholders. Exceptions(minorities can sue) 1. company is acting illegally. 2. Majority shareholders are committing a fraud against the company. 3. where an individual's rights are being infringed. 4. Where directors benefit from their own negligence.

Question 31

Unfairly prejudicial Conduct

Answer 31

Main2: Exclusion of a director. Discrimination against minority Any member can apply to court. Court can do whatever it deems fit

Question 32

Class rights

Answer 32

It is possible to alter class rights: 1. The articles must allow for variation 2. Agreement of 75% of that class of shareholder. Can be challenged by minority interests: 15% within 21 days. ``` Special rights: Dividends Return of capital Voting The right to appoint remove director. ```

Question 33

Governments investigation.

Answer 33

``` For minority protection. Appoint inspector for: Affairs of a company Ownership of a company Suspected infringement by directors Suspected insider dealing. ``` ``` It may appoint inspector if: 1. Company itself applies 2. Members: No less then 200 in mement Hold 1/10 of issues shares If no shares, at least 1/5 of members. 3. If unlawful affairs. ```

Question 34

Financial assistance

Answer 34

``` A company to give assistance to a third party to buy it shares. Ie: Loaning money Acting as guarantor of a loan Purchasing assets at over value. ``` This is not allowed in a public company. Exceptions: If purchasing shares is not main purpose of transaction If it is a bank If it is for benefit of genuine enployees-(directors are not genuine employees)

Question 35

Reducing share capital

Answer 35

``` Private company: Court not needed Special resolution Statement of solvency within 15 days Copy sent to registrar. ``` Public needs court approval + member/creditor can object.

Question 36

Dividends distributable.

Answer 36

Difference between net assets - (share capital + Undistributable reserves. ``` Undistributed reserves: Share Premium account Capital redemption reserve Revaluation Reserve Any reserve restricted be the articles. ```

Question 37

Redemption and purchase by a company of its own shares.

Answer 37

``` A company cannot acquire its own shares. Exceptions: 1. A quarter order 2. Redeemable shares 3.under specific procedures ```

Question 38

FRC

Answer 38

Financial Reporting Council UK Has lead role in ethical reporting Monitors accountability of prof acc. Work is undertaken by two sub bodies: (POB) The professional oversight board for accountants. (Regulates specific activities: registration/training/cpd/discipline) (APB) The auditing practices board. (Mainly about auditing practices: standards UK/advice/international legislation/public understanding)

Question 39

IFAC

Answer 39

International Federation of Accountants (IFAC) Published: Code of ethics for professional accountants. 4parts: PartA: General application PartB: prof acc. In public practise PartC: prof acc. In business

Question 40

The seven principles of public life

Answer 40

1. Selflessness: act in interest of public 2. Integrity: avoid actions that would put them in a position of influence 3. Objectivity: choices should be based on merit. 4. Accountability: responsible for actions 5. Open about actions and decisions. 6. Honesty: share private interest 7. Leadership: show example and follow 6 rules.

Question 41

CIMA's personal development cycle.

Answer 41

``` Define-current + desired roles Assess-find knowledge gaps Design-learning program Act-do the learnings activity Reflect-what was learnt Evaluate-actual development vs objectives ```

Question 42

Confidentiality

Answer 42

Care must be taken not to share info. ``` Exceptions: Permitted by law Authorised by client or employer Required by law Permitted by professional duty or right.(protect accountant in an investigation) ```

Question 43

King report

Answer 43

South Africa's attempt to deal with corporate governance issues

Question 44

Symptoms of poor corporate governance

Answer 44

1.domination by a single individual | 2.

Question 45

Promissory Estoppel

Answer 45

If someone makes s promise, (unsupported by consideration), intended to be binding and acted upon, other party relies or acts on it. Then 1st party is estopped to retract promise. Unless party 2 can be restored to original position.

Question 46

Corporates Governance

Answer 46

Effects of good governance: Effective controls over operations Business efficacy Management are held accountable

Question 47

Acceptance of an offer

Answer 47

Not effective unless communicated to offerer. Unless postal rule: as soon as posted,

Question 48

Capari decision

Answer 48

Auditors do not owe a duty of care to the public at large who rely on the info for investment decisions.

Question 49

Duty of care during take over bids

Answer 49

A higher duty of care is expected when giving advice on company takeovers then when advising on an audit.

Question 50

Essentials of a contract

Answer 50

Agreement Consideration Intention

Question 51

Binding in honour

Answer 51

Express denial of intention to create legal relations.

Question 52

Condition

Answer 52

Gives the right to damages and repudiate contract.

Question 53

Warranty

Answer 53

Gives right to claim for damages

Question 54

Consumer

Answer 54

A part to a contract deals as a consumer if: He neither makes the contract in the course of a business nor holds himself as doing so and The other party holds himself as going so and Goods are ordinarily supplied for practice use or consumption.

Question 55

An injunction

Answer 55

Purpose: | To enforce a negative restraint in a contract.

Question 56

Termination by notice

Answer 56

Cannot be less then the contract. If non given: reasonable notice. Can be given without reason-unless contract requires otherwise.

Question 57

Termination by dismissal

Answer 57

Summary dismissal and constructive dismissal are ones without proper notice. Summary: not proper notice (employee bad) Constructive: employee resigns (employer bad)

Question 58

Wrongful dismissal

Answer 58

When summary dismissal is unjustified. Remedy: damages based on loss of earnings.

Question 59

Unfair dismissal.

Answer 59

Need: Employed for 2 year Dismissed Remedy: what would have been earned if proper notice had been given.

Question 60

Limited liability companies

Answer 60

Limited by shares: Only amount unpaid by shares Limited by guarantee: Constitution states how much each member will pay.

Question 61

Unlimited liability

Answer 61

Can only be private.

Question 62

Public and Private companies

Answer 62

Public: Registered with registrar. £50,000 minimum capital Raise capital by selling shares 2 public. 6 months to to produce accounts. Must obtain trading certificate, before trading. Private: cannot offer securities to public. Companies limited by guarantee and that are unlimited can only be private. No minimum capital Cannot sell shares to public. 9 months to produce accounts.

Question 63

Retirement of directors.

Answer 63

In the model article for public companies: 1. Every year half should retire 2. Retiring directors can be re-elected 3. Longest in first out. 4. Appointed mid year + not interested in re-election: not included in Calc for those required to be re-elected. At first AGM: all retire

Question 64

Quorum

Answer 64

Minimum number of members at a meeting. | If undecided this is 2.

Question 65

Rules for calling a general meeting

Answer 65

Share holding Public: 10% of paid up Private: 5 or 10% Requisition: signed with registered office or send by email with objective Date: Notice of info on meeting must be sent out within 21 days of requisition. Meeting must be held within 28 days of the notice.

Question 66

Registration of charges

Answer 66

Must be registered within 21 days of creation by the registrar. Rectification: court can extend registration of error made by mistake. Failure to deliver particulars: mistake is responsibility of company-so fine. On time correctly registered has priority over earlier charge filled late. Company must keep copy if documents creating charge.

Question 67

Disadvantages of floating charges

Answer 67

Cannot be certain which asset will form security until crystallisation. Even crystallisation, others come 1st: Creditor/landlord Preferential debts Holder of a fixed charge Creditor retains legal ownership until paid. May be automatically invalid if created and the company is bankrupt after 12m/1y.

Question 68

Performance of the contract

Answer 68

Discharge by performance: Only by complete and exact performance. Exceptions Substantial performance

Question 69

Maternity leave | Time

Answer 69

52 weeks

Question 70

Paternity leave time

Answer 70

1-2 weeks within 56 days of birth

Question 71

Documents a company needs to send to registrar

Answer 71

``` Applications for registration 1 name 2. Location of reg office (Wales, eng..) 3. Limited by shares or guarantee 4. Private or public 5. Intends address of reg office ``` ``` Memorandum Statement Proposed officers Statement of compliance Statement of capital and initial shareholdings/ or guarantee Few ```

Question 72

Registration number?

Answer 72

Given to company when incorporated (after documents are sent in.

Question 73

CIMA fundamental principles:

Answer 73

Integrity (straightforward/consistent) Objectivity Professional competence and due care Confidentiality

Question 74

Treasury shares Deferred shares

Answer 74

T: when a Plc is allowed to purchase its own shares out of distributable profit. Up to 10% allowed. And can issue these easily.

Question 75

Deferred shares

Answer 75

Paid after preference and ordinary shares get the %

Question 76

Public company allotment of shares

Answer 76

Public offer: public subscribes directly to the company Offer for sale: offer to public to apply for shares based on prospectus Placing: small number large blocks to people or institutions, who have previously agreed a price.

Question 77

What causes crystallisation of a floating charge?

Answer 77

``` Liquidation Cessation of the company's business Active intervention of chargee Charge contract Crystallisations of another floating charge if it stops the business, ```