Practice answer bank 375
Answer 46
(a) Since they make contracts as agents of the company and have control of its property, directors are
said to be akin to trustees and therefore owe fiduciary duties to the company. A fiduciary duty is
one based on common law principles of trust and honesty. Therefore a director must act bona fide
and honestly and not seek any personal advantage when dealing with the company.
(b) Jeremy has not disclosed either his interest in FD Ltd or his interest in this particular contract.
Under s177 of the Companies Act the interest should have been stated at the board meeting that
Jeremy attended which approved the contract. It was not. It should also have been declared under
s182 of the Companies Act once it had occurred – but it was not either. He will therefore have to
account to KL Ltd for any profit that he makes on the transaction and he may also be subject to a
fine. Had he dealt honestly with KL Ltd by declaring his interest and obtaining company approval,
he would have been permitted to retain any profit which is made.
Answer 47
C The just and equitable ground will be applied where the object of the company cannot be achieved.
For example where the company only existed to 'work a particular patent' Re German Date Coffee
Co 1882. The other options are not grounds for the just and equitable winding-up of a company.
Syllabus area G1(b)
Answer 48
D A liquidator is in charge of a voluntary winding-up. The official receiver is in charge of a
compulsory winding-up. An administrator is in charge of an administration.
Syllabus area G1(a)
Answer 49
A The initial disposal of the proceeds of a crime is known as placement.
Syllabus area H1(c)
Answer 50
B No expectation of profit is a valid defence to a charge of insider dealing. The other options are not
valid defences.
Syllabus area H1(a)
Answer 51
(a) Money laundering is the term given to attempts to make the proceeds of crime appear respectable.
It covers any activity by which the apparent source and ownership of money representing the
proceeds of crime are changed so that the money appears to have been obtained legitimately.
(b) Gloria has assisted in Vlad's money laundering, so may be convicted of money laundering under
the Proceeds of Crime Act. She may also be found guilty of failure to report under the Proceeds of
Crime Act.
(c) Vlad is guilty of the main offence of money laundering under the Proceeds of Crime Act.