These are ACCA F4 Global (CL/LW) Corporate and Business Law MCQs for Part-E of the Syllabus “Capital and the financing of companies”.

These multiple-choice questions (MCQs) are designed to help ACCA F4 Global students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have studied the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F4 Global (CL/LW) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCA – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Corporate and Business Law
Paper:	F4 Global – CL/LW
Chapter:	Loan capital
Chapter Number:	16 of the Practice and Exam Kit
Syllabus Area:	E – “Capital and the financing of companies”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part E of the Syllabus; “Capital and the financing of companies” of ACCA F4 Global (CL/LW) Corporate and Business Law Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate.

Result

Students will get their F4 Global CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “( select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

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F4 (GLO) - Chapter 16 - Part E - MCQs

Course: ACCA - Association of Chartered Certified Accountants
Subject: F4 (LW/CL) (GLOBAL) - Corporate And Business Law
Syllabus Area: E - Capital and the financing of companies
Chapter in Kit: 16 - Loan capital
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 15

Which of the following is true regarding the borrowing powers of companies?

The Companies Act 2006 sets a maximum limit on the amount each type of company may borrow

All companies registered under the Companies Act 2006 have an implied power to borrow

The members of public companies registered under the Companies Act 2006 must authorise the company to borrow

2 / 15

In relation to debentures issued as a series, which of the following describes the term pari passu?

Older debentures rank above newer debentures

All debentures rank equally

Higher value debentures rank above lower value debentures

3 / 15

Which of the following differences between share capital and debentures is correct?

Dividend payments on shares is tax-deductible, interest payments on debentures is not tax- deductible

In the event of liquidation, shareholders are paid their investment back before the debentureholders

Interest payments on debentures is mandatory, dividend payments on shares is discretionary

4 / 15

Which of the following charges on the same asset, all of which have been properly registered, has the highest priority? Assume all chargeholders are unaware of the other charges.

A floating charge with a value of $5,000 registered on 1 January 20X1

A floating charge with a value of $7,000 registered on 1 March 20X1

A fixed charge with a value of $2,000 registered on 1 February 20X1

5 / 15

Which of the following events will cause a floating charge to crystallise?

The chargee appointing a receiver

Sale of the assets subject to the charge

Resignation of the finance director

6 / 15

How many days after creation must a charge be registered in order for it to be valid and enforceable?

7 / 15

Which of the following is true concerning late registration of a company charge?

A charge may be registered late, but only if the permission of the Registrar of Companies is obtained

A charge may be registered late if it does not prejudice the creditors or shareholders of the company

A charge may not be registered late

8 / 15

Which of the following statements regarding directors' borrowing powers is correct?

Where directors borrow for a non-business purpose, the loan contract is unenforceable by the lender

Where directors borrow for a business purpose, the loan contract is unenforceable unless it is supported by a company charge

Where directors exceed their bowering powers, the company may ratify the loan contract if it is within the capacity of the company

Where directors borrow a greater amount than they have the power to, the loan contract is unenforceable by the lender

9 / 15

Which of the following MUST be created using a debenture trust deed?

Debenture stock

Series debentures

A single debenture

10 / 15

Which TWO of the following are advantages of using a debenture trust deed?

The deed creates a charge or charges over the company's assets which creates security
A single trustee of the debentureholders is appointed so the company only has to deal with one person
Debentures covered by a debenture trust deed have a higher priority of repayment on liquidation than debentures not covered by a deed
The process of selling a debenture covered by a debenture trust deed is substantially faster than the process of selling a debenture not covered by a debenture trust deed.

1 and 4

1 and 2

2 and 3

3 and 4

11 / 15

Which of the following statements regarding the differences between loan capital and share capital is correct?

Unlike loan capital, share capital does not have to be repaid

Share capital offers the holder more security than loan capital

Share capital is transferable but loan capital is not

Loan capital has voting rights attached but share capital does not

12 / 15

Which of the following statements regarding the differences between loan capital and share capital is correct?

There are statutory restrictions on redeeming shares, there are no statutory restrictions on redeeming debentures

A public sale of shares is known as a prospectus, the public sale of debentures is known as a listing

A shareholder is an owner of the company, a debentureholder is not

Shares may not be issued at a discount to their nominal value, debentures may be issued at a discount to their nominal value

13 / 15

Which of the following is the purpose of a 'negative pledge' clause on a company charge?

To prevent the company from issuing a subsequent charge on the same asset

To prevent the company from using the asset without the chargee's permission

To ensure the company pays the proceeds from the sale of the asset to the chargeholder

To prevent the company from selling the asset without the chargee's permission

14 / 15

The holder of a floating charge may protect their priority by including in the terms of the charge a clause that prevents the borrower from creating a fixed charge on the same asset.

What is the name given to such a clause?

Equitable clause

Injunction clause

Negative pledge clause

Positive pledge clause

15 / 15

Which TWO of the following are true concerning the registration of company charges?

Charges must be registered within 21 days of creation
If a charge is not registered on time then the company and its officers who created the charge are liable to a fine
The Registrar of Companies is permitted to rectify a mistake in the registration documents of a charge with the permission of the chargeholder
Non-registered charges are valid and enforceable with the permission of the Registrar of Companies

3 and 4

1 and 4

1 and 3

1 and 2