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ICAEW ACA Law Certificate: Key Questions and Answers for Exam Preparation, Exams of Social Sciences

United States International UniversitySocial Sciences

A compilation of key questions and answers related to the icaew (aca) law certificate, designed to aid students in exam preparation. It covers various topics including company law, contract law, and employment law, offering concise explanations and practical insights. The material is structured to facilitate quick review and comprehension of essential legal concepts, making it a valuable resource for students pursuing the aca qualification. It includes topics such as duties of company directors, contract terms, and employment rights, providing a comprehensive overview of relevant legal principles.

Typology: Exams

2025/2026

Available from 11/19/2025

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ICAEW (ACA) LAW CERTIFICATE QUESTIONS AND
ANSWERS
Within how many weeks must an administrator hold a creditors meeting? - Answer -10
weeks.
However no creditors meeting is necessary where the administrator considers there to
he insufficient property to make a distribution to the unsecured creditors over and above
the ring-fenced asset distribution and at least 10% of creditors do not require one
Within what time period must a private company give notice of its refusal to register a
requested transfer of its shares - Answer -2 months
It must also give reasons for its refusal
Defences for money laundering under the proceeds of crime act 2002 - Answer --
Person genuinely did not know or suspect money laundering was taking place
-Person made an authorised disclosure
-Duress or coercion
Contract of service vs contract for services - Answer -Contract FOR services = self-
employed (can be a company) independent contractor
Contract OF service = employee
Can an independent contractor claim wrongful dismissal ? - Answer -No. Only
employees can claim wrongful dismissal.
Wrongful dismissal is the breach of an employment contract
Mutuality of Obligation - Answer -Employer is obliged to provide work and the
employee is obliged to perform the work provided (if lawful and reasonable)
Must be present in order for a contract of employ to exist
What needs to be present for a contract of service (employment contract) to exist -
Answer -Mutuality of obligation
Control (of employee by employer)
Personal service
[intention to create legal relations]
Multiple test (employee or contractor) - Answer -Provision of tools or equipment
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Download ICAEW ACA Law Certificate: Key Questions and Answers for Exam Preparation and more Exams Social Sciences in PDF only on Docsity!

ICAEW (ACA) LAW CERTIFICATE QUESTIONS AND

ANSWERS

Within how many weeks must an administrator hold a creditors meeting? - Answer - 10 weeks. However no creditors meeting is necessary where the administrator considers there to he insufficient property to make a distribution to the unsecured creditors over and above the ring-fenced asset distribution and at least 10% of creditors do not require one Within what time period must a private company give notice of its refusal to register a requested transfer of its shares - Answer - 2 months It must also give reasons for its refusal Defences for money laundering under the proceeds of crime act 2002 - Answer -- Person genuinely did not know or suspect money laundering was taking place

  • Person made an authorised disclosure
  • Duress or coercion Contract of service vs contract for services - Answer - Contract FOR services = self- employed (can be a company) independent contractor Contract OF service = employee Can an independent contractor claim wrongful dismissal? - Answer - No. Only employees can claim wrongful dismissal. Wrongful dismissal is the breach of an employment contract Mutuality of Obligation - Answer - Employer is obliged to provide work and the employee is obliged to perform the work provided (if lawful and reasonable) Must be present in order for a contract of employ to exist What needs to be present for a contract of service (employment contract) to exist - Answer - Mutuality of obligation Control (of employee by employer) Personal service [intention to create legal relations] Multiple test (employee or contractor) - Answer - Provision of tools or equipment

Integration in organisation Payment of regular wage or salary Holiday pay and sick pay Tax and NI arrangements Length and exclusivity of contract Disciplinary action Work is performed on an 'as and when required' basis - Answer - Independent contractor. There is no mutuality of obligations therefore cannot be an employee Duties of employees - Answer - Obey lawful and reasonable instructions Perform job personally (unless contract allows otherwise) Exercise reasonable care and skill Maintain mutual trust and confidence Fidelity (loyalty) and good faith Confidentiality and statutory duties Duties of Employers - Answer - Provide safe working environment Pay agreed wages (or reasonable, if not explicitly agreed) Duty of mutual trust and confidence Statutory Notice Period (where no explicit provision) - Answer - 1 month - 2 years: 1 week 2 - 12 years: 1 week per year of continuous employment More than 12 years: 12 weeks With what period must an employee submit a claim for UNFAIR dismissal - Answer - 3 months from the effective date of termination i.e. the last working day How long does an employee have after dismissal to require the employer to provide a written statement of the reasons for their dismissal - Answer - Within 14 days of their dismissal Within what period of time following the breach of an employment contract can an action for WRONGFUL dismissal be brought? - Answer - 6 years. The equivalent period for unfair dismissal is 3 months Conditions to claim statutory redundancy payment under the Employment Rights Act 1996 - Answer - 1. Be an employee

  1. Have two years continuous service
  2. Dismissal by reason of redundancy
    • business/workplace closure, reduced need for particular work
  3. Not excluded (apprentices, police force, gross misconduct)

A company may agree to enter into a liability limitation agreement with an auditor to limit the auditor's liability to a fair and reasonable amount Are directors agents of the members or the company? - Answer - The board of directors collectively is the agent of the company. They are not subject to members instructions and must do what is in the interest of the company (ie the principal) Ordinary resolution or special resolution: alteration of articles - Answer - Special resolution (75%) Ordinary resolution or special resolution: changing company name - Answer - Special resolution Ordinary resolution or special resolution: reducing capital - Answer - Special resolution. Ordinary resolution or special resolution: ratify a directors action that was in breach of duty - Answer - Ordinary Ordinary resolution or special resolution: remove a director from office - Answer - Ordinary resolution True or false: Directors must only use their powers for the purposes for which they were granted - Answer - True Express actual authority is created by - Answer - Explicit language in writing or orally from the principal to the agent Implied Actual Authority - Answer - Based on the agent's reasonable understanding of the principal's instructions Unrestricted Objects - Answer - CA06: unless specifically restricted, board of directors may exercise 'all the powers of the company' Seven General duties of a company director - Answer - 1. Act within powers

  1. Promote success of the company
  2. Independent judgement
  3. Reasonable skill, care and diligence
  4. Avoid conflicts of interest
  5. Benefits from third parties
  6. Interest in a transaction Duty of Directors: act within powers - Answer - Act in accordance with constitution and exercise powers for purpose granted. E.g. issuing shares to raise finance rather than issuing shares to block a takeover bid

Duty of Directors: promote success of the company - Answer - Act in good faith in the long term interest of the members Consider: employees, business relationships, environment, standards Duty of Directors: independent judgement - Answer - Exercise powers according to own sound judgement. Avoid being unduly influenced by external parties Duty of Directors: reasonable skill, care and diligence - Answer - Act with the skill, care and diligence that would be expected by a reasonable person with:

  • the skills, knowledge and experience expected of a director, AND
  • the actual skills, knowledge and experience of that director (higher standards expected of a qualified accountant) Duty of Directors: avoid conflicts of interest - Answer - A director's own interest must not (actually or potentially) conflict with the company's interests. In a PRIVATE company, directors may authorise what would otherwise be a breach of duty (assuming no express condition in articles). In a PUBLIC company, the directors can only authorise if expressly provided for in articles Duty of Directors: interest in a transaction - Answer - Disclose all interests in a transaction to the full board at earliest opportunity. Contract will become voidable at the option of the company if not disclosed properly. Director may be held personally liable Duty of Directors: benefits from third party - Answer - Duty not to accept benefit from third party ie bribe or inducement inc corporate hospitality Refusal of share transfer by a private company - Answer - Permitted but company must provide notice to the proposed transferee (the would-be buyer) with reasons for the refusal within 2 months Company and officers can be fined if they do not comply Alteration of share capital - Answer - Subject to restrictions in articles, shares may be
  • subdivided or consolidated
  • redenominated in another currency by passing an ordinary resolution
  • (additional shares can be) allotted CONDITIONS Must give notice to registrar of the alteration with a statement of capital within ONE MONTH

Shareholders notified in writing Offer must be open for 21 days Permitted consideration for issue of new shares in a public company - Answer - Money: but at least 1/4 of nominal value and all of the premium must be paid. Subscribers must pay entirely in cash Goods: independently valued within 6m before allotment and received with 5y Permitted consideration for issue of new shares in a private company - Answer - Money Goods Services Knowhow No requirement for subscription to be paid up. No quarter-paid up rule for share capital or wholly-paid up rule for share premium Voting power required to authorise an application to the court for the appointment of an administrator - Answer - 50% - ordinary resolution is sufficient Who is entitled to propose a company voluntary arrangement? - Answer - The directors An administrator A liquidator Minimum amount available for distribution for ring-fencing to apply - Answer - Provisions only apply where the fund available for distribution is at least £10, What track in the County Court deals with claims under £10,000? - Answer - The small claims track Who usually decides disputes in arbitration? - Answer - An independent arbitrator, often agreed by the parties. What are the conditions under which a third party can benefit from a contract? - Answer

  • If they are expressly identified and the contract gives them a benefit. hat is the maximum sanction that can be imposed if convicted of fraud under the Fraud Act 2006 - Answer - 10 years' imprisonment and an unlimited fine Criteria for establishing constructive dismissal - Answer - The employer committed a serious breach of contract. The employee left because of the breach and they did not affirm the contract.

Data subjects according to Data Protection Act 2018 - Answer - Individuals whose data is is held on either/both computer-based and manual information systems Personal data according to DPA 2018 - Answer - Data which may identify an individual (not a company). Includes facts and opinions about the data subject and intentions of the data controller Time frame in which the Data Commissioner must be notified of a breach of the DPA 2018 that affects rights and freedoms of individuals - Answer - 72 Hours Fine for non-compliance with DPA 2018 - Answer - Criminal conviction or fine. Fine is capped at the higher of £17.5m or 4% of global turnover Time frame within which a data controller must correct the data it holds about a data subject to avoid non-compliance with DPA 2018 - Answer - 1 month Conditions for a 'special relationship' to exist and therefor a duty of care arises - Answer - 1. Client requests and professional opinion

  1. Opinion is given in a professional capacity
  2. The client (reasonably) relies on the opinion given
  3. Client suffers economic loss, as a result of the reliance on the opinion Auditor's liability for the opinion given on financial statements - Answer - Auditor owes no duty to any investor/shareholder in the company. Auditor is liable to company itself only. If opinion/report was prepared for general circulation, there will be no duty of care. A duty of care will arise if the information is prepared in the knowledge that a particular "person" was contemplating a transactions and would rely on it e.g. considering takeover bid Members voluntary liquidation process (solvent liquidation) - Answer - 1. Directors make a sworn declaration of solvency
  4. Special resolution is passed. Notice of resolution advertised in Gazette within 14 days
  5. Liquidator is appointed by ordinary resolution
  6. Liquidator convenes a meeting within 3 months

Where do all criminal cases start? - Answer - Magistrates' Court. Minor offences will be dealt with entirely by Magistrates' Court but complex cases are referred to Crown Court for trial by judge and Jury When can a third party enforce a contractual term under Contracts (Rights of Third Parties) Act 1999? - Answer - If they both of the follow apply

  • they are expressly identified in the contract
  • the contract states they can enforce it or benefit from it Example: Life insurance: A beneficiary may be a third party with enforceable rights Act does not apply to employment contracts Trading certificate (required for public companies) - Answer - If the company enters into a transaction without obtaining a trading certificate, the transaction is not invalid. Failure to obtain a trading certificate with 12 months of incorporation may lead to compulsory winding up and fines for officers Application should state that the nominal value of company's share capital exceeds the authorised minimum Matters re the directors that need approval from members to be valid - Answer - Service contracts exceeding 2 years Substantial property transactions
  • £100k+ = always needs approval
  • Under £5k de minimis = never required
  • £5k-100k = only needs approval is more than 10% of net assets Loans (with exceptions for minor/ordinary transactions and legal/regulatory expenditure) Payments for loss of office or on retirement What percentage of voting rights is needed to requisition a general meeting - Answer - 5% of paid up share capital with voting rights Written resolutions - Answer - Private companies only A written resolution is one that is signed by the members. Must be passed within 28 days of its circulation. Approval is achieved as follows:
  • usually performed by ordinary resolution = >50% of members must consent
  • usually performed by special resolution = ≥75% of members must consent.

Written resolutions cannot be used for the removal of directors and auditors (requires special notice) Conditions required for a contract for consumer credit - Answer - Agreement must have written evidence of terms, although the terms within it need not actually be written Conditions for a conveyance (transfer) of legal estate in land - Answer - Must be made by Deed Conditions for contract for purchase or sale of land - Answer - Must be in writing to be enforceable Micro-entity - Answer - Balance sheet total ≤ £316,000; turnover ≤ £632,000; 10 or fewer employees Calling general meeting / AGM at short notice. AGM = 21 days notice GM = 14 days notice - Answer - Public AGM requires 100% member approval (voting rights). General meeting requires 95% private 90% for both Following a variation of class rights, what percentage of that share class is required to apply to the court to cancel the variation - Answer - 15% and the members who apply to court must not have voted for it