ExpertMedium2 marksMultiple Choice
Management, administration and the regulation of companiesSection BSyllabus FCorporate and Business Law
ACCA · Question 55 · Management, administration and the regulation of companies
Scenario: 'Quantum Lithography PLC' manufactures microchips. The CEO, David, secretly sets up a rival consulting firm and diverts a lucrative government contract away from Quantum to his new firm. Another director, Fiona, fails to declare her 30% shareholding in a company that Quantum just signed a major supply contract with.
Question: Which specific statutory duty under the Companies Act 2006 has David breached?
Scenario: 'Quantum Lithography PLC' manufactures microchips. The CEO, David, secretly sets up a rival consulting firm and diverts a lucrative government contract away from Quantum to his new firm. Another director, Fiona, fails to declare her 30% shareholding in a company that Quantum just signed a major supply contract with.
Question: Which specific statutory duty under the Companies Act 2006 has David breached?
Answer options:
A.
Duty to act within powers (s.171).
B.
Duty to promote the success of the company (s.172).
C.
Duty to avoid conflicts of interest (s.175).
D.
Duty not to accept benefits from third parties (s.176).
How to approach this question
Identify the action: taking a corporate opportunity for personal gain. Match this to s.175 CA 2006.
Full Answer
C.Duty to avoid conflicts of interest (s.175).✓ Correct
Under section 175 of the Companies Act 2006, a director must avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. This specifically applies to the exploitation of any property, information, or opportunity (such as diverting a contract).
Common mistakes
Choosing s.172 (promote success). While technically breached, exam questions look for the *most specific* statutory duty breached, which is s.175.
Practice the full ACCA LW — Corporate and Business Law Practice Exam 2
60 questions · hints · full answers · grading
More questions from this exam
Q01A dispute has arisen between 'AquaHarvest Ltd' and a supplier over a £150,000 contract for specia...MediumQ02A judge is interpreting a 19th-century statute regarding 'carriages on the highway' to determine ...MediumQ03Under the Human Rights Act 1998, certain rights can be claimed by corporate entities as well as n...MediumQ04'AeroDyne Drone Logistics Ltd' sends an automated email to a potential client stating: "We can pr...EasyQ05'EcoVertical Farms Ltd' leases a warehouse from a landlord. During a severe economic downturn, th...Hard