ACCA LW · Chapter 10 · Question 5 of 13
How is the standard of care, skill and diligence required of a director under s174 Companies Act 2006 measured?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) By the general knowledge, skill and experience reasonably expected of a person carrying out the director's functions, and also the general knowledge, skill and experience the director actually has
Explanation
Section 174 sets a dual objective and subjective test, derived from s214 Insolvency Act 1986 and applied in Re D'Jan of London. The minimum is the objective standard expected of a reasonably diligent person carrying out the director's functions; a director with greater actual skill (such as a qualified accountant) is held to that higher standard. Honesty alone is not enough.
More Directors, company secretary and meetings MCQs
- Q7Under the Company Directors Disqualification Act 1986, when must the court make a disqualification order?
- Q8Which of the following statements about the company secretary is correct under the Companies Act 2006?
- Q9Under the Companies Act 2006, what majority is required to pass a special resolution at a general meeting?
- Q10Which of the following CANNOT be passed by a private company as a written resolution under the Companies Act 2006?
- Q11Members of a company holding at least 5% of the paid-up voting share capital deposit a request for a general meeting. Under s303-304…