100+ Free Applied Corporate Law Practice Questions

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Key Facts: Applied Corporate Law Exam

100

Practice Questions

OpenExamPrep

50%

Passing Score

GIA

3.0 hrs

Time Limit

GIA

Exam Questions

GIA

The GIA Applied Corporate Law postgraduate exam is a proctored 3.0-hour test on the Corporations Act 2001, director duties, shareholder remedies, and insolvency. Pass mark is 50%. This prep features 100 questions.

Sample Applied Corporate Law Practice Questions

Try these sample questions to test your Applied Corporate Law exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which seminal case established the principle of separate corporate personality, confirming that a company is a separate legal entity distinct from its shareholders and directors?

A.Salomon v Salomon & Co Ltd [1897] AC 22

B.Salisbury v Fagan (1993) 11 ACSR 12

C.Lee v Lee's Air Farming Ltd [1961] AC 12

D.Macaura v Northern Assurance Co Ltd [1925] AC 619

Explanation: Salomon v Salomon established that a company registered under the Companies Act is a distinct legal person, separate from its shareholders and directors. Consequently, Mr. Salomon was not personally liable for the company's debts upon insolvency, and his secured debenture took priority over unsecured creditors.

2Under Section 124(1) of the Corporations Act 2001 (Cth), what legal capacity and powers does a company possess upon registration?

A.A company has limited capacity defined strictly by its constitution, and any acts beyond those objects are void under the ultra vires doctrine.

B.A company has the legal capacity and powers of an individual, both inside and outside this jurisdiction, as well as the power to issue shares and debentures.

C.A company has the legal capacity of a partnership, requiring all directors to consent personally to execute binding agreements.

D.A company's legal capacity is restricted to trading actions and does not extend to holding real property or granting floating charges.

Explanation: Section 124(1) of the Corporations Act 2001 (Cth) explicitly grants a company the legal capacity and powers of an individual, including the power to issue and cancel shares, issue debentures, and grant security interests. This abolished the common law doctrine of ultra vires for companies registered in Australia.

3In Lee v Lee's Air Farming Ltd [1961] AC 12, how did the Privy Council apply separate corporate personality to a worker's compensation claim?

A.It decided that worker's compensation only applies to non-corporate partnerships and was thus inapplicable to incorporated air farming businesses.

B.It ruled that because Lee held 2,999 of the 3,000 shares, the company was a sham and he was personally liable for his own injuries.

C.It held that the company was a separate legal entity, meaning Lee could act in one capacity as director to employ himself, and in another capacity as employee.

D.It held that Lee's role as governing director precluded him from being an employee because a person cannot contract with themselves.

Explanation: The Privy Council in Lee's case held that because the company was a separate legal entity from Mr. Lee, it was possible for the company to enter into a contract of service with him. Therefore, he was an 'employee' of the company, and his widow was entitled to worker's compensation following his death in a work-related aircraft crash.

4What was the key ruling in Macaura v Northern Assurance Co Ltd [1925] AC 619 regarding a shareholder's relationship to corporate assets?

A.The separate corporate personality is disregarded when insuring physical assets, allowing sole shareholders to claim directly for corporate losses.

B.A creditor of a company has a proprietary interest in the company's inventory and can maintain an insurable interest ahead of the company.

C.Shareholders own a proportional percentage of corporate assets and can insure them under their personal insurance policies.

D.A shareholder has no legal or equitable interest in the assets of the company, so they cannot insure corporate property in their own name.

Explanation: Macaura established that the company's property belongs to the company, not to its shareholders or creditors. Because Macaura insured the timber in his own name rather than the company's name, he lacked an insurable interest in the timber and his insurance claim failed when the timber was destroyed by fire.

5Under Section 131 of the Corporations Act 2001, who is personally liable for a pre-registration contract if the company is not registered, or is registered but does not ratify the contract within a agreed or reasonable time?

A.The promoter or person who entered into the contract on behalf of the yet-to-be-registered company, unless they are released under s131(4).

B.The vendor of the contract is liable because they entered into a contract with a non-existent entity, making the transaction void ab initio with no recourse.

C.The director of the parent company of the promoter is automatically liable for any pre-incorporation obligations.

D.The company itself is automatically liable from the moment it is registered, regardless of whether it ratifies the contract.

Explanation: Section 131(1) states that if a person enters into a contract on behalf of a company before it is registered, the person is liable to pay damages if the company is not registered, or if the company is registered but fails to ratify the contract within the agreed or reasonable time. Section 131(4) allows the court to exempt the person from liability.

6What is the statutory effect of a company's constitution and any replaceable rules under Section 140(1) of the Corporations Act 2001?

A.They constitute an employment agreement between the company and its external contractors, override the Fair Work Act, and prevent termination of staff.

B.They have effect as a contract under seal between the company and each member, the company and each director/secretary, and between the members themselves.

C.They have effect as a public administrative regulation enforced solely by ASIC, with no private right of action for members.

D.They have the effect of a deed of company arrangement binding all external creditors and priority workers upon incorporation.

Explanation: Section 140(1) states that a company's constitution and replaceable rules operate as a contract under seal between the company and each member, the company and each director and company secretary, and between a member and each other member, under which each person agrees to observe the constitution and rules.

7According to Section 135(1) of the Corporations Act 2001, when do the replaceable rules NOT apply to a proprietary company?

A.When the company is registered as a no-liability mining company under Chapter 2M.

B.When the company's constitution explicitly adopts the replaceable rules in their entirety without any modifications.

C.When the company is a single-director/single-shareholder proprietary company, as special rules under s198E, s201F, and s202C apply instead.

D.When the proprietary company has more than 50 non-employee shareholders and is classified as a public corporation.

Explanation: Section 135(1) states that the replaceable rules do not apply to a proprietary company while the same person is both its sole director and sole shareholder. For such companies, specific provisions like s198E (powers of sole director/shareholder), s201F (appointment), and s202C (remuneration) apply instead.

8Under Section 136(2) of the Corporations Act 2001, what is required for a company to adopt, modify, or repeal its constitution?

A.An ordinary resolution passed by a simple majority (greater than 50%) of directors present at a board meeting.

B.A court order under Section 232 proving that the current constitution is oppressive to minority shareholders.

C.Unanimous written consent of all creditors and directors of the company filed with ASIC within 28 days.

D.A special resolution of the members, which requires at least 75% of the votes cast by members entitled to vote on the resolution.

Explanation: Section 136(2) states that a company may modify or repeal its constitution, or a provision of its constitution, by special resolution. Section 9 defines a 'special resolution' as one passed by at least 75% of the votes cast by members entitled to vote on the resolution.

9Which section of the Corporations Act 2001 permits an agent to make, vary, ratify, or discharge a contract on behalf of a company as if it were done by an individual?

A.Section 126

B.Section 124

C.Section 127

D.Section 129

Explanation: Section 126(1) states that a company's power to make, vary, ratify, or discharge a contract may be exercised by an individual acting with the company's express or implied authority and on behalf of the company, without using a common seal.

10How can a company execute a document without using a common seal under Section 127(1) of the Corporations Act 2001?

A.By having the document signed by the chief financial officer and authenticated by an external registered auditor.

B.By having the document signed by two directors, a director and a company secretary, or the sole director of a proprietary company who is also the sole secretary.

C.By having the document signed by any one director, provided the signature is witnessed by a Justice of the Peace.

D.By having the document signed by any two employees of the company, provided they have been employed for at least 12 months.

Explanation: Section 127(1) states that a company may execute a document without using a common seal if the document is signed by: (a) 2 directors; (b) a director and a company secretary; or (c) for a proprietary company that has a sole director who is also the sole secretary—that director.

About the Applied Corporate Law Exam

The Applied Corporate Law subject exam is a core postgraduate module offered by the Governance Institute of Australia. It tests deep legal knowledge of the Australian Corporations Act 2001 and ASIC regulations, including corporate personality (s124, Salisbury v Fagan), directors' duties (s180-184), related party transactions (Chapter 2E), member rights and remedies (s232 oppression, s236 derivative actions), share capital maintenance (buy-backs, capital reductions, financial assistance), and external administration and insolvency (insolvent trading s588G, voluntary administration, liquidation).

Assessment

Open-book or closed-book proctored examination administered at GIA testing centers or online under strict surveillance.

Time Limit

3.0 hours

Passing Score

50%

Exam Fee

Approx. $1200 - $1600 AUD (subject tuition and exam assessment fee combined) (Governance Institute of Australia)

Applied Corporate Law Exam Content Outline

25%

Corporations Act Legal Framework

Separate corporate personality, Salomon principle, company constitution, replaceable rules, and contracting by companies

25%

Director Duties & Governance

Sections 180-184 duties, Business Judgment Rule, related party transactions, and civil/criminal penalty regimes

20%

Member Rights & Remedies

Shareholder meeting rules, minority oppression (s232), statutory derivative actions (s236), and injunctions

15%

Capital Maintenance & Debt

Share buy-backs, capital reductions, financial assistance rules, debentures, and registration of charges

15%

Insolvency & Administration

Insolvent trading (s588G), receivership, voluntary administration, liquidations, and voidable transactions

How to Pass the Applied Corporate Law Exam

What You Need to Know

Passing score: 50%
Assessment: Open-book or closed-book proctored examination administered at GIA testing centers or online under strict surveillance.
Time limit: 3.0 hours
Exam fee: Approx. $1200 - $1600 AUD (subject tuition and exam assessment fee combined)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

Applied Corporate Law Study Tips from Top Performers

1Learn the core director duties: s180 (care and diligence), s181 (good faith and proper purpose), s182 (misuse of position), s183 (misuse of information), and s184 (criminal equivalents)

2Understand shareholder remedies: memorize the grounds for minority oppression under Section 232 and how it differs from a derivative action under Section 236

3Study insolvent trading defense: under s588H, memorize the four defenses available to a director (reasonable grounds to expect solvency, reliance on others, absence from management, all reasonable steps)

Frequently Asked Questions

What is the Applied Corporate Law module?

It is a qualifying subject for the Graduate Diploma of Applied Corporate Governance and Risk Management, recognized by CGI (Chartered Governance Institute).

What is the pass mark for the exam?

The pass mark is 50%, reflecting the academic rigor of postgraduate study, though candidates must also pass the continuous assessments.