100+ Free ICCSSL Business Law Practice Questions

Prepare for the ICCSSL Business Law Module (Subject 2306) exam with instant access — no signup required.

✓ No registration✓ No credit card✓ No hidden fees✓ Start practicing immediately

Approximately 60% – 75% Pass Rate

100+ Questions

100% Free

Loading practice questions...

2026 Statistics

Key Facts: ICCSSL Business Law Exam

50%

Pass Mark

ICCSSL Regulations

3 hours

Exam Time Limit

ICCSSL Exam Guidelines

Subject 2306

Course Code

ICCSSL Management Level Curriculum

Rs. 11,000

Lecture Fee per Subject

ICCSSL Student Guide

Rs. 500,000

Secretary Stated Capital Threshold

Sri Lanka Companies Act Regulations

S. 185

Major Transactions Section

Sri Lanka Companies Act No. 7 of 2007

ICCSSL Business Law (Subject 2306) is a Management Level professional module. The assessment includes a 3-hour final written examination (worth 50% of the total grade or 100 marks of final written paper), legal drafting coursework (30%), and oral presentations (20%). The pass mark is 50%. The syllabus covers the Companies Act No. 7 of 2007 (solvency tests, stated capital, directors' duties, company secretary, major transactions, winding up), the Law of Contracts (Roman-Dutch principles, iusta causa, Prevention of Frauds Ordinance, remedies), Partnership Law (Ordinance of 1866, partner liabilities, dissolution), Law of Agency (creation, actual vs. apparent authority, secret profits, undisclosed principals), and Commercial Law (Sale of Goods Ordinance, Bills of Exchange Ordinance).

Sample ICCSSL Business Law Practice Questions

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

1Under Section 3 of the Sri Lankan Companies Act No. 7 of 2007, which of the following is NOT a recognized category of company that may be incorporated?

A.A company limited by shares

B.A company limited by guarantee

C.An unlimited company

D.A partnership company with limited liability

Explanation: Section 3 of the Companies Act No. 7 of 2007 recognizes three types of companies: a company limited by shares, a company limited by guarantee, and an unlimited company. A 'partnership company' is not a legally recognized category under the Act; partnerships are governed separately under the Partnership Ordinance.

2Which of the following describes a major reform introduced by the Sri Lankan Companies Act No. 7 of 2007 regarding share capital?

A.It mandated a minimum par value of Rs. 10 for all shares.

B.It completely abolished the concept of par value or nominal value for shares.

C.It prohibited companies from issuing ordinary shares without voting rights.

D.It required all companies to maintain a capital redemption reserve.

Explanation: The Companies Act No. 7 of 2007 abolished the concept of nominal or par value of shares. Shares issued after the commencement of the Act have no par value, and stated capital is used instead, representing the actual consideration received for the issue of shares.

3Under the Sri Lankan Companies Act No. 7 of 2007, what two tests must be satisfied for a company to meet the 'solvency test'?

A.The current ratio test and the quick ratio test

B.The asset coverage test and the debt service coverage test

C.The liquidity (cash flow) test and the balance sheet (net assets) test

D.The working capital test and the capital adequacy test

Explanation: Section 57 of the Act defines the solvency test: (a) the company is able to pay its debts as they become due in the normal course of business (liquidity test), and (b) the value of the company's assets is greater than the value of its liabilities and its stated capital (balance sheet test).

4What is the statutory requirement for the board of directors immediately after a company makes a distribution (such as a dividend) under Section 56 of the Companies Act No. 7 of 2007?

A.They must obtain approval from the Registrar of Companies within 7 days.

B.The directors who voted in favor must sign a certificate stating that in their opinion, the company will satisfy the solvency test immediately after the distribution.

C.They must publish the distribution in at least three national daily newspapers.

D.They must file a declaration of solvency with the Commercial High Court of Colombo.

Explanation: Section 56(2) of the Companies Act No. 7 of 2007 requires that the directors who vote in favor of a distribution must sign a certificate stating that, in their opinion, the company will satisfy the solvency test immediately after the distribution is made.

5If a company makes a distribution to shareholders when it does not satisfy the solvency test, who may be held personally liable to restore the distribution under the Sri Lankan Companies Act No. 7 of 2007?

A.Only the majority shareholders who received the distribution

B.The company secretary and the external auditors

C.The directors who authorized the distribution and signed the solvency certificate

D.The Registrar of Companies

Explanation: Under Section 56 and Section 61, if a distribution is made and the company fails the solvency test, the directors who authorized it (and signed the solvency certificate without reasonable grounds) can be held personally liable to refund the amount to the company, to the extent it cannot be recovered from shareholders.

6Under Section 185 of the Sri Lankan Companies Act No. 7 of 2007, a company cannot enter into a 'major transaction' unless it is approved by which of the following?

A.A simple majority of the Board of Directors

B.An ordinary resolution of the shareholders

C.A special resolution of the shareholders

D.The unanimous consent of the Board of Directors and the Registrar of Companies

Explanation: Section 185(1) of the Act states that a company shall not enter into a major transaction unless the transaction is approved by a special resolution of the shareholders or is contingent on such approval.

7Which of the following is defined as a 'major transaction' under Section 185 of the Companies Act No. 7 of 2007?

A.A transaction involving assets valued at more than 10% of the company's total assets

B.The acquisition or disposition of assets whose value is more than half the value of the company's assets before the transaction

C.Any lease of property for a period exceeding 5 years

D.The appointment of a new Managing Director or Auditor

Explanation: Section 185(2) defines a major transaction as one involving the acquisition or disposition of assets, or incurring of obligations, whose value is more than half (50%) the value of the company's assets before the transaction.

8Under the Sri Lankan Companies Act No. 7 of 2007, every company must have a company secretary. Under what statutory conditions must the secretary be a professionally qualified person (such as a registered Chartered Secretary, Chartered Accountant, or Attorney-at-Law)?

A.Only if the company is a public limited company

B.If the company has a stated capital of Rs. 500,000 or more, or an annual turnover of Rs. 1,000,000 or more

C.If the company has more than 10 shareholders

D.For all companies, with no exceptions based on capital or turnover

Explanation: Under the regulations issued under Section 222 of the Act, a company secretary must possess prescribed professional qualifications if the company's stated capital is Rs. 500,000 or more, or its annual turnover is Rs. 1,000,000 or more.

9What is the minimum number of directors required for a private company and a public company, respectively, under Section 201 of the Sri Lankan Companies Act No. 7 of 2007?

A.Private: 1 director; Public: 1 director

B.Private: 1 director; Public: 2 directors

C.Private: 2 directors; Public: 3 directors

D.Private: 2 directors; Public: 7 directors

Explanation: Section 201 of the Companies Act No. 7 of 2007 states that a private company shall have at least one director, and a public company shall have at least two directors.

10Which section of the Sri Lankan Companies Act No. 7 of 2007 codifies the general duty of a director to act in good faith and in the best interests of the company?

A.Section 56

B.Section 113

C.Section 187

D.Section 220

Explanation: Section 187 of the Companies Act No. 7 of 2007 codifies the director's fundamental duty to act in good faith and in what he believes to be the best interests of the company.

About the ICCSSL Business Law Exam

The ICCSSL Business Law module (Subject 2306) is a core Management Level subject that covers the legal framework governing businesses in Sri Lanka. It focuses heavily on the Companies Act No. 7 of 2007, the general law of contracts (Roman-Dutch law), partnership law, agency law, and commercial statutes including the Sale of Goods and Bills of Exchange Ordinances.

Assessment

Question count not published by the exam provider

Time Limit

3 hours (written exam)

Passing Score

50% (50-64% is a Pass, 65-74% is a Merit, and 75-100% is a Distinction)

Exam Fee

Rs. 6,000 for the examination entry fee, in addition to standard student registration and lecture fees. (Institute of Chartered Corporate Secretaries of Sri Lanka (ICCSSL))

ICCSSL Business Law Exam Content Outline

Syllabus Area A (35%)

Companies Act No. 7 of 2007

Detailed rules on company incorporation (Forms 1, 18, 19), separate legal personality, constitutional documents (Articles of Association), stated capital (abolished par value), solvency tests for distributions and share buybacks, directors' fiduciary duties and standard of care (Sections 187/188), qualified company secretary requirements, major transactions (Section 185), and winding-up procedures.

Syllabus Area B (25%)

Law of Contracts

General contract principles under Sri Lankan common law (Roman-Dutch law). Focuses on iusta causa vs English consideration, offer and acceptance, capacity of parties (minors, insane persons), reality of consent (error/mistake, metus/duress, misrepresentation), Prevention of Frauds Ordinance writing requirements (for land transactions and guarantees), breach, and remedies (specific performance as a primary right and Hadley v Baxendale remoteness).

Syllabus Area C (15%)

Partnership Law

Partnership Ordinance No. 7 of 1866 and English Partnership Act 1890 principles in Sri Lanka. Explores partnership formation, writing requirements under Section 18(c) of the Prevention of Frauds Ordinance for capital over Rs. 1,000, rights and duties of partners, joint liability for contracts, joint and several liability for torts, and winding up/dissolution.

Syllabus Area D (15%)

Law of Agency

Fiduciary nature of agency. Covers creation of agency (express, necessity, ratification, estoppel), actual vs. apparent/ostensible authority, agent's duties (obedience, skill/diligence, non-delegation, accounting for secret profits), agent's rights (indemnity, lien), undisclosed principal doctrine, and termination of agency.

Syllabus Area E (10%)

Commercial Law & Statutes

The Sale of Goods Ordinance No. 11 of 1896 (implied conditions of title, description, quality/fitness, risk passing, nemo dat rule and exceptions, unpaid seller remedies), Bills of Exchange Ordinance No. 25 of 1927 (definition of bill of exchange, holder in due course, cheque rules), and the Consumer Affairs Authority Act No. 9 of 2003.

How to Pass the ICCSSL Business Law Exam

What You Need to Know

Passing score: 50% (50-64% is a Pass, 65-74% is a Merit, and 75-100% is a Distinction)
Assessment: Question count not published by the exam provider
Time limit: 3 hours (written exam)
Exam fee: Rs. 6,000 for the examination entry fee, in addition to standard student registration and lecture fees.

Keys to Passing

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

ICCSSL Business Law Study Tips from Top Performers

1Familiarize yourself with the exact section numbers of the Companies Act No. 7 of 2007, particularly regarding solvency tests (S. 56/57), major transactions (S. 185), directors' duties (S. 187/188), and secretary qualifications.

2Understand the key distinctions between Roman-Dutch law and English law in contract formation. Focus on 'iusta causa' vs 'consideration' and specific performance as a primary remedy.

3Memorize the writing requirements of the Prevention of Frauds Ordinance, specifically Section 2 (land transactions) and Section 18(c) (partnership capital threshold of Rs. 1,000).

4Pay attention to the rules of partnership liability, contrasting joint liability for contracts with joint and several liability for torts.

5Practice drafting basic corporate secretarial documents, resolutions (ordinary and special), and simple business contracts, as drafting is worth 30% of the coursework.

6Review the exceptions to the 'nemo dat quod non habet' rule in the Sale of Goods Ordinance, especially sales by mercantile agents.

Frequently Asked Questions

What is the assessment structure for the ICCSSL Business Law module?

The module is assessed through continuous assessment coursework (30% legal drafting exercises and 20% group presentations) and a final 3-hour summative written examination (accounting for the remaining weight / final written mark).

What is the pass mark for the ICCSSL Business Law exam?

The pass mark is 50%. A score of 50-64% is graded as a Pass, 65-74% as a Merit, and 75% or above as a Distinction.

Does Sri Lankan company law recognize par value for shares?

No. The Companies Act No. 7 of 2007 completely abolished the concept of nominal or par value for shares. Stated capital is used instead, representing the actual value of consideration received for the shares.

What is the solvency test under Sri Lankan company law?

The solvency test consists of two parts: (1) Liquidity test: the company must be able to pay its debts as they become due in the ordinary course of business. (2) Balance sheet test: the value of the company's assets must exceed the sum of its liabilities and its stated capital.

When does a company secretary need to be professionally qualified in Sri Lanka?

A company secretary must be a qualified person (such as an Attorney-at-Law, Chartered Accountant, or registered Chartered Secretary) if the company's stated capital is Rs. 500,000 or more, or its annual turnover is Rs. 1 million or more.

What is the Prevention of Frauds Ordinance requirement for land transactions in Sri Lanka?

Under the Prevention of Frauds Ordinance No. 7 of 1840, any sale, transfer, mortgage, or lease exceeding one year of immovable property (land) must be in writing, signed, and executed before a Notary Public and two witnesses.