100+ Free CGISA Corporate Law Practice Questions

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Key Facts: CGISA Corporate Law Exam

3 hours

Exam Time

CGISA Official Syllabus

50%

Pass Mark

CGISA Board Examination Rules

Act 71 of 2008

Primary Legislation

South African Companies Act

King IV

Governance Framework

Institute of Directors SA (IoDSA)

100 Marks

Official Assessment Total

CGISA Board Examination

Open-Book

Official Exam Format

CGISA Examination Guidelines

The CGISA Corporate Law module is a core Board Level examination administered by the Chartered Governance Institute of Southern Africa. It assesses advanced understanding of the South African Companies Act 71 of 2008 and King IV Report principles. Key topics include corporate legal personality, MOI rules, directors' duties under Section 76, share capital maintenance, company secretary obligations, business rescue under Chapter 6, and fundamental transactions. MCQ-based study aid for the official assessment; it does not replace required writing, oral, portfolio, clinical, or hands-on performance.

Sample CGISA Corporate Law Practice Questions

Try these sample questions to test your CGISA Corporate 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 8(2) of the South African Companies Act 71 of 2008, which of the following is NOT classified as a profit company?

A.Private company ((Pty) Ltd)

B.Personal liability company (Inc.)

C.Non-profit company (NPC)

D.State-owned company (SOC Ltd)

Explanation: Under Section 8(1) and 8(2) of the Companies Act 71 of 2008, companies are broadly categorized into non-profit companies (NPCs) and profit companies. Profit companies comprise four types: private companies, public companies, personal liability companies, and state-owned companies. A Non-Profit Company is established for public benefit or cultural/social objectives and does not distribute income or assets to its incorporators or members.

2Which statutory requirement applies specifically to Non-Profit Companies (NPCs) under Schedule 1 of the Companies Act 71 of 2008 upon their dissolution?

A.All remaining assets must be distributed equally among the founding incorporators.

B.Remaining assets must be transferred to another NPC, charitable trust, or voluntary association with similar objectives.

C.All net proceeds must be paid directly into the National Revenue Fund of South Africa.

D.The assets automatically escheat to the CIPC for administrative liquidation.

Explanation: Schedule 1 Item 1(4) of the Companies Act 71 of 2008 mandates that upon winding up or dissolution of a non-profit company, any remaining net assets must be transferred to one or more non-profit companies, registered charitable trusts, or voluntary associations having objectives similar to its main objective. Incorporators, members, directors, or officers of an NPC are strictly prohibited from receiving residual asset distributions.

3Under Section 21 of the Companies Act 71 of 2008, what is the legal consequence if a newly incorporated company fails to ratify or reject a pre-incorporation contract within three months after incorporation?

A.The contract becomes completely void and unenforceable against all parties.

B.The person who entered into the contract on behalf of the unformed company is permanently released from liability.

C.The company is deemed to have completely ratified the contract.

D.The contract must be referred to the Companies Tribunal for mandatory arbitration.

Explanation: Section 21(5) of the Companies Act 71 of 2008 stipulates that if a company does not ratify or reject a pre-incorporation contract within three months after incorporation, the company will be deemed to have ratified the contract. Upon deeming or express ratification, the company becomes bound by the contract as if it had been in existence at the time the agreement was made, and the promoter is released from personal liability under Section 21(4).

4In the event of an irreconcilable conflict between a provision of a company's Memorandum of Incorporation (MOI) and a Shareholders' Agreement, which rule applies under Section 15(7) of the Companies Act 71 of 2008?

A.The Shareholders' Agreement automatically overrides the MOI between shareholders.

B.The MOI prevails over the Shareholders' Agreement to the extent of the inconsistency.

C.The conflicting provisions in both documents become completely void.

D.The CIPC must intervene to issue a binding ruling resolving the dispute.

Explanation: Section 15(7) of the Companies Act 71 of 2008 explicitly provides that the Shareholders' Agreement must be consistent with the Act and the company's MOI, and any provision of a Shareholders' Agreement that is inconsistent with the Act or the MOI is void to the extent of the inconsistency. Thus, the MOI always takes precedence over private shareholders' agreements.

5Under Section 16(1) of the Companies Act 71 of 2008, how may a company alter its Memorandum of Incorporation (MOI)?

A.By a simple majority vote of the board of directors at any ordinary meeting.

B.By an ordinary resolution adopted at a shareholders' meeting.

C.By a special resolution passed by shareholders, or pursuant to a court order.

D.By submitting a written application directly to the Minister of Trade, Industry and Competition.

Explanation: Section 16(1) of the Companies Act 71 of 2008 provides that a company's MOI may be amended by a special resolution passed by shareholders, or in compliance with a court order. Amendments proposed by the board or shareholders must be submitted to CIPC together with Form CoR 15.2 and take effect on the date of filing or as specified in the notice.

6Which element is MANDATORY for a company that includes restrictive 'ring-fencing' provisions in its Memorandum of Incorporation under Section 11(3)(b) of the Companies Act 71 of 2008?

A.It must register as a State-Owned Company (SOC Ltd).

B.Its name must be followed by the suffix '(RF)'.

C.It must obtain annual written clearance from the Takeover Regulation Panel.

D.Its board must consist exclusively of independent non-executive directors.

Explanation: Section 11(3)(b) read with Section 15(2)(b) and (c) of the Companies Act 71 of 2008 requires that if a company's MOI contains restrictive conditions or prohibitions on amending any provision ('ring-fencing'), the company's name must immediately be followed by the suffix '(RF)' to give public notice of these restrictions.

7Under Section 4 of the Companies Act 71 of 2008, what are the TWO core limbs of the Solvency and Liquidity Test?

A.Fair value of assets exceeds fair value of liabilities; and company can pay debts as they become due in the ordinary course of business for 12 months.

B.Current ratio exceeds 2.1; and debt-to-equity ratio remains under 50%.

C.Retained earnings are positive; and net cash flow from operations is positive for the previous financial year.

D.Audited balance sheet shows zero long-term liabilities; and liquid cash exceeds capital requirements.

Explanation: Section 4(1) of the Companies Act 71 of 2008 establishes a two-part test: (1) Solvency: the assets of the company, fairly valued, equal or exceed the liabilities of the company, fairly valued; and (2) Liquidity: it appears that the company will be able to pay its debts as they become due in the ordinary course of business for the 12 months considering all reasonably foreseeable financial circumstances.

8What is the legal position regarding a company's legal capacity under Section 19(1)(b) of the Companies Act 71 of 2008?

A.A company has limited capacity defined strictly by the common law ultra vires doctrine.

B.A company has all the legal capacity and powers of an individual, except to the extent that a juristic person cannot exercise them or the MOI provides otherwise.

C.A company can only execute acts specifically listed in its statutory Objects Clause.

D.A company must obtain CIPC approval prior to entering into any commercial transaction exceeding R10 million.

Explanation: Section 19(1)(b) of the Companies Act 71 of 2008 grants every company all the legal capacity and powers of an individual, except to the extent that a juristic person cannot exercise such powers (e.g. getting married) or the company's MOI explicitly restricts its capacity.

9Under Section 19(4) of the Companies Act 71 of 2008, how has the Doctrine of Constructive Notice been modified?

A.It applies strictly to all registered company documents filed with CIPC.

B.A person is no longer deemed to have knowledge of the contents of any company document solely because it has been filed with CIPC or is available at the company's office, except for ring-fenced restrictions.

C.It has been retained exclusively for public companies listed on the JSE.

D.It applies only to bank loan agreements and mortgage bonds.

Explanation: Section 19(4) of the Companies Act 71 of 2008 abolished the general doctrine of constructive notice. Third parties dealing with a company are not presumed to know the contents of its MOI or records filed with CIPC. Section 19(5) sets out the sole exception: third parties are deemed to have notice of restrictive 'ring-fencing' provisions in an '(RF)' company.

10How does the statutory Turquand Rule codified in Section 20(7) of the Companies Act 71 of 2008 protect third parties?

A.Third parties dealing with a company in good faith may presume that the company has complied with all internal formal and procedural requirements.

B.Third parties can enforce contracts even if signed by an unauthorized imposter with no link to the company.

C.Third parties are granted an automatic statutory guarantee from the National Treasury.

D.Third parties may cancel contracts unilaterally within 30 days without penalty.

Explanation: Section 20(7) of the Companies Act 71 of 2008 codifies the common law Turquand Rule. A person dealing with a company in good faith is entitled to presume that the company, in executing any act, has complied with all formal and procedural requirements prescribed by the Act, its MOI, or company rules, unless the person knew or reasonably ought to have known of any non-compliance.

About the CGISA Corporate Law Exam

The CGISA Corporate Law examination tests candidate knowledge and practical application of South African corporate law, specifically the Companies Act 71 of 2008, CIPC regulations, and the King IV Report on Corporate Governance. Candidates must demonstrate competence in incorporation, Memorandum of Incorporation (MOI), share capital, directors' fiduciary and statutory duties, corporate governance standards, company secretary functions, financial reporting, business rescue, and fundamental transactions. MCQ-based study aid for the official assessment; it does not replace required writing, oral, portfolio, clinical, or hands-on performance.

Assessment

3-hour open-book written examination (100 marks total)

Time Limit

3 hours

Passing Score

50%

Exam Fee

~R4,000 ZAR (Chartered Governance Institute of Southern Africa (CGISA))

CGISA Corporate Law Exam Content Outline

20%

Business Entities, Incorporation & Memorandum of Incorporation

Types of profit and non-profit companies under Section 8, legal personality, pre-incorporation contracts under Section 21, MOI rules, capacity, constructive notice, and piercing the veil under Section 20(9)

30%

Governance, Board Structure & Directors' Duties

Board appointments, eligibility, disqualification under Section 69, delinquency orders under Section 162, statutory fiduciary duties and duty of care under Section 76, Business Judgment Rule under Section 76(4), director liability under Section 77, and King IV Principles

20%

Share Capital, Maintenance of Capital & Financial Matters

Legal nature of shares, share authorization/issue under Sections 36 & 38, pre-emptive rights under Section 39, financial assistance under Sections 44 & 45, solvency and liquidity test under Section 4, distributions under Section 46, and PIS audit requirements under Section 30

15%

Corporate Administration, Company Secretary & Audit Committee

Company records and registered office, mandatory appointment, qualifications, statutory duties, and removal of Company Secretary under Sections 84-89, Audit Committee composition under Section 94, and shareholders' meetings and resolutions under Sections 61-65

15%

Business Rescue, Fundamental Transactions & Takeovers

Chapter 6 Business Rescue proceedings, financial distress criteria under Section 128, moratorium under Section 133, business rescue practitioner powers, rescue plan adoption under Section 152, fundamental transactions under Chapter 5 (Sections 112-114), and appraisal rights under Section 164

How to Pass the CGISA Corporate Law Exam

What You Need to Know

Passing score: 50%
Assessment: 3-hour open-book written examination (100 marks total)
Time limit: 3 hours
Exam fee: ~R4,000 ZAR

Keys to Passing

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

CGISA Corporate Law Study Tips from Top Performers

1Master Section 4 Solvency and Liquidity Test rules and identify every transaction requiring its application (Sec 44, 45, 46, 48)

2Memorize key statutory sections of the Companies Act 2008 (Sec 20(9) veil piercing, Sec 21 pre-incorporation, Sec 69 disqualification, Sec 76 duties, Sec 77 liability, Sec 84-89 company secretary, Sec 94 audit committee, Sec 128-154 business rescue)

3Learn the exact statutory thresholds for resolutions: Ordinary (>50%) vs Special (75% or higher as defined in MOI)

4Understand King IV Principles (1-17), focusing on ethical leadership, governing body responsibilities, audit, risk, and social & ethics committee duties

5Differentiate between ineligible directors (absolute bar, e.g. juristic persons, unrehabilitated insolvents) and disqualified directors under Section 69

6Study Section 44 and Section 45 financial assistance requirements, noting when special resolutions and solvency/liquidity approvals are mandated

7Understand the mechanics of Chapter 6 Business Rescue, including the moratorium on enforcement, practitioner powers, and voting threshold for rescue plan adoption (75% creditors' voting interests)

8Practice linking statutory provisions of the Companies Act 2008 to King IV governance outcomes in scenario questions

Frequently Asked Questions

What is the CGISA Corporate Law examination?

The CGISA Corporate Law exam is a compulsory Board Level module for candidates seeking professional qualification through the Chartered Governance Institute of Southern Africa. It assesses candidate proficiency in applying the South African Companies Act 71 of 2008, CIPC administrative regulations, and the King IV Report on Corporate Governance to complex corporate governance and legal scenarios.

What primary legislation and governance codes are tested?

The examination focuses primarily on the South African Companies Act 71 of 2008 (as amended by the Companies Amendment Acts), the Companies Regulations of 2011, and the King IV Report on Corporate Governance for South Africa (2016). Candidates are also expected to understand relevant common law principles governing corporate personality, agency, and fiduciary duties.

What is the format of the official CGISA Corporate Law exam?

The official CGISA Board examination is a 3-hour open-book written assessment consisting of scenario-based and essay questions totaling 100 marks. Candidates are permitted to bring clean, unannotated copies of the Companies Act 71 of 2008 into the examination hall. The pass mark for the examination is 50%.

How does this MCQ practice bank assist in preparing for the exam?

While the official CGISA exam requires written essay and scenario responses, this 100-question MCQ practice bank serves as an essential knowledge-retention tool. It tests precise statutory thresholds, section references, legal definitions, and procedural rules under the Companies Act 2008 and King IV, building a fast and accurate legal reference mindset for candidates.

What are the key requirements for directors' duties under Section 76?

Section 76 codifies both fiduciary duties (acting in good faith, for a proper purpose, and in the best interests of the company) and the duty of care, skill, and diligence. It also introduces the Business Judgment Rule under Section 76(4), which protects directors from personal liability if they took reasonably informed steps, had no material personal financial conflict, and rationally believed their decision was in the best interests of the company.

What is the Solvency and Liquidity Test under Section 4?

The Solvency and Liquidity Test under Section 4 of the Companies Act 2008 requires that: (1) the fairly valued assets of the company equal or exceed its fairly valued liabilities (solvency), and (2) the company will be able to pay its debts as they become due in the ordinary course of business for the 12 months following the test (liquidity). Satisfying this test is a mandatory statutory prerequisite for distributions (Sec 46), financial assistance (Sec 44/45), and share repurchases (Sec 48).

How does Chapter 6 Business Rescue operate in South Africa?

Chapter 6 of the Companies Act 2008 provides a statutory framework for rehabilitating a company that is financially distressed (unable to pay debts within 6 months or likely to become insolvent within 6 months). Business rescue can be initiated by board resolution (Sec 129) or court order (Sec 131). It creates a temporary moratorium on legal proceedings against the company (Sec 133) while a licensed Business Rescue Practitioner formulates a rescue plan for approval by creditors and shareholders.