Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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What happens if a public company fails to gain a trading certificate within a year?

The company is automatically dissolved
A petition may be filed for winding up the company
The company can continue operating indefinitely
The company must change its business model

The correct answer is: A petition may be filed for winding up the company

When a public company fails to gain a trading certificate within a year, a petition may indeed be filed for winding up the company. This situation arises because the inability to obtain a trading certificate implies that the company is not fulfilling the regulatory requirements necessary to operate as a public entity. The trading certificate is a legal requirement, and without it, the company loses the ability to engage in public trading activities. The option regarding the automatic dissolution of the company is incorrect because dissolution is not an automatic process but requires a legal procedure. The company cannot simply continue operating indefinitely without meeting the legal requirements and could face serious repercussions, including potential legal actions from stakeholders. While changing the business model may be a strategy the company could consider to recover, it does not directly address the need for a trading certificate nor directly influence the filing of a winding-up petition.