COMPANY LAW

General:

The overall performance of candidates was satisfactory. However those who performed poorly, again committed the same persistent mistakes like misunderstanding of requirement of the question and weakness in conceptual clarity regarding the  provisions of law.

Generally, in subjective questions, candidates mentioned entire sections without giving much thought to the context in which the questions were asked.

Question wise comments are as under:

Q.1

(a)

The students were aware of simple procedure that is followed to change the name of a company. However, some wasted their time in writing irrelevant provisions such as the requirement to mention old name with new name for a specified period.

(b)

Misstatement in prospectus is also a simple topic and well taken by the students.

(c)

Most of the students answered correctly that Mr. Ahmed cannot issue such a statement (Ref Sec 54)

Q.2

(a)

Most of the students knew the fact that provisions of the ordinance are effective, irrespective of anything contained in the Memorandum or Articles and that all such provisions which are repugnant to the provisions of the ordinance shall become void.

(b)

Candidates on an average knew the provisions of law regarding minimum number of members that various types of companies shall always have, however very few knew about the repercussions of carrying on business with less than minimum number of members.

(c)

Generally, the examinees stated the prohibition imposed by law on political contributions but failed to mention the penalties and the punishment to which the defaulting persons may become liable.

Q.3

(a)

An easy scoring opportunity was lost by many candidates as they ignored the fact that question related to share issue in which public subscription is not invited. They submitted material relating to public issue of shares and got no marks.

(b)

This was also an easy question. Students generally did well however some of them wrote many irrelevant details ignoring the marks allocated to the question.

(c)

The question comprised of two parts, that is, significance of memorandum of association and its alteration. Many students attempted first part and left other unattended or described only secretarial practice without explaining how it can be altered and what legal requirements need to be fulfilled in this regard.

(d)

Being a new topic that is of interest in the current circumstances, most students have prepared well and got good marks.

Q.4

It was a practical question, which dealt with exceptional circumstances when a company is allowed to make investment on its behalf, other than its own name. Some students did it with clarity and some even tried guess work. The circumstances generally include, share held by directors as nominees, shares held as security or in the name of CDC and shares kept in the name of the company’s bankers.

Q.5

(a)

The question dealt with the provision of law relating to creditors’ consent in case of reduction in capital of a company. Very few were aware of the powers given to the Court to secure the payment of such creditors’ debts and the manner in which it has to be exercised. The candidates should refer to Section 100 for details.

(b)

As expected, students had reasonable command on provisions of law dealing with treatment of surplus on revaluation of fixed assets. Majority submitted correct answers and secured good marks.

Q.6

(a)

A number of students relied on guess work. Very few knew that a company is supposed to provide minutes of the general meeting to its shareholders on request provided that seven days have passed and at a fee not exceeding the amount prescribed by the company.

(b)

Filing of annual return by a listed company is an easy area and was well attempted by the candidates. However, few muddled it with the prescribed time for holding annual general meeting.

(c)

Circulation and submission of quarterly accounts is comparatively a new requirement and students had given due attention to this practical topic  and got good marks

Q.7

(a)

A number of students wrote unnecessary details regarding disclosure by interested director and bar on his/her participation and voting in the matters in which he/she is interested. Whereas the question was on exceptional circumstances under which the restriction would not apply such as in case of private company or where the director is a nominee director.

(b)

Withholding payment of dividends is a topic often asked in professional examinations and students secured good marks. For details the students should refer Section 251(2) of the Companies Ordinance 1984.

Q.8

(a)

Majority attempted this question very well and scored good marks. However, some students could not describe the rule regarding term of office for those persons who are appointed as director to fill casual vacancy.

(b)

Debentures and area related to it is not very common in context with Pakistan’s financial environment. Accordingly, very poor performance was shown. Students are advised to study Section 116 of the Companies Ordinance 1984.

(c)

Most students were able to write prescribed investment avenues for employees provident fund and company’s responsibilities with respect to deductions and payment of contributions to the fund managed by a trust.

Q.9

(a)

Provisions relating to polling in general meetings proved to be simple for candidates. However, some examinees mixed up public and private companies with listed and unlisted. Generally speaking, the Companies Ordinance, 1984 rarely recognizes companies with their listing status.

(b)

Students generally offered an obvious answer stating the power of SECP to call company’s meeting in case of default. However, most students related the question to AGM only. In fact SECP may also interfere if the company does not comply with the request of members to call extra-ordinary general meeting.