General:

This paper seemed to be the easiest one of all the papers set in the recent past and the overall performance of the candidates was quite satisfactory. Except for the quality of English and presentation, the scripts on an overall basis showed that majority of the candidates were well prepared for the examination.

However, many candidates also wrote irrelevant answers along with the required answers hence wasting their precious time. It is advised that important thing for securing the marks is the relevance and appropriateness and not the length of the answer.

Question-wise comments are given hereunder:

Q.1

The question was relatively easy, but the response of the candidates was not satisfactory. The right to receive notices from the company is the same for all shareholders irrespective of their shareholdings. Many candidates got confused on this issue.

Q.2

This question was attempted well except that many candidates could not mention the following: 

·        the time frame for notifying the refusal required by CDC which is five days.

·        the limitations which can be imposed by the articles on transfer of shares, in case of a private limited company.

Q.3

Both parts of the question were well attempted by almost all the candidates.

Q.4

Though most of the candidates were quite clear that Mr. Pervaiz Khan as Chief Accountant was liable to surrender the gain from dealing in securities of the company if that arose within the period of 6 months but quite a large number of candidates failed to mention that :

·        he should send an intimation to the Registrar and the Commission about such gain while tendering the gain to the company.

·        if he fails to deposit such gain to the company within a period of six months, such gain shall vest in the Commission.

·        nothing shall apply to a security acquired in good faith in satisfaction of a debt.

Q.5

(a)

Most of the candidates did not know that a shareholder can inspect the register and the company cannot charge any fee for such inspection.

(b)

It was again a very poorly attempted question. Most of the candidates were of the view that there are no legal grounds to refuse Mr. Wahid’s request to review the cash book of the company since he is a major shareholder. In fact, only a director or any person so authorized by the directors is entitled to review the books of accounts.

Q.6

Though it was a very simple question, the candidates instead of mentioning the requirements of maintaining minutes as given in the Companies Ordinance, 1984, wrote pages discussing the finer points of drafting the minutes.

Q.7

In part (a), most candidates were able to write few of the points but very few could give complete answer. Moreover, part (b) was omitted by a vast majority.

Q.8

(a)

It was a very simple question and most of the candidates gained full marks.

(b)

The performance of the candidates was rather poor in this question as they failed to understand the requirement of the question and narrated the procedure for alteration of various clauses of the Memorandum of Association. In fact they were required to explain the matters which SECP considers before confirming the approval.

Q.9

It was an easy question and the performance of the candidates was average. Many candidates wasted their precious time in explaining the business to be taken up in an AGM etc. instead of explaining the requirements regarding servicing of notices, time frame and the places of holding the meeting, etc.

Q.10

This question was responded well by most of the candidates.

Q.11

The question consisted of four parts carrying a total of 28 marks. Most of the candidates gained quite high marks in it.

However, in part {c(i)} of this question, the following mistakes were commonly noted:

·        It was mentioned that application for invalidating the directors’ election will be filed with the Commission whereas it is required to be filed with the Court.

·         The time period within which the application is to be lodged with the Court was not specified.

Q.12

Both parts of this question were easy and well attempted by most of the candidates. However, in part (b), many candidates spent lot of time in explaining the difference between mortgages, hypothecation and pledge which was not required.

Q.13

Majority of the candidates failed to define “offer for sale”. Though they defined “prospectus”, they were not quite able to bring out the difference between the two documents.