General

Generally candidates performed well in this paper. Most of the students attempted all the questions, however, many of them wrote irrelevant details along with the required answers hence wasting their precious time. It is advised that the answers given should be as per the requirement only.

Q.1

Most candidates seemed aware of the concept of a company being treated as an artificial person in law and answered this question satisfactorily.

About 70% candidates included the fundamental provisions of conversion under Section 45 of the Company.

Q.2

Majority of candidates could not attempt this question very well, although the difference between Prospects and Statement in Lieu of Prospectus are very definitive.

Very few got this one right. None of them highlighted the actual objective of issuing a prospectus i.e. and generally copied down its definition.

Was mostly answered correctly since it warranted very little elaboration.

Q.3

(a)

This part was carrying 2 marks asking ‘can accounts of a company exceed twelve month period’. The correct answer was that, the period to which the accounts relate shall not exceed twelve month period except where special permission has been granted in that behalf by the Registrar. The examinees mostly mentioned that special permission is required from SECP. In the paper of law we should be careful in selecting the correct word as it is always important in communicating the intention of the law.

(b)

This question was regarding the circumstances in which the proceedings of a general meeting may be declared invalid. It was observed that examinees were generally not able to give complete answer as they were not aware of all the circumstances under which the proceedings may be declared invalid.

(c)

Overall performance of the examinees in this question was average and they were generally aware of the status of the contracts entered by the company before acquiring certificate of commencement of business except in few cases where the examinees were not aware that the contracts entered by the company before certificate of commencement are provisional.

Q.4

All candidates, with the exception of two or three, answered the first part of the question correctly. Many displayed knowledge of the fact that the difference between the nominal value of shares and the value paid was the amount of discount. However, many candidates unnecessarily gave their own versions of the difference between reduction of share capital and issue of shares at discount which was uncalled for.

Q.5

With the exception of a few candidates, most answered question 5 with reasonable knowledge of company meetings.

Q.6

(a)

Very few candidates were able to tackle this question. Almost all gave absurdly lengthy explanations relating to alteration of the various clauses (Object, Capital etc.) contained in the MOA. Whereas the question was specifically about alteration of the memorandum and its effects ‘generally’, the answer to which is distinctly available in all major text books with little or no variation.

(b)

Most candidates were able to answer this one correctly.

Q.7

(a)

This part was generally answered correctly, however, many candidates elaborated on who, whether directors or members, can pass the special resolution for removal of auditors, which really didn’t have a direct bearing on the answer.

(b)

Many candidates mixed up Section 253 which was the answer to this part, with Section 255 (power and duties of auditors) although the question was quite specific. Most answered correctly.

Q.8

(a)

This was a simple question regarding distinction between subsidiary and associated company. The examinees were generally aware of the answers but could not present them well. In many cases they unnecessarily tried to prolong the answer.

(b)

Answers to this question were encouraging and the examinees generally scored good marks in this part of the question.

(c)

The response to this question was below average as the examinees lacked in depth knowledge of the relevant provisions of law about legal requirements to be fulfilled before making investment in associated company or undertaking.

(b)

Candidates failed to mention that business shall be deemed to be carried on by the Chief Executive if it is carried on by any of his relatives.

(c)

This part was answered well except that most candidates did not mention that articles may contain a provision for empowering a director of company to assign his office to another person or there may be an agreement between any person and the company for the same. They did mention although that special resolution is required notwithstanding any thing else.

Q.10

This question pertained to provisions of Section 195 of the Companies Ordinance 1984. The examinees generally did not answer the question fully and were able to state few of the provisions of law in this respect.