The Institute of Chartered Accountants of Pakistan 

   

Company Law
Intermediate Examination – Spring 2011 March 9, 2011
Module D 100 marks - 3 hours

Q.1 Zeeshan Pharma Limited (ZPL) commenced its business two years ago with a paid up capital
consisting of 80 million ordinary shares of Rs. 10 each. On February 13, 2011 the board of directors
decided to issue right shares at a discount of Rs. 1.50 per share.

Narrate the provisions contained in the Companies Ordinance, 1984 which ZPL would need to comply
with for issuance of shares at discount. (09 marks)

Q.2 Mr. Shakeel has significant shareholdings in various public and private companies. He is not
satisfied with some of the resolutions passed by such companies by show of hands. You are
required to advise him as regards the following:

(a) What conditions would he need to satisfy if Mr. Shakeel wishes to request for a poll?
(05 marks)
(b) Explain whether a company is required to oblige him if he wishes to satisfy himself about the
validity of the results of voting by poll. (02 marks)

Q.3 Explain the exception to the following provisions as specified under the Companies Ordinance, 1984.

(a) The Court having jurisdiction under the Companies Ordinance, 1984 shall be the High Court
having jurisdiction in the place at which the registered office of the company is situated.
(03 marks)
(b) No association consisting of more than twenty persons shall be formed for the purpose of carrying
on any business with an object for acquisition of gain, unless it is registered as a company under
the Companies Ordinance, 1984. (03 marks)
(c) Where a dividend is declared by a company but is not paid within the period specified in the
Companies Ordinance, 1984, the chief executive of the company shall be punishable with
imprisonment for a term which may extend to two years and with fine which may extend to one
million rupees. (05 marks)
(d) In a meeting of the board of directors, no director shall take any part in the discussion of, or vote
on, any contract or arrangement entered into, or to be entered into, by or on behalf of the
company, if he is in any way, whether directly or indirectly, concerned or interested in the contract
or arrangement, nor shall his presence count for the purpose of forming a quorum at the time of
any such discussion or vote; and if he does vote, his vote shall be void. (04 marks)

Q.4 State the provisions of the Companies Ordinance, 1984 with respect to carrying on business with less
than the legal minimum number of members. (06 marks)

Q.5 Alfalah Associates is an association of persons. It wants to register itself as a limited company but does
not wish to include the word “Limited” in its name.

In view of the provisions of the Companies Ordinance, 1984 you are required to explain the conditions:
(a) that need to be satisfied before the Commission may issue it a licence and allow it to dispense
with the word “Limited” from its name. (07marks)
(b) under which the licence may be revoked and its consequences. (04 marks)
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Q.6 Explain whether or not the following statements are in accordance with the provisions of the
Companies Ordinance, 1984.

(a) A company may change the number of directors to be elected at least 21 days before the date
of general meeting at which the election is to be held. (04 marks)
(b) A duplicate of a certificate of share or debenture shall be issued by the company within thirty
five days from the date of loss of the original certificate. (05 marks)
(c) Directors’ remuneration for performance of extra services including the holding of office of
the chairman or attending the board meeting is decided by the chief executive. (04 marks)
(d) A director of a listed company cannot assign his office to another person under any
circumstances. (03 marks)

Q.7 The directors of ABC Limited are considering to issue 50% right shares on premium. The issue
would be underwritten and significant amount of commission would be paid to the underwriters.
The directors are however concerned as to whether they are empowered to pay the commission.

Narrate the relevant provisions of the Companies Ordinance, 1984 regarding the payment of the
commission and the directors’ responsibility in the above situation. (07 marks)

Q.8 Narrate the responsibilities of a company or of its directors in the following circumstances:

(a) Transfer of 5,000 shares held by the shareholder of a listed company to his sister who is the
wife of a Director of the company. (03 marks)
(b) A notice is given to a listed company by a member of the company, 17 days before the annual
general meeting, proposing for a change in the auditors of the company. (03 marks)
(c) An alteration in Articles of Association of the company is approved by passing a resolution in
the annual general meeting. (03 marks)

Q.9 A professional valuer appointed by Metal Industries (Private) Limited (MIL) has reported that the value
of company’s fixed assets is substantially in excess of the book value of such assets. Consequently the
board of directors has decided to record the surplus on fixed assets in the financial statements.

(a) How should the surplus be disclosed in the financial statements? (02 marks)
(b) Discuss the provisions of the Companies Ordinance, 1984 regarding the application of the
amount of Surplus on Revaluation of Fixed Assets. (06 marks)

Q.10 Mr. Zafar a director of Hilltop Limited, a listed company, has received a notice making him
responsible for incorrect information contained in the prospectus issued by the company and also on
account of the company’s failure to meet certain requirements related to the issue of prospectus.

You are required to list the relevant provisions of the Companies Ordinance, 1984 on the basis of which
Mr. Zafar can claim relief from any liability. (04 marks)

Q.11 Explain the provisions contained in the Companies Ordinance, 1984 relating to a special audit and the
expenses to be incurred in this regard. (08 marks)

(THE END)