Section 1

Directions: This section may contain a passage followed by a question. Read each passage and question
carefully. For every question, highlight or underline the corresponding answer that is most correct.

1. Disputants should resolve their problems through alternative dispute resolution because

a. It’s cheaper and safer

b. It’s safer and more relaxed
c. It’s non-binding and safer
d. None of the above

2. When a company is being wound up and subsequently dissolved, the order in which parties are to
be paid is the following:

a. Shareholders, creditors, and other parties with claims against the company
b. Creditors, shareholders, and other parties with claims against the company
c. Creditors, other parties with claims against the company, and shareholders
d. Shareholders, other parties with claims against the company, and creditors

3. It is mandatory for every public company to host a Statutory Meeting after one month of
incorporation. Then, an Annual Meeting must be held within 18 months of incorporation.

a. The first statement is true, but the second statement is false

b. The first statement is false, but the second statement is true
c. Both statements are false
d. Both statements are true

4. What three issues are decided at the Annual General Meeting?

a. Voting of Board of Directors, receiving financial statements, and appointing a CEO

b. Receiving financial statements, voting of Board of Directors, appointing an auditor, and
electing a CEO
c. Voting of Board of Directors, appointing a CEO, and inspecting financial statements
d. None of the above

5. The basic rights associated with shares are the following:

a. Voting rights, eating rights, and the right to freely elect the board of directors
b. Voting rights, right to inspect audited financial statements, and receiving dividends
c. Voting rights, receiving dividends, and residual claims
d. None of the above

Section 2
Directions: For this section, read each question carefully and note your answer in the space
provided/below.

6. Why do some partners announce their retirement through The Bangladesh Gazette while others
announce it through the Registrar of Joint Stock Companies and Firms?

Answer: Some partners announce their retirement through The Bangladesh Gazette while others
announce it through the Registrar of Joint Stock Companies and Firms because in foreign
country, registration of a firm is compulsory. Beside, in Bangladesh, registration of a firm is
optional. So, The Partnership Act, 1932 doesn’t require that a firm be registered.

7. Upon dissolution of a company and if the Memorandum is silent, which class of shareholders
have a right to a residual claim against the value of the assets of the company?

Answer: Upon dissolution of a company and if the Memorandum is silent, preferred shareholders
have a right to a residual claim against the value of the assets of the company
They need the proper to whatever is left of the corporation in any case creditors, other claimants,
and other shareholders are paid. Again, this must be included within the Memorandum:
otherwise, based on the principle of equality of shares, both preferred and customary shareholders
share equally in residue.

8. Unlike shareholders and with the exception of silent partners, why do partners not enjoy limited
liability?

Answer: Unlike shareholders and with the exception of silent partners, those partners not enjoy
limited liability because in particular, during a partnership business, all partners share liabilities
and profits equally, while in others, partners have indebtedness. Shareholders have no direct
liability at all for obligations of the corporation. There is also the so-called "silent partner," during
which one party isn't involved within the day-to-day operations of the business.

9. What is the primary difference between a company and a firm?

Answer: A company may be a business that sells goods and, on the other hand, services for
profit and includes all business structures and trades. A firm has one or more locations which all
have an equivalent ownership and report under an equivalent EIN.
Section 3

Directions: You are to answer both questions. Read the fact-set, identify the problem(s) in the fact-set, if
any, and answer the question carefully in the space provided.

10. While Metals & Woods, which is a firm that cuts trees and uses the timber to make wooden
furniture, has twenty partners, only John and Henry are Active Partners and the others are
sleeping partners. Their Partnership Agreement does not mention anything about share of profits
and losses. On 30 September 2018, as Jacob (another partner) was cutting trees, one tree fell to
the ground off-trajectory because he was derelict in his duties, which struck a 4-year old boy,
causing massive head trauma. The parents of the boy now bring a lawsuit against Metals & Wood
worth $100,000.

John speaks to Jennifer (another partner) and tells her that he will not be able to pay his share of
the loss. Thus, the two of them reach an agreement whereby Jennifer would pay for John’s share
of the loss and John would pay her back in two months. Unfortunately, it has been 4 months and
John still has not paid Jennifer. Since John is yet to pay Jennifer, she wishes to sue John for the
money. Moreover, amid the turmoil, Henry announced his retirement from the firm through the
Office of the Registrar of Joint Stock Companies and Firms.

You are the judge presiding over the case. How do you rule on the issue(s)?

Answer: If a dispute arises between the partners and therefore the dispute is predicated upon the
Partnership Agreement or the rights conferred by The Partnership Act, 1932, then a partner of an
unregistered partnership cannot institute a suit to settle such a dispute. So that, Jennifer can’t able
to sue John for the money because the another active partner Henry announced his retirement
from the firm.
11. Katherine lives in Bangladesh and is in a contractual relationship with FiberGlass Ltd — a steel-
manufacturing company headquartered in Thailand — whereby the company would sell 1,000
tons of steel for $10,000. While she has bought steel from FiberGlass for the past 6 years, she
speaks to a representative of the company regarding arbitration in the event there is a delay in
payment and delivery. On 28 November 2018, FiberGlass calls Katherine and informs her that
they agree to submit the issue of delayed payment to arbitration in Bangladesh, which Katherine
gladly accepts.

FiberGlass delivered 1,000 tons of steel to Katherine on 15 December 2018, with the promise that
she would pay by 20 December 2018. Unfortunately, as of 28 December 2018, she has not paid.
Therefore, FiberGlass seeks the help of courts to order Katherine to pay. However, Katherine
contends that the matter ought to be arbitrated — not litigated.

Is the matter to be arbitrated or litigated? Why?

Answer: The matter is to be arbitrated. The submission of a dispute to an unbiased person

designated by the parties to the controversy, who agree beforehand to suits the award. So, both
the parties can sort it out without the court and the case can take place outside of the court.
Therefore, the parties could agree in advance to abide by the Arbitrator’s award and they could be
able to reach a great solution.