INSTITUTE OF CHARTERED SECRETARIES AND

ADMINISTRATORS IN ZIMBABWE

SUGGESTED SOLUTIONS JUNE 2020

CORPORATE SECRETARIAL PRACTICE

 SECTION A

QUESTION 1

a) Every company must under the Companies Act keep and maintain certain registers that
reflect the operation of the business. It is the company secretary’s responsibility to see
they are kept update and safe.
b) It is also the secretary’s duty to ensure that people who are entitled to inspect the
statutory registers have access and receive copies according to the provisions of the Act.
c) The secretary has to ensure that improper access is not permitted.
d) The Act requires every company to keep the following registers:

(i) Register of members

(ii) – showing names and addresses of members, statement of the number of shares
held, date on which a person was entered in the register and date on which a
person ceased to be a member.
(iii) Register of directors and secretaries - which contain particular of the directors
and particulars of any other directorship held
(iv) Register of directors’ shareholding – showing details of share or debentures of
the company held by each director or in trust for which he has a right to become
the holder

(v) Register of mortgages and debenture - showing a description of the property

mortgaged, interest rate, amount of the debt and holders.
(vi) Register of debenture holders – showing the number of debentures issues and
outstanding and details of holders
(vii) Minute books of minutes of generals meeting and directors’ meetings.– which
shows proceeding of general and board meetings Any such minutes, if signed by
the chairman of the meeting is deemed to be evidence of the proceedings of the
meeting.
(viii) Books of accounts - showing all sums of money received, sales and purchases of
the company and assets and liabilities
(ix) Register and return as to allotment–stating the number and nominal amount of
shares allotted, the names and addresses of the allottees and the amount if any
paid

Specific location
Statutory registers must be kept in specified places where they can be inspected.
Generally the registers should be kept at the registered office. However the Register of
members must be kept where it is maintained, provided it is still within the country of
registration. The Registrar of Companies must be informed of the place where the
register of members is kept.

e) It is important for the company to file all required returns with the Registrar of
Companies. Filing of returns is importance as it provides useful information on the
company and how the company is being managed to the public. The company’s Act
makes directors and any officer of the company liable for failing to file the required
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 returns. This could damage the reputation of both the company and directors. In
addition, part of the assessment of the company by stakeholders such as suppliers,
credit references, will include a review of the documents at the Registrar of Companies.
If the company s not adhering to its statutory requirements, this may discourage third
parties from doing business with the company. Failure by the company to file returns
may lead to strike –off as the Registrar may suspect that the company is no longer
trading. Failure to submit returns on time will lead to penalties being imposed which
could be very costly for the company. It helps the company to keep in good standing
with the Registrar of Companies. It helps the company to maintain compliance with
regulations.

QUESTION 2

a) Dissemination of information
(i) Preliminary Announcements
To ensure information reaches the market and shareholders, a listed company
must prepare a preliminary announcement of its annual results. This is one of the
routine announcements a company makes during the year. It gives shareholders
information on the company’s annual performance as well as outlook for the
future. Board’s decision regarding dividends, profits and other matter will be
available in the preliminary announcement. This will ensure shareholders are
kept update on developments during the year.
(ii) Interim reports.
Listed companies are also required to prepare an interim report on activities and
profit and loss for the six months of each financial year. This enable shareholder
‘s to make an assessment of the trend of the company’s activities and
performance to date.
(iii) Trading updates – companies should endeavour to provide updates on trading in
between reporting period to enable shareholders to be kept update with
development in the company. It is necessary to communicate with shareholders
on any events that may lead to failure by the company achieve their goals. It
should not come as a surprise to shareholders.
(iv) Cautionary statements– this is also another important form of communication
with shareholders. It gives information to shareholders regarding events
happening in the company which are likely to have significant impact on their
investment
(v) Annual General meetings - give shareholder an opportunity to interact with
directors review the performance of the company for the past year as well as get
updates on the prospects of the company. The meeting allows shareholders to
exercise their right to vote on certain matters.
(vi) Company’s Website– act as another important form of communication with
shareholders. Shareholders can access information such as financial statements,
notices of AGMs and any other information of interest to shareholders and
investors.

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b) The shareholders and investors could lose faith and confidence in the company and sell
their shares. Share price may fall as a result. Financial institutions, lenders and creditors
could doubt the financial ability and governance standards of the company. Credit
ratings will drop and credit lines may contract. Failure to publish audited financial
statements result in a timely manner constitutes a breach of the Zimbabwe Listing
requirements. The Zimbabwe Stock Exchange may enforce disciplinary actions on the
company and its directors. These include investigations, disciplinary hearing and the
issue of a private reprimand or a public statement of criticism against the company. In
addition the ZSE will require the breach to be rectified or other remedial action to be
taken within the stipulated time. if the breach is found to be material, the ZSE may
suspend or cancel the listing and trading of the company’s shares.

The directors may be privately be reprimanded or publicly criticised for breaching their
duties as directors to have compliance with the Listing requirements. Shareholders may
take action against the director such as removal of directors.

QUESTION 3

a) A private placement is a sale of shares or bonds to pre-selected investors and

institutions rather than on the open market. It is an alternative to an initial public
offering (IPO) for a company seeking to raise capital for expansion.

There are several advantages to using private placements to raise finance. These
include:
- allow you to choose your own investors - this increases the chances of having
investors with similar objectives to you and means they may be able to provide
business advice and assistance, as well as funding
- allow you to remain a private company, rather than having to go public to raise
finance
- provide flexibility in the amount and type of funding – e.g. allowing a combination of
bonds and equity capital
- allow you to make a return on the investment over a longer time period as private
placement investors will be prepared to be more patient than other investors, such
as venture capitalists
- require less investment of both money and time than public share flotations
- provide a faster turnaround on raising finance than the venture capital markets or
public placements
- private placements are sometimes the only source of raising substantial capital for
more risky ventures or new businesses as the public may not be in a position to take
risks.

There are also some disadvantages of using private placements to raise business
finance. These will be:
- a limited number of potential investors, who may not want to invest substantial
amounts
- the need to place shares at a substantial discount to attract investors
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 - some degree of ownership and control over your business. New shareholders will
have a voice in the management and they may be able to vote on important
decisions affecting the company.
- Ease of Execution – By using private placements, you can raise a significant amount
of finance, and often quite quickly.
- Cost Savings– A company can often issue a private placement for a much lower all-in
cost than it could in a public offering. A private placement doesn't need to involve
brokers or underwriters.
.
Any points raised up to a maximum of 12 marks

b) If a company wishes to change its auditor, the most common procedure is to request the
auditor to resign voluntarily and the directors then fill the casual vacancy so created. The
same matter could be left until the existing auditor retires at the next annual general
meeting and the meeting could then proceed not to re-appoint the existing auditor but
directors can appoint the new auditor in his place.

If the need for a change of the auditor is more pressing, the company may by ordinary
resolution remove an auditor before the expiration of his term of office. The vacancy
arising from the removal is usually filled by the company in general meeting but it may
also be filled by directors. If shareholders so wish to have the auditor removed:
(i) A special notice of 28 days shall be given to the company of the intention to
pass a resolution to remove the auditor as well as appoint a new auditor in his
place.
(ii) Upon receipt of the notice of the proposed resolution, the company shall
forthwith deliver a copy to the auditor to be removed as well as the auditor to
be appointed.
(iii) The auditor proposed to be removed may make representations in writing to
the company and ask the company to circulate the representations to the
shareholders.
(iv) The company must comply with the request and call a meeting on 21 days
notice.
(v) The company will state in the notice of the meeting that representations have
been made. If it is too late to include the representations with the notice of the
meeting, it will still be sent out to all shareholders who received the notice.
(vi) The resolution must be passed at a general meeting is an ordinary resolution

(vii) An auditor who has to be removed is also entitled to receive notice of and
attend and speak at the meeting at which the resolution for the removal to be
considered.

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 SECTION B

QUESTION 4

Chairman’s Agenda for 8th the Annual General Meeting of XYZ Company to be held on 22
June 2019 in the Boardroom, 9th floor Corner house, 21 Samora Machel Avenue at 100hours

1. Chairman to call the meeting to order and welcome members

Introduce other fellow Board Members present, auditors

2. Request Secretary to confirm quorum and declare the meeting properly constituted

3. Request secretary to read the notice of the meeting or take it as read with consent of
the meeting and declare the meeting is thus duly convened to conduct the business for
which it has been called.

4. Consideration and Approval of the financial statements for the year ended 2018
together with the reports of the directors and auditors
Chairman to address the meeting and to propose
THAT the audited Financial Statements of the Company for the year ended 31
December 2018 together with the reports of the Directors and Auditors be and they are
hereby approved and adopted.”
Request for a seconder of the motion.
The Chairman to invite questions and having replied, to put the motion to the meeting
and declare the results.

5. Dividend declaration
Chairman to propose:
THAT the final dividend of 20 cents per share recommended by the directors be
approved
Request for a seconder of the motion.
Put the motion to the meeting and declare the results

6. Appointment of directors
Chairman to propose:
THAT Mr Ndere, the director retiring by rotation be-elected a director of the company.

Request for a seconder of the motion

Put the motion to the meeting and declare the results

7. Approval of the remuneration of directors

Chairman to propose
THAT the remuneration of the Directors for the past financial year be and is hereby fixed
at $36 000.00
Request for a seconder
Put to the motion meeting and declare the results

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8. Auditor’s Remuneration
Chairman to propose
THAT the Directors be authorised to fix the remuneration of the Auditors for the past
year and approve an amount of $ 112 000 paid to auditors.
Request for a seconder
Put the motion to the meeting and declare the result

9. Appointment of auditors
Chairman to propose
THAT Mumba Chartered Accountants be and are hereby appointed auditor of the
company for the current year until conclusion of the next Annual General Meeting
Ask for a seconder
Put the motion to the meeting and declare results
10. Any other business
Chairman to request for any other business as may be transacted at an Annual General
Meeting and for which notice has been given
Pause for any contributions, comments or questions.

11. Conclusion
Chairman to declare the meeting closed

QUESTION 5

a) The Board of Directors is responsible for the governance of their organisation and is
appointed by shareholders and their responsibility is to act in the best interest of all
stakeholders.

With so much demands being placed on boards by regulatory bodies, shareholders,

other stakeholders and the public in general, boards need to make the most efficient use
of their time and make well thought out decisions. Boards are therefore resorting to
using board committees to deal with specific issues that require specialized areas of
expertise. Committees provide a practical way to structure and manage the board’s
work. A committee would normally be comprised of a few members of the board who
are tasked to deal with certain issues that might not be dealt with efficiently by the full
board. The scope and the responsibilities of each committee is defined by the board.

The board committees are appointed by the Board to focus on specific areas and take
informed decisions within the framework of delegated authority and they then make
specific recommendations to the Board on matters in its area of expertise. All decisions
and recommendations of the committees are tabled before the Board for approval or
for information. Committees are therefore accountable to the board and should submit
timely reports to the full board.
There are some benefits derived from establishing board committees.

Certain board issues are of such a complex nature that they demand substantially more
time than a board can commit to during the course of one or two board meetings. A
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 committee set for this purpose will be able to efficiently and effectively deal with the
task on behalf of the board.

A committee is smaller than the full board and therefore allows board members the
proper time required to research various issues and permits broader participation by all
members of the committee.

Having a committee assigned to carry out some assignments for the board will provide
accountability since committee members will be directly accountable to the full board
for completing the tasks. Committees have dedicated time for addressing agenda items,
and so the board expects them to conduct due diligence and be thorough in dealing with
complex issues, yet do this timely. After dealing with issues, the committee will then
provide comprehensive information that will help the board make informed decisions on
specific issues.

Having committees of the board has some downsides as well. Decision making can take
longer than normal. Some organisations have too many committees which can result in
some of these committees having little work to do.

To make a committee effective, the board should ensure that the committee has clear
terms of reference and defined goals which are enshrined in the committee’s charter, it
should have a chair who is able to involve all members in the committee, it should work
with members who are committed and willing to spend the needed time to accomplish
their tasks, it should have an understanding of time constraints and deadlines and
should understand that it does not make decisions; rather it advises, recommends, or
carries out a task on behalf of the board. The committee should be evaluated regularly.

b) The differences between the two methods of voting commonly used at company
meetings namely voting by show of hands and by poll:

It is usual in the first instance for the chairman to take a vote on a show of hands. The
chairman calls on those present to vote by raising their hands first for the motion and
then against. At this stage each member or proxy has one vote. A visual count is made
and the chairman declares the motion carried or lost Voting by show of hands first
decide unless a poll is demanded. Every person present who is members or
representative shall have 1 vote.

Voting on a poll is when the votes are given proportionately to the number of shares
held which ‘1 share1 vote’ Voting on a show of hand is usually faster and less involving.

The advantage is gives all entitled person It makes use of voting lists or ballot papers
where votes are determined by the number of shares held. It gives shareholders an
opportunity to exercise their vote which 1 share 1 vote and where voting entitlements
vary, it provides a safeguard against a minority of persons with large shareholding being
over-voted by a majority of persons who have small shareholdings

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 Voting by poll may be demanded by chairman; or at least 3 members present in person
or proxy; or any members present holding not less than 10% of voting right; or any
members present holding shares not less than 10% of total paid up capital

QUESTION 6

a)
- ensure that the company’s Articles of Association allow the directors to offer
shareholders the right to elect to receive shares instead of cash dividend
- if necessary, pass an ordinary resolution at general meeting to give the board power to
offer shares instead of cash for all or part of any dividend.
- Decide on the record date since entitlement will be to those members whose names
appear on the register at record date
- Set the price for the shares with reference to the recent market price of the shares
- Prepare a circular to the shareholders giving the price of the shares and explaining what
action is needed if they wish to elect to receive the shares instead of cash
- Prepare form of election to accompany the circular with the following information:
a) Number of shares held on record date
b) Number of shares on which election may be made
c) Number of shares on which the dividend will be paid
d) Number of shares to be issued
- Prepare dividend warrants or transfer to bank account based on non elected shares
- Update share registers and prepare new share certificates
- Apply for listing of new shares issued as scrip dividend.
- File return of allotment CR2

b) Share buybacks are an increasingly frequent and healthy phenomenon. When there are
no investment opportunities offering a return commensurate with the required rate of
return, directors returns cash to shareholders, who, presumably, can find investments
that meet their requirements.

- Treasury shares
Building up a reserve of shares to be used later for stock option awards or as a
currency for an acquisition.

- Smoothing out share price fluctuations

Buyback can be used to smoothen out share price fluctuations especially for listed
entities

- Undervalued Stock
Directors may initial a buyback if it feels its stock is undervalued by the market. Buying
back shares and cancelling them increases the value of the remaining shares.

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- Excess Cash Reserves
When a company has excess cash reserves, directors may choose to buy back shares
rather financing expansion programs.

- Preventing Takeovers
Directors might also use a stock buyback as a defense against takeovers If directors want
to prevent the takeover, it can attempt to buy back enough of the outstanding stock to
make that more difficult for someone to build a controlling stake.

- Improving Financial Ratios

Directors might also engage in stock buybacks to improve the company's financial ratios,
particularly its earnings per share and diluted EPS. For the regular EPS, the fewer shares
outstanding, the higher the EPS. When a company repurchases its shares, the EPS
increases for the remaining shares.

- Reduction in cost of maintaining the share register

This is particularly so where a company has a large share register, buyback reduces the
number of shares resulting in lesser cost of maintaining it.

- Reduce Dilution and Increase Ownership

Over time companies tend to issue new shares, e.g. via capital raisings or exercise of
options, which implies dilution of existing shareholders. By buying back stock, a
company can reduce the impacts of dilution.

QUESTION 7

a) An alternate director is a person appointed by a member of the board to act and speak
during the period of his/her absence. An alternate director can only be appointed if the
Articles of Association provide for it. An alternate director is a de facto director and the
Articles should therefore provide that he is an officer of the company for all purposes. A
director can appoint another director to be his /his alternate or another person as his
alternate, subject to that person being approved by the Board of Directors. The
particulars of an alternate director should be entered in the register of directors and
form CR14 must be filed with Registrar of Companies. Alternate directors are subject to
the same rules as any other director. They act only in the absence of the appointing
director, who may also revoke the appointment at any time by giving notice to the
company.
If the appointing director ceases to hold office for whatever reason, the was already a
director.

Alternate directors are entitled to:

- Receive notices of all meetings of directors and all meetings of committees of which the
appointor is a member
- Attend and vote at such meeting of which the director appointing him is not a member
- Perform all functions of his appointor as a director in his absence
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- Will be responsible for his actions, will not be deemed to be an agent of the appointee
He is not entitled to remuneration from the company for his service.

b)
- Higher productivity and efficiency
By eliminating time and space barriers, video conference can be conducted to
communicate could become much shorter and more efficient.

- More flexibility. One of advantages of video call is that it gives you more flexibility. Even
if you are outside for some reason, you can still easily start or join a video conference for
an important matter .

- More effective communication. In comparison to audio-only calls, video conferencing

provides participants with a kind of non-verbal communication which is reported to be
an effective communication means.

- Good options for remote working, online interview and distance learning. Besides
business meeting and staff training, video conferencing can also make remote working
like telecommuting, online interview and e-learning possible.

- Save money and time. The tangible advantages of video conferencing include lower
costs on business travels and staff training; less time for meetings, training and projects
because of improved communication among participants, trainees and teammates.

- Quorums can easily be achieved - where it is sometimes difficult to get a quorum

because directors are always, video conference can make it easy to achieve a quorum.
Directors can actually participate in meetings and contribute rather than sent apologies.

- Quick decision making– where there is an urgent matter to be discussed, decision

quickly can be met without calling a meeting

“End of Suggested Solutions”

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