COMPANY LAW

Suggested Answers
Intermediate Examinations – Spring 2010

Ans.1 (a) The procedure for changing the name of the company is as follows:

(i) Beta Industries should call a general meeting by giving 21 days notice and pass a special
resolution in the meeting.
(ii) Approval of the registrar signified in writing, should be obtained to change the name to Star
Industries Pakistan Limited.
(iii) The registrar shall enter the name SIPL on the register and shall issue an altered certificate of
incorporation and on the issue of such a certificate the change of name shall be complete.

(b) Where a company changes its name it shall, for a period of one year from the date of issue of a
certificate by the registrar, continue to mention its former name along with its new name on the
outside of every office or place in which its business is carried on and in every document or notice.

The documents referred above include invoices, bills of exchange, receipts, letter of credit,
cheques, promissory note and letterhead etc.

Ans.2 (a) "Expert" includes an engineer, a valuer, an accountant and every other person whose profession
gives authority to a statement made by him.

(b) A prospectus which includes a statement made by an expert shall not be issued, unless:

(i) The expert has given his written consent to the issue thereof with the statement included in the
form and context in which it is included and has not withdrawn such consent before the
delivery of a copy of the prospectus. for registration; and
(ii) a statement that he has given and has not withdrawn his consent as aforesaid appears in the
prospectus.

Ans.3 (a) The statement is incorrect because a company can issue securities outside Pakistan subject to prior
approval of the Commission.

(b) The statement is incorrect because private companies are not required to hold statutory meeting.
Moreover, the statutory meeting is to be held within a period of not less than three months, nor
more than six months, from the date at which the company is entitled to commence business.

(c) The statement is correct however, if a person holds shares prior to his appointment as auditor, he
can still be appointed as auditor provided he disinvests such shares within ninety days of his
appointment.

(d) In the case of an emergency affecting the business of the company, the registrar may, on the
application of the directors, authorize EOGM to be held at such shorter notice as he may specify.

(e) The statement is incorrect because the first chief executive, unless he earlier resigns or otherwise
ceases to hold office holds office up to the first annual general meeting or for a shorter period if
such shorter period is fixed by the directors at the time of his appointment. The subsequent Chief
Executive is appointed by the Directors within fourteen days from the date of election of directors
or the office of the chief executive falling vacant.

Ans.4 (a) The Company, if so authorized by its articles can make the liability of the directors unlimited. In
order to do so, it shall have to pass a special resolution in a general meeting for altering the
memorandum accordingly.

(b) The liability of the two dissenting directors cannot be made unlimited without their consent.
However, once the memorandum is altered the liability of the directors elected or re-elected after
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 COMPANY LAW
Suggested Answers
Intermediate Examinations – Spring 2010

such alteration shall be unlimited.

Ans.5 After receiving from the Court’s order confirming the reduction of the share capital, the company
should carry out the following statutory formalities:

(a) Produce and file certified copy of the Order and minutes approved by the Court with the registrar,
showing the alteration in the amount of the share capital, the number of shares into which it is to be
divided, the amount of each share, and the amount, if any, at the date of the registration,
deemed to be paid-up on each share.

(b) Publication of the notice of the registration in the manner as the Court directs.

c) Obtain a certificate from the registrar certifying the registration of the order and the minute.

d) Add the words, ‘and reduced’ to its name.

e) The minute when registered shall be deemed to be substituted for the corresponding part of the
memorandum of the company and shall be embodied in every copy issued subsequent to its
registration.

f) If required by the court, publish the reasons for the reduction and any other information specified.

Ans.6 (a) The accounting record shall include proper books of account with respect to:

(i) all sums of money received and expended by the company and the matters in respect of
which the receipt and expenditure takes place;
(ii) all sales and purchases of goods by the company;
(iii) all assets of the company;
(iv) all liabilities of the company; and
(v) utilization of material or labour or to other inputs or items of cost as may be prescribed for
such class of companies by the Commission.

(b) Particulars to be entered into Register of contracts, arrangements and appointments in

which directors etc., are interested:

(i) Date of the contract, arrangement or appointment.

(ii) Names of the parties thereto.
(iii) Principal terms and conditions thereof.
(iv) Date on which it was placed before the directors.
(v) Names of the directors voting for and against the contract, arrangement or appointment and
the names of those remaining neutral.
(vi) Name of the director or officer concerned or interested in the contract, arrangement or
appointment and the extent or nature of his interest therein.

Ans.7 (a) Even if the financial statements are not approved by the shareholders, the company would still be
required to file the financial statements with the registrar within 30 days of the annual general
meeting. However, in such a situation a statement of the fact that the financial statements have not
been adopted giving reasons thereof shall have to be attached while filing the financial statements.

(b) Quarterly accounts of listed companies

Every listed company shall within one month, of the close of first, second and third quarter,
prepare and transmit to the members or through its corporate website and the stock exchange in
which the shares of the company are listed a profit and loss account for, and balance-sheet as at the
end of, that quarter, whether audited or otherwise. At the same time, the company shall file with
the registrar and the Commission such number of copies thereof, not being less than three, as may
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 COMPANY LAW
Suggested Answers
Intermediate Examinations – Spring 2010

be prescribed.

Ans.8 (a) The procedure for transfer of shares from a deceased member to his lawful nominee successor-in-
interest is as follows:

Mr. Javed would have to submit application to the company, duly supported by a document
evidencing nomination or lawful award of shares to him and thereupon he shall be entered as a
member.

The company may, on furnishing of a suitable indemnity by Mr. Jawed, proceed to transfer the
security in his name and enter him in the register of members.

(b) Debentures not to carry voting rights.

Debentures that are convertible into ordinary shares may, at the option of the company, carry
voting right. However, such voting rights shall not be in excess of the voting rights attached to
ordinary shares of equal paid-up value.

Ans.9 (a) The directors of XYZ Limited should fix the number of elected directors of the company not later
than thirty five days before the convening of the extra ordinary general meeting at which the
directors are to be elected.

Once the number is fixed in the Board meeting, it shall not be changed except with the prior
approval of a general meeting of the company.

The notice of the meeting at which the directors are proposed to be elected shall among other
matters state:
(i) The number of elected directors fixed in the director’s meeting.
(ii) The names of the retiring directors.

(b) When the chief executive is for the time being not in Pakistan, then the balance-sheet and profit
and loss account or income and expenditure account of the company shall be signed by not less
than two directors for the time being in Pakistan, but in such a case there shall be subjoined to the
balance-sheet and profit and loss account or income and expenditure account a statement signed by
such directors explaining the reasons on account of which the accounts could not be signed by the
Chief Executive.

Ans.10 Powers of Directors.

The shareholders seem to be referring to the following powers of the directors of RRL:

(i) Make calls on shareholders in respect of moneys unpaid on their shares.

(ii) Borrow moneys otherwise than on debentures.
(iii) Invest the funds of the company.
(iv) Make loans.
(v) Incur capital expenditure on any single item or dispose of a fixed asset, in accordance with
the limits prescribed.
(vi) Undertake obligations under leasing contracts exceeding one million rupees.
(vii) Issue shares
(viii) Issue debentures or any other instrument in the nature of redeemable capital.
(ix) Declare interim dividend
(x) Write off bad debts, advances and receivables
(xi) Write off inventories and other assets of the company
(xii) To authorize sale, purchase or supply contracts with interested companies and firms
(xiii) To approve annual, half yearly or other periodical accounts to be circulated to members.
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 COMPANY LAW
Suggested Answers
Intermediate Examinations – Spring 2010

(xiv) To approve bonus to employees

Ans.11 (a) Special business means the business other than the consideration of accounts, balance sheets and
the report of the directors and auditors, the declaration of a dividend, the appointment and fixation
of remuneration of auditors, and the election or appointment of directors .

(b) A company is required to annex an explanatory statement to every notice of a meeting of the
company at which special business is to be transacted.

This statement should include all material facts concerning special business. The nature and extent
of the interest, if any, of the director, whether directly or indirectly.

Where an approval to any document is required from the meeting, the time and the place where the
document may be inspected shall be specified in the statement.
Ans.12 (a) Mr. Aslam can file an application in the Court within thirty days of the date of election but he must
be holding not less than 20% voting power, either individually or with other members, in the
company. In order to avail the given option, it must be proved that there has been some material
irregularity in the holding of the elections and matters incidental thereto.

(b) All the cases submitted before the court shall be disposed of and the judgment pronounced within
90 days from the date of application or petition and except for extraordinary circumstances and on
grounds to be recorded, the court shall hear the case from day to day.

Moreover, the hearing of the cases shall not be adjourned except for sufficient cause to be recorded
or for more than fourteen days at any one time or for more than thirty days in all.

Ans.13 (a) Service of documents on company:

A document may be served on a company or an officer thereof by sending it to the company or
officer at the registered office of the company by post under a certificate of posting or by registered
post, or by leaving it at the registered office of the company.

(b) Service of documents on registrar:

A document may be served on the registrar by sending it to him at his office by registered post, or
by delivering it to him, or leaving it for him at his office, against an acknowledgement of receipt.

(c) Service of notice on members:

If a member has no registered address in Pakistan, and has not supplied to the company an address
within Pakistan for the giving of notices to him, a notice addressed to him or to the shareholders
generally and advertised in a newspaper circulating in the Province or the part of Pakistan not
forming part of a Province in which the registered office of the company is situated shall be deemed
to be duly given to him on the day on which the advertisement appears.

Provided that in the case of a listed company such notice shall in addition to its being published as
aforesaid be also published at least in one issue each of a daily newspaper in English language and a
daily newspaper in Urdu language having circulation in the Province in which the stock exchange
on which the company is listed is situated.

(THE END)

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