CAF - 07 – Company Law

Final Mock Exam – Hudaid Wasi

Date: 21st August 2024

Time: 3 Hours
Reading Time: 15 minutes
Instruction to Examinees:
i. Answer All Eleven Questions
ii. Answer in black pen only

Q.1 Select the most appropriate answer from the options available for each of the following
Multiple-Choice Questions. Each MCQ carries ONE mark.

1. Which of the following is a requirement for the appointment of a Chief Executive Officer (CEO) in a
public company under the Companies Act, 2017?
a) The CEO must be a member of the board of directors.
b) The CEO must hold shares in the company.
c) The CEO must be appointed by the shareholders in a general meeting.
d) The CEO must be appointed by the board of directors.
2. In the event of a casual vacancy in the office of the Chief Executive Officer (CEO), the board of
directors must appoint a new CEO within:
a) 15 days
b) 30 days
c) 45 days
d) 60 days
3. In case of a listed company, if members holding at least 10% of the total paid-up capital request the
company to provide a video link facility to attend the AGM, how many days prior to the meeting
must this request be submitted?
a) 14 days
b) 21 days
c) 10 days
d) 7 days
4. Who is responsible for keeping the minutes of the general meetings as required by the Companies
Act, 2017?
a) The chairman of the board
b) The company secretary
c) The Chief Executive Officer (CEO)
d) Any director present
5. Under the Companies Act, 2017, if a person has been disqualified from holding the office of a
director due to a conviction for an offense involving moral turpitude, how long must elapse before
they can be reappointed as a director?
a) 3 years from the date of conviction
b) 5 years from the date of conviction
c) 7 years from the date of conviction
 CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

d) They can never be reappointed

6. Which of the following statements is true regarding the liability of experts involved in the
preparation of a prospectus under the Companies Act, 2017?
a) Experts are not liable if they withdraw their consent before the prospectus is issued.
b) Experts are liable only if they are shareholders of the company
c) Experts are liable only for fraudulent misrepresentations in the prospectus.
d) Experts are not liable if they were unaware that the prospectus was issued without their
consent.
7. When must a company file a copy of the prospectus with the Registrar after its publication?
a) Immediately after publication
b) Within 7 days of publication
c) Within 15 days of publication
d) Within 30 days of publication.
8. If a company fails to register a charge within the prescribed time under the Companies Act, 2017,
what is the status of the charge?
a) It is void against the company.
b) It is void against the liquidator and any creditor.
c) It remains valid but with a penalty.
d) It is voidable at the discretion of the Registrar.
9. Under the Companies Act, 2017, a company must maintain a register of charges. For how long must
this register be preserved after the satisfaction of a charge?
a) 3 years.
b) 5 years.
c) 7 years.
d) Permanently.
10. In case of multiple charges registered against the same asset, how is priority determined under the
Companies Act, 2017?
a) By the date of the charge agreement.
b) By the amount of the charge.
c) By the date of registration.
d) By the company's board decision.
11. Under the Companies Act, 2017, a director of a company must disclose his interest in any contract
or arrangement with the company. What is the maximum penalty for failing to disclose such
interest?
a) Rs. 500,000
b) Rs. 1,000,000
c) Rs. 2,000,000
d) Rs. 3,000,000
12. Under the Companies Act, 2017, if a director acquires an interest in a transaction after the contract
has been entered into by the company, what is the director required to do?
a) Disclose the interest at the next board meeting
b) Immediately resign from the board
c) Notify the SECP within 14 days
d) Disclose the interest at the next annual general meeting
 CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

13. Under the Companies Act, 2017, when a director has an interest in a transaction, what percentage
of shareholders' approval is required for the transaction to proceed?
a) Simple majority
b) Three-fourths majority
c) Two-thirds majority
d) Unanimous approval
14. When must a company file a return with the Registrar regarding the director’s disclosure of interest
under the Companies Act, 2017?
a) Within 30 days of the disclosure
b) At the end of the financial year
c) No filing is required
d) Within 15 days of the disclosure
15. Under the Companies Act, 2017, which of the following is true regarding the disclosure of interest by
a director in a contract with the company?
a) The disclosure must be in writing and recorded in the minutes of the board meeting
b) The disclosure can be made verbally at the board meeting
c) The disclosure is only required if the contract is above a certain value
d) The disclosure is not required if the interest is less than 5%
 CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

Q.2 Ali and Bilal, co-founders and sole shareholders of AB (Private) Limited, a technology startup,
faced a tragic turn of events when Bilal passed away on March 1, 2023. According to Bilal's will,
his shares were to be transferred to his son, Hassan, who was studying abroad and unaware of
the company's operations at the time. In order to keep the business running, Ali took on the
responsibility of managing AB (Private) Limited alone, making all decisions and handling financial
matters single-handedly. It was only on October 15, 2023, when Hassan was informed about his
inherited shares and agreed to take over Bilal's position. However, the company encountered
significant financial difficulties during this period, leading to substantial debts.

Required: Analyze the legal consequences for Ali and Hassan in relation to their responsibilities
and liabilities under the Companies Act 2017. Specifically, consider whether Ali could be held
personally accountable for the company's debts from the time of Bilal's death until the shares
were transferred to Hassan. (06)

Q.3 Alpha Manufacturing Limited has issued 8 million Class A ordinary shares and 4 million Class B
preference shares. Class B shares carry a 6% fixed dividend and no voting rights. The board of
directors has proposed a significant change: to allow Class B shares to participate in voting at
general meetings, equal to Class A shares. Concerned about this change, a group of Class A
shareholders believes that their influence in company decisions will be unfairly diluted if this
proposal is implemented.

Required: As a Class A shareholder, explain the legal process you would follow to challenge the
proposed change in rights attached to Class B shares and on what grounds court may cancel the
resolution. (03)

Q.4 Ahmed and Akbar are planning to incorporate a private limited company, “Techify Solutions
(Pvt) Limited,” which will offer software development and IT consultancy services. During the
name reservation process, they discover that a similar name, “Techify Systems (Pvt) Limited,” is
already registered. Despite the minor difference in wording, they worry that their proposed
name might cause confusion or legal issues.

Additionally, Ahmed suggests expanding their business to include cybersecurity services and
proposes modifying the company name to "SecureTechify Solutions (Pvt) Limited" to better
encompass this wider range of offerings. However, he is concerned about the legal permissibility
of this name change and the additional steps required under the Companies Act, 2017.

Required

a) Evaluate the potential legal challenges of using the name "SecureTechify Solutions (Pvt)
Limited," considering the existence of “Techify Systems (Pvt) Limited.” (04)
b) Outline the steps Ahmed and Akbar must take to ensure compliance with the
Companies Act, 2017, if they decide to proceed with the name "SecureTechify Solutions
(Pvt) Limited." (04)
 CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

Q.5 AlphaTech (Pvt) Limited, a private company, recently ended its financial year on March 31, 2024.
The company is now getting ready to hold its Annual General Meeting (AGM) to discuss the
annual financial statements and other regular matters. However, one of the shareholders,
BetaCorp, owns 15% of the total voting shares and is unhappy with the current auditor's
performance. They believe there may be a conflict of interest because of the auditor's close
relationship with the CEO.

BetaCorp wishes to propose a resolution to appoint a new auditor during the upcoming AGM.
The Board of Directors, however, has been hesitant to address this issue, as the current auditor
has been with the company for several years and has established a strong rapport with the
board.

Required: Advise BetaCorp on the legal steps it can take to ensure that the resolution for
appointing a new auditor is included in the AGM agenda, in accordance with the Companies Act,
2017. (05)

Q.6 Comment on the following independent statements in the light of Companies Act 2017.

a) A company must hold a statutory meeting within six months of its incorporation . (02)
b) Every company must include its principal line of business in the Memorandum of Association.
(02)
c) Notice of every general meeting must be sent to all members at least 21 days before the
meeting (02)
d) The alteration of a company’s Articles of Association requires a special resolution
(02)
e) A company can change its registered office within the same city by passing a special resolution.
(02)

Q.7 "Pineapple Ventures Limited," a publicly traded company in the food and beverage industry, has
concluded its fiscal year on March 31, 2024. The Board of Directors is keen on announcing a
dividend to its shareholders but is currently deliberating on whether the available profits are
adequate and in compliance with the necessary legal prerequisites for such a distribution.

Required:

a) Explain the restrictions on declaring dividends for Pineapple Ventures Limited under the
Companies Act, 2017. (04)
b) Under what circumstances will the CEO of Pineapple Ventures Limited not be held liable for the
non-payment of dividends? Provide a brief explanation based on the legal provisions. (05)
c) Discuss the legal consequences if Pineapple Ventures Limited fails to pay the declared dividends
to its shareholders. (03)

Q.8 Karachi Foods Limited owns 600,000 shares out of the 1,000,000 total shares of Lahore Agro
Ventures (Pvt) Limited. Lahore Agro Ventures (Pvt) Limited, in turn, owns 850,000 shares out of
the 1,000,000 total shares of Islamabad Organics (Pvt) Limited. Additionally, Karachi Foods
Limited directly owns 150,000 shares out of the 1,000,000 total shares of Islamabad Organics
(Pvt) Limited.
 CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

The financial year-end for Karachi Foods Limited is June 30, while Lahore Agro Ventures (Pvt)
Limited and Islamabad Organics (Pvt) Limited have financial year-ends of March 31. The Board of
Directors of Karachi Foods Limited is evaluating the requirements for preparing the financial
statements and the necessary audit and disclosure obligations under the Companies Act, 2017.

Required:

a) Outline the requirements that Karachi Foods Limited must fulfill in preparing its financial
statements considering its relationship with Lahore Agro Ventures (Pvt) Limited and Islamabad
Organics (Pvt) Limited. (02)
b) Highlight the disclosure requirements that Karachi Foods Limited must adhere to, ensuring
compliance with the Companies Act, 2017. (02)
c) The Board also seeks guidance on the requirements that Karachi Foods Limited must follow
when entering into any transaction with Lahore Agro Ventures (Pvt) Limited or Islamabad
Organics (Pvt) Limited. (03)

Q.9 Under the provisions of Companies Act 2017, Comment on the following cases relating to
winding up of a company.

a) What are the grounds for a company to be wound up by the court? (05)
b) What is the role of the Official Liquidator during the winding-up process? (05)
c) Under what circumstances can a voluntary winding-up be converted into winding-up by the
court? (03)
d) What are the different modes of winding up? (03)
e) What is the order of payment of liabilities in a winding-up process? (05)

Q. 10 Gaming Arena Limited (GAL) was established as a company involved in the operation of gaming
zones and the organization of e-gaming tournaments throughout Pakistan. The company
possesses an issued and paid-up share capital of 300 million ordinary shares with a par value of
Rs. 10 each. Esports Ventures Limited (EVL), Digital Gamers Limited (DGL), and Play Hub Private
Limited (PHPL) have subscribed to 100 million, 120 million, and 80 million ordinary shares of
GAL, respectively.

The board of directors of GAL has made the decision to expand its operations by acquiring a new
gaming zone situated in a prime location in Karachi. The management of GAL has identified a
highly profitable property, which is owned by Ahsan, a non-executive director of GAL and EVL.
Following negotiations, GAL and Ahsan have reached an agreement wherein a gaming zone
located in Karachi will be transferred to Ahsan in exchange for a state-of-the-art e-gaming
facility to be constructed by GAL.

Required: In the light of Companies Act 2017, state the procedures required in order to execute
the said transaction. (06)

Q. 11 Which companies are required to obtain a Certificate of Commencement of Business under the
Companies Act, 2017 and what are the requirements or conditions that must be fulfilled to
obtain a Certificate of Commencement of Business. (07)
CAF - 07 – Company Law
Final Mock Exam – Hudaid Wasi

(THE END)