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Module E
1 June 2015
3 hours 100 marks
Additional reading time 15 minutes
The Institute of
Chartered Accountants
of Pakistan
Corporate Laws
Q.1
(a)
The Board of Directors of HAQ Limited (HL), a listed company, has decided to buyback its ordinary shares through a tender process.
Draft a special resolution for the proposed buy-back of shares of HL. You may
assume any information you may consider necessary.
(b)
Assume that HL has received an overwhelming response against the tender. Zakir is
one of the respondents and has holdings of one million shares. He has expressed his
interest to sell these shares to HL.
Describe the provisions contained in the Companies (Buy-back of Shares) Rules, 1999
whose compliance would be necessary for HL prior to making payment to Zakir.
(c)
(04)
Assume that HL has accepted Zakirs offer and has purchased all the shares at the
price approved by the board of directors and the shareholders.
Advise HL about the information that it would be required to disclose in its financial
statements in respect of the above and the documents to be submitted to the
authorities as specified in the Companies (Buy-back of Shares) Rules, 1999.
Q.2
(04)
(04)
Q.3
(a)
Who would be considered as the liquidator of the company and what course of action
is available to those who do not agree to such an appointment?
Powers of the duly appointed liquidator.
Save Foundry Limited (SFL) has recently obtained a certificate of incorporation from
SECP and has applied for certificate for the commencement of business. Meanwhile,
SFL has entered into an agreement with Feroz Engineering Limited (FEL) for the
supply and installation of machinery at its factory. SFL has also signed an agreement
with a commercial bank for a short-term finance facility for advance payment to FEL.
In the light of the Companies Ordinance, 1984 analyse above situation and comment
on its legality and the implications of entering into the above agreements.
(b)
(06)
(06)
(05)
Adnan is a director of Star Limited (SL), a listed company. During the preceding
quarter he had purchased and sold shares of SL.
Under the provisions of Companies Ordinance, 1984 narrate the conditions which
Adnan would be required to comply with in respect of the above transactions.
(03)
Corporate Laws
Q.4
In the light of the Companies Ordinance, 1984 describe the circumstances under which:
(a)
(b)
Q.5
Page 2 of 3
(06)
(06)
Saad holds 10% voting shares in Strong Machine Limited (SML), a company listed on
Karachi Stock Exchange. Saad intends to acquire 16% additional voting shares in SML. In
this respect he has made a public announcement of the offer to acquire voting shares in
SML and has also sent a copy of the public announcement to SML.
In the light of the provisions of the Listed Companies (Substantial Acquisition of Voting
Shares and Takeovers) Ordinance, 2002 you are required to explain:
(a)
(b)
Q.6
(07)
(02)
Q.7
The term offer period and the obligations of the board of directors of SML during
the offer period.
The condition(s) under which Saad would be entitiled to have a representation on the
Board of SML.
Briefly explain the term Participant and state the services performed by a
Participant.
Identify the circumstances in which Central Depository Company may disclose
information or documents to any person.
(03)
(06)
Hyper (Pvt.) Limited (HPL) has two shareholders. All the directors of the company are
nominees of these two shareholders. The details are as follows.
Name of shareholders
Western Cement Limited (WCL) - listed company
Furqan
No. of
shares
8,040,000
3,960,000
12,000,000
Nominee
directors
5
*3
8
(04)
The meeting of Board of Directors of Duck Limited (DL) would be held on 20 June 2015 to
consider declaration of 20% final cash dividend. The directors intend to close the share
transfer register from 2 July 2015 for determining shareholders entitlement for the purpose
of dividend, meeting, etc. The AGM is to be held on 15 July 2015.
In the light of the listing regulations you are required to advise the directors as regards the
following :
(a)
(b)
Q.9
(a)
(05)
(02)
List the criteria which an NBFC should observe for determining the realizable value
of mortgaged, pledged, leased or collaterally held assets under the NBFC and Notified
Entities Regulations, 2008.
(04)
Corporate Laws
(b)
Page 3 of 3
Ageing
(02)
(08)
Q.10 Zahid, a recently appointed director on the board of Zodiac Limited, a listed company, has
sought your help in resolving the following issues which he observed while reviewing the
working papers of the board meeting:
(a)
(b)
(c)
(d)
The CEO is the chairman of Human Resource and Remuneration Committee which
includes two members, the CFO and the company secretary.
Certain transactions with related parties which were not executed on arms length
basis are not shown in the working papers.
The pattern of shareholdings presented in the note does not disclose the necessary
details.
After the death of the Chairman, the CEO has assumed the charge of the chairman of
the company.
As a consultant, you are required to write a letter advising Zahid about the requirements of
the Code of Corporate Governance, 2012, in respect of the above matters.
(THE END)
(03)
(03)
(04)
(03)