CPA INTERMEDIATE LEVEL
CS INTERMEDIATE LEVEL
COMPANY LAW
THURSDAY: 25 April 2024. Morning Paper. Time Allowed: 3 hours.
This paper has seven (7) questions. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
(a) (i) Explain the meaning of “consolidation of a company’s share capital”. (2 marks)
(ii) Outline SIX reasons why a company might opt to consolidate its share capital. (6 marks)
(b) Summarise FIVE similarities between “debentures” and “shares”. (5 marks)
(c) Examine SEVEN rules governing the alteration of company status in your country. (7 marks)
(Total: 20 marks)
QUESTION TWO
(a) Highlight SIX legal effects of the articles of association of a company. (6 marks)
(b) Identify SEVEN reasons why a company will effect a corporate restructuring. (7 marks)
(c) Outline the procedure for removal of a company director from office. (7 marks)
(Total: 20 marks)
QUESTION THREE
(a) Outline the priority of distribution of assets of a company after dissolution. (3 marks)
(b) Distinguish between “Private Limited Company” and “Public Limited Company”. (4 marks)
(c) With reference to incorporation of companies:
(i) Explain the doctrine of adoption. (2 marks)
(ii) Describe how the doctrine of adoption relates to pre-incorporation contracts. (5 marks)
(d) Explain the following terms:
(i) Receivership. (2 marks)
(ii) Administration. (2 marks)
(iii) Liquidation. (2 marks)
(Total: 20 marks)
QUESTION FOUR
(a) Explain the legal position of a company secretary. (3 marks)
(b) Analyse SEVEN rules governing beneficial owners of companies in your country. (7 marks)
(c) With reference to shareholding, examine FIVE roles of derivative action. (10 marks)
(Total: 20 marks)
QUESTION FIVE
(a) Outline FIVE legal requirements for a company to issue bonds or debentures as a form of debt capital.
(5 marks)
(b) With regard to financial reporting and disclosures, summarise FIVE legal obligations of foreign companies in your country. (5 marks)
(c) Patapata Company Ltd. is a company with both ordinary shares and preference shares issued to its shareholders. The ordinary shares carry voting rights whereas the preference shares do not. The company has been performing well and the board of directors proposes a variation of class rights, intending to grant voting rights to the preference shareholders. However, this proposed variation is met with resistance from some of the ordinary shareholders who fear dilution of their voting power.
Required:
Analyse the situation and advise the board of Patapata Company Ltd., on the legal framework regarding the variation of class rights. (10 marks)
(Total: 20 marks)
QUESTION SIX
(a) Highlight FIVE roles of the board of directors in the oversight of company accounts under company law in your country. (5 marks)
(b) Outline FIVE powers of a company’s external auditor. (5 marks)
(c) XYZ Ltd., a publicly listed company, is scheduled to hold its annual general meeting (AGM) next month. You have been requested to draft an agenda for the AGM and provide guidance on the legal requirements and procedures that must be followed.
Required:
Outline FIVE items that should be included in the agenda for XYZ Ltd.’s AGM, and explain the legal requirements and procedures associated with each item. (10 marks)
(Total: 20 marks)
QUESTION SEVEN
(a) In relation to company accounts, outline SEVEN consequences of non-compliance with accounting standards and disclosure requirements. (7 marks)
(b) Examine SIX circumstances under which an inspector may be appointed by a regulatory authority to investigate the affairs of a company. (6 marks)
(c) Identify SEVEN mechanisms that could be put in place to protect shareholders’ rights and interests during corporate restructuring. (7 marks)
(Total: 20 marks)
