The Association of Chartered Certified Accountants Fundamentals Level – Skills Module Corporate and Business Law ACCA Complete PAPER 2010

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Corporate and

Business Law

(Pakistan)

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The Association of Chartered Certified Accountants

Fundamentals Level – Skills Module

Time allowed

Reading and planning: 15 minutes

Writing: 3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor.

During reading and planning time only the question paper may

be annotated. You must NOT write in your answer booklet until

instructed by the supervisor.

This question paper must not be removed from the examination hall.

ALL TEN questions are compulsory and MUST be attempted

1 Explain the ‘constitutional jurisdiction’ of the High Courts of Pakistan under Article 199 of the Constitution of

Pakistan, 1973.

(10 marks)

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2 Under the law of contract, explain the meaning of ‘acceptance’ of an offer (proposal).

(10 marks)

3 Under the Companies Ordinance, 1984;

(a) define a ‘chief executive’; (3 marks)

(b) explain the requirements for the appointment and removal of a ‘chief executive’. (7 marks)

(10 marks)

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4 Under the Partnership Act, 1932:

(a) define ‘implied authority’ of a partner; (3 marks)

(b) state the restrictions on the scope of implied authority; (4 marks)

(c) describe the liability of a partner for the acts of the partnership firm. (3 marks)

(10 marks)

5 In relation to the concept of loan capital, under the provisions of Companies Ordinance, 1984, explain the

meaning of:

(a) ‘debenture’; (5 marks)

(b) ‘redeemable capital’. (5 marks)

(10 marks)

6 Under the Securities and Exchange Ordinance, 1969, explain the terms:

(a) ‘insiders’; (4 marks)

(b) ‘insider information’; and (2 marks)

(c) ‘insider trading’. (4 marks)

(10 marks)

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7 In relation to the employment law in Pakistan, describe the following three streams of employment:

(a) ‘workman’; (4 marks)

(b) ‘government employees’; (3 marks)

(c) ‘master and servant’. (3 marks)

(10 marks)

8 Ahmed is a cotton grower. He supplies his cotton to textile manufacturers. In June 2010 he entered into a contract

with Shah Textile Mills Limited (‘STML’) for sale and supply of cotton. He received Rs. 100,000·00 as advance

payment from STML. In August 2010 his cotton crop was destroyed by the severe floods in Pakistan.

Required:

In relation to the law of contract, advise Ahmed and STML on the impact of this event on their contract.

(10 marks)

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9 Zahoor Sons Limited (‘ZSL’) is a public unlisted company engaged in the business of textile manufacturing. ZSL owns

two factories. Due to the economic slow down, the textile industry has suffered badly and one of the factories of ZSL

has been shut down for the past one year (‘Closed Factory’). During a recent meeting of the board of directors, the

board was informed that the expensive machinery installed in the Closed Factory is depreciating rapidly. The board

was also informed that a potential buyer has expressed his interest in buying the machinery, however, he wants to

complete the sale before leaving for England in two weeks’ time. One of the directors was of the view that approval

of the shareholders in a general meeting is needed for selling the machinery; and, in view of the 21-days minimum

notice period for general meetings, their approval may not be available in time to complete the proposed sale.

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Required:

With reference to the Companies Ordinance, 1984:

(a) advise the directors on whether approval of shareholders is needed for selling the machinery in the Closed

Factory; and (5 marks)

(b) whether the directors may convene a general meeting before the potential buyer leaves for England.

(5 marks)

(10 marks)

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10 Rahman has been engaged in the business of carpet manufacturing as a sole proprietor for the last 10 years. In

addition to his own business, Rahman along with his wife and their two sons established Orient Carpets (Private)

Limited (‘OCPL’) in 2008 with the main objects of manufacturing and exporting carpets. Rahman has been OCPL’s

chief executive since 2008. On the advice of OCPL’s financial advisor, the shareholders want to convert OCPL into a

public company.

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Required:

Under the Companies Ordinance, 1984:

(a) advise OCPL’s shareholders on the procedure for conversion of a private company into a public company;

(4 marks)

(b) advise Rahman on the implications of this conversion on his role as the chief executive of the company;

(4 marks)

(c) advise Rahman on the implications of the appointment of his wife as the chief executive of OCPL.

(2 marks)

(10 marks)

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