Institute of Certified Management Accountants of Sri Lanka ...

[Pages:5]Institute of Certified Management Accountants of Sri Lanka Corporate Law (CLT /ML 4) ? Managerial Level Pilot Paper - Suggested Answer Scheme

Question 1

1.1 d 1.2 c 1.3 b 1.4 a 1.5 a 1.6 b 1.7 a 1.8 d 1.9 c 1.10 b

PART A (Total 20 marks)

Question 02

(i) (08 marks) Answer

PART B

Altering objective is not an act of ultra vires.

(2 marks)

Section 17 (2) of the Companies Act No 07 of 2007

(2 mark)

Company has the power and capacity to enter into any contract by its own name.

Company's power and capacity are not restricted to the objectives. Therefore third

parties are protected.

(4 marks)

Institute of Certified Management Accountants of Sri Lanka Managerial Level ?Corporate Law (CLT / ML 4)-Pilot Paper Answer Scheme

1

(ii) (04 marks)

Answer Company has a capacity and power to enter into any contract. However it does not

restrict a shareholders right to sue against the company and Director as provided by

Section 17 (3),

Sue against company under Section 233 (restraining orders,)

(2 marks)

Sue against Directors under Section 188 Articles).

(Directors to comply with the Act and

(iii) Minority buy out right ? section 93

(2 marks) (4 marks)

Question 03

(i) (a) Answer

A Co. will be a Pvt Co. only and if only it complies with the provisions of Section

27 of Companies Act No.07 of 2007

Maximum of 50 members ? Sec 27(b)

(02 marks)

Company cannot issue shares or securities to the public ? Sec 27 (a)

(02 marks)

(b) Answer As per Sec 4 (1) any person or persons may apply to incorporate a Company, (other than a Company limited by guarantee) by making an application to the Registrar in the prescribed form signed by each of the initial shareholders, together with the following documents: ? A declaration ? the name of the Company is not identical or similar to that of an existing Company. ? The Articles of Association of the Company ? signed by each of the initial shareholders. ? Consent from each of the initial directors, to act as a director. ? Consent from the initial secretary, to act as secretary (1 Mark each total 04marks) (ii)Answer

Institute of Certified Management Accountants of Sri Lanka Managerial Level ?Corporate Law (CLT / ML 4)-Pilot Paper Answer Scheme

2

CERTIFIED EXTRACT OF A RESOLUTION PASSED AT A MEETING

OF THE BOARD OF DIRECTORS OF ABC (PVT) LTD, HELD ON THE 11THJULY 2016 AT THE REGISTERED OFFICE

OF THE COMPANY.

(02 marks)

"Resolved that 300,000 Subscribed Shares to the value of Rs.3,000,000/=be allotted to the following persons who have paid for in cash";

1. A - 100,000

2.B

- 100,000

3C- 100,000

(02 marks)

300,000

Certified at Colombo on this 11thday of July 2016.

(02 marks)

CHARMAN SECRATARY

(01 marks) (07 marks)

Question 04

(i) Shares and debentures

(03 marks)

Students are required to explain the differences and similarities between terms

Shareholders are owners/Debenture holders are creditors

They are entitled to dividends and surplus assets/DH entitle to receive interest etc

Both are issued to raise the funds and for general public a way of investing

(ii) Limited company and Guarantee company

(04 marks)

In limited companies liability is limited to the shares they have bought

In a guarantee company liability is limited to the guarantee that members have agreed to

pay at the event of winding up.

Institute of Certified Management Accountants of Sri Lanka Managerial Level ?Corporate Law (CLT / ML 4)-Pilot Paper Answer Scheme

3

For Guarantee Company articles must include objectives

(iii)Company Contracts and pre incorporation contacts

(04 marks)

Contracts entered into after incorporation are known as company contracts. And

companies can enter in to contracts according to sec 19 of the companies Act. Contracts

entered into before its incorporation are known as pre-incorporation contracts and they

can be ratified according to sec.24.

(iv) Ordinary resolution and Special resolution

(04 marks)

Resolutions passed more than 51% voting rights are ordinary resolutions. Resolution

required more than 75%voting rights and 15 days' notice is a special resolution.

Question 05

Students are required to write an details essay on role of Auditors including the following

An auditor is a person who makes an independent report to a company's members (shareholders) as to whether its financial statements have been properly prepared in accordance with the Companies Act and relevant Accounting and Auditing Standards.

The report must also say whether a company's Financial Statements give a "true and fair"

view of its affairs. SBEs (as per Accounting and Auditing Standards Act,) are required to

have their accounts audited.

(5 marks)

157. (1) A person should not be appointed or act as auditor of a company, unless that person

?

(a) is a member of the Institute of Chartered Accountants of Sri Lanka; or

(b) is a registered auditor.

Disqualification

If he is not a charted accountant or registered auditor If he is a director or employee of the co. If he is a partner or in the employment of a director or employee of the company; if he is a liquidator or an administrator or receiver in respect of the property of the company;

Institute of Certified Management Accountants of Sri Lanka Managerial Level ?Corporate Law (CLT / ML 4)-Pilot Paper Answer Scheme

4

If that person is a body corporate;

if he is not qualified to be appointed or act as auditor of a related company because of any

office or relationship referred in above.

(5 marks)

Rights to access the books and records.

Right to get explanations from company staff.

Right to receive notice of general meetings.

Right to visit branches.

Right to seek legal and technical advises.

Right to claim remuneration.

Right to refuse to commence the audit.

Right to question the board.

Right to qualify his report. (Unqualified ? clean, Qualified ? subject to condition, Adverse ?

unclean, Disclaimer ? no opinion )

Right of indemnity.

(10 marks)

End of Answer Scheme

Institute of Certified Management Accountants of Sri Lanka Managerial Level ?Corporate Law (CLT / ML 4)-Pilot Paper Answer Scheme

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download