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Paper GE05 Fundamentals of Ethics, Corporate Governance and Business law

Professional Questions Bank Edition: January 2017

Prepared By –

Dhaka, Bangladesh Mobile: +88 01711137039 E-mail: info@sabolilacademy.org Website: www.sabolilacademy.org Sabolil Academy Professional Questions Bank

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Copyright Š 2016 All rights reserved. No part of this publication may be reproduced, stored, transmitted in any form or by any means of electronic, photocopying, recording or otherwise, without the prior written permission of Sabolil Publication.

Edition: January 2017.

Presented by: Sabolil Publication Dhaka, Bangladesh.

Designed by: Time Press Nilkhet, Dhaka, Bangladesh.

Price: BDT180.00 only

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Preface With the growing demand of professional education, Cost and Management Accountant has gained a huge popularity. A Cost and Management Accountant degree makes the candidates suitable for lots of opportunities. As more and more multi-nationals are coming into the world, demand for Cost and Management Accountant has further increased. The employment periphery for Cost and Management Accountants are various and can range from holding key positions in a company. To become a Cost and Management Accountant a person needs to qualify the course offered by the Institute of Cost and management Accountants of Bangladesh (ICMAB). This book contains suggested questions and answer along with CMA previous examination questions. It covers whole syllabus of ICMAB and includes related topic so that students can be well prepared for the final examination by studying this book. The main objectives of this book is to meet the basic requirements for the students of ICMAB but it is also helpful for other professional students and the person who are intended to get admission into a professional institute. We are grateful and deserve our thanks to the publishers, printers and designers of this book. Any criticism, favorable or unfavorable, and any constructive suggestion in regards of this book will be gratefully received by us.

Sabolil Academy

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Dedication We would like to dedicate this publication to the honorable qualified Cost and Management Accountants for their incredible contribution in the field of Accounting.

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Availability Dhaka Farhan Book Center Islamia Market, Nilkhet, Dhaka-1205, Bangladesh. Mobile: +8801911558690 Dhaka Students Book House Islamia Market, Nilkhet, Dhaka-1205, Bangladesh. Mobile: +8801921314326 Chittagong F.N.N Library & Stationery (Beside of Beparipara Jame Masjid) Beparipara, Agrabad, Chittagong, Bangladesh. Mobile: +8801843659433 Rajshahi Snigdha Photocopy (Beside Northern University) Taloimari, Motihar, Rajshahi, Bangladesh. Mobile: +8801728586997

Dhaka Bhai Bhai Photostat & Computer 415, Gausul Azom Super Market, Nilkhet, Dhaka-1205, Bangladesh. Mobile: +8801922213179 Comilla Victoria Computer & Printing Victoria College Road, Kandirpar, Comilla, Bangladesh. Mobile: +8801712863746 Khulna Rifat Computer & Digital Photostat Mojid Soroni, Sona Danga, Khulna, Bangladesh. Mobile: +8801936818482

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Table of contents Segment A B C D E F G

Topic Ethics and business Ethical conflict Corporate governance Comparison of English law with alternative legal systems The law of contract The law of employment Company administration and finance

Page No. 6 17 26 46 55 94 101

ফুঝতে ঳ভ঳যা ঴তর ফা ঩যাভ঱শ প঩তে পপান করুন! ঳াফলরর একাতেলভ - ০১৭১১১৩৭০৩৯

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Segment- A: Ethics and business

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Q-1. “A professional accountant shall comply with the fundamental principles as per IFAC Handbook for code of Ethics for Professional Accountants”. Please expand upon this statement. Discuss the Code of Ethics of a Professional Accountant. ICMA- June‘16 Ans. A professional accountant‘s responsibility is not exclusively to satisfy the needs of an individual client or employer, but to act with the fundamental principles as per IFAC Handbook for code of Ethics for Professional Accountants. Thus, the responsibility of the professional accountant is to ensure that the financial statements present information that is relevant, reliable and useful to a wide range of users who are not in a position to demand reports tailored to meet their particular information needs. The code of ethics of a Professional Accountant: a) Integrity – it is the quality of being honest and having strong moral principles; moral uprightness. b) Objectivity - the objectivity principle states that accounting information and financial reporting should be independent and supported with unbiased evidence. c) Confidentiality - it is the protection of personal information. Confidentiality means keeping a client's information between you and the client, and not telling others including co-workers, friends, family, etc. Q-2. Who is a professional accountant as per Financial Reporting Act2015? Critically discuss the Financial Reporting Act-2015 with particular emphasis on the accounting profession in Bangladesh. ICMA- June‘16 Ans.

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Professional accountant: In Bangladesh the profession of accountancy represented by two professional bodies, the Institute of Cost & Management Accountants of Bangladesh (ICMAB) and the Institute of Chartered Accountants of Bangladesh (ICAB). Chartered Accountants complete their training in practicing firms and specialise in financial accounting, financial audit and tax. CMAs receive particular training in cost audit, management audit and management accounting, as well as general accounting and taxation. The Financial Reporting Act-2015: The Financial Reporting Act 2015 (known as FRA 2015 ) is an act of the Bangladesh National Assembly which has passed the act on September 6, 2015 in order to make sure the accountability and transparency in the financial reporting procedures of the country. As per the FRA 2015, All auditors and audit firms must register with the Financial Reporting Council. Without registration, no auditor and audit firm will be able to provide auditing services to any entity related with public interest. For registration, the auditor or audit firm needs to apply to the Financial Reporting Council (FRC). The FRC will review the application, and will provide the registration pursuant to the rules and guidelines. If any auditor or any audit firm violates any provision of the act or any of its rules and guidelines, the FRC may cancel or suspend the registration and may fine as well. Q-3. What are the IFAC codes of ethics for Professional Accountants? ICMA- Dec‘15 Ans. A Professional Accountant should comply with the following code of ethics: a) Integrity – it is the quality of being honest and having strong moral principles; moral uprightness. b) Objectivity - the objectivity principle states that accounting information and financial reporting should be independent and supported with unbiased evidence. Sabolil Academy Professional Questions Bank

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c) Confidentiality - it is the protection of personal information. Confidentiality means keeping a client's information between you and the client, and not telling others including co-workers, friends, family, etc. Q-4. The Bangladesh National parliament passed the Financial Reporting Act- 2015 on September 6, 2015. Could you critically evaluate the impact of the Act on accounting profession? ICMA- Dec‘15 Ans. The Financial Reporting Act 2015 is an act of the Bangladesh National Assembly which has passed the act on September 6, 2015 in order to make sure the accountability and transparency in the financial reporting procedures of the country. The Act may have the following impact on accounting profession: a) Financial reporting will be more fair b) The authenticity of financial reporting will be reviewed and monitor by public interest entities c) Practice of auditors will be monitored to maintain a high standards of professional conduct d) The Act enforces compliance with Accounting Standards/ Financial Reporting Standards and Auditing Standards, etc. Q-5. What is ethics? Write the importance of ethics. Ans. Ethics: Ethics is the discipline dealing with what is good and bad and with moral duty and obligation. It is a set of moral principles, especially ones relating to or affirming a specified group, field, or form of conduct. It includes study of universal values such as the essential equality of all men and women, human or Sabolil Academy Professional Questions Bank

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natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment. Ethics (sometimes called morals or moral philosophy): - is concerned with fundamental principles of right and wrong and what people ought to do - inform the judgements and values and help individuals decide on how to act The importance of ethics: The ethics is important because of the following: 1. Satisfying basic human needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices. 2. Creating credibility: An organization that is believed to be driven by moral values is respected in the society even by those who may have no information about the working and the businesses or an organization. 3. Uniting people and leadership: This goes a long way in aligning behaviors within the organization towards achievement of one common goal or mission. 4. Improving decision making: A man‘s destiny is the sum total of all the decisions that he/she takes in course of his life. The same holds true for organizations. Decisions are driven by values. 5. Long term gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money.

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6. Securing the society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save the society and the environment. Q-6. Briefly discuss the nature of ethics and its relevance to business and the accountancy profession. Ans. The nature of ethics: a) Business ethics is a code of conduct. It tells what to do and what not to do for the welfare of the society. b) Business ethics is based on moral and social values. It contains moral and social principles (rules) for doing business. c) Ethics give protection to different social groups such as consumers, employees, small businessmen, government, shareholders, creditors, etc. d) It provides a basic framework for doing business. It gives the social cultural, economic, legal and other limits of business. e) Businessmen must be given proper education and guidance before introducing business ethics. Its relevance to business and the accountancy profession: Ethical behaviour can bring significant benefits to a business and accountancy profession. For example, it may: a) Attract customers to the firm‘s products, which means boosting sales and profits b) Make employees want to stay with the business, reduce labour turnover and therefore increase productivity

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c) Attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees d) Attract investors and keep the company‘s share price high, thereby protecting the business from takeover. Q-7. What are values and attitudes for professional accountants? Ans. Values: In ethics, value denotes the degree of importance of some thing or action, with the aim of determining what actions are best to do or what way is best to live, or to describe the significance of different actions. It may be described as treating actions themselves as abstract objects, putting value to them. It deals with right conduct and good life, in the sense that a highly, or at least relatively highly, valuable action may be regarded as ethically "good", and an action of low in value, or somewhat relatively low in value, may be regarded as "bad". What makes an action valuable may in turn depend on the ethic values of the objects it increases, decreases or alters. An object with "ethic value" may be termed an "ethic or philosophic good". Attitudes: An attitude is a settled way of thinking or feeling about someone or something, typically one that is reflected in a person's behavior. Attitudes structure can be described in terms of three components: a) Affective component: this involves a person‘s feelings/ emotions about the attitude object. For example: ―I am scared of spiders‖. b) Behavioral (or conative) component: the way the attitude we have influences how we act or behave. For example: ―I will avoid spiders and scream if I see one‖. c) Cognitive component: this involves a person‘s belief/ knowledge about an attitude object. For example: ―I believe spiders are dangerous‖. Sabolil Academy Professional Questions Bank

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Q-8. What are the roles of international accounting bodies? Ans. The roles of international accounting bodies: a) To formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observance. b) To work generally for the improvement and harmonization of regulations, accounting standards and procedures relating to the presentation of financial statements. Q-9. What are the „Seven Principles of Public Life‟? Briefly describe. Ans. In 1994, the UK government established a Committee on Standards in Public Life. The committee was chaired by Lord Nolan, and was tasked with making recommendations to improve standards of behaviour in public life. The first report of the committee established the seven principles of public life, also known as the ―Nolan principles‖. The seven principles are outlined below: 1. Selflessness – Holders of public office should act solely in terms of the public interest. They should not do so in order to gain financial or other benefits for themselves, their family or their friends. 2. Integrity – Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might seek to influence them in the performance of their official duties. 3. Objectivity – In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit. Sabolil Academy Professional Questions Bank

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4. Accountability – Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office. 5. Openness – Holders of public office should be as open as possible about all the decisions and actions they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands. 6. Honesty – Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest. 7. Leadership – Holders of public office should promote and support these principles by leadership and example. Q-10. What are the ethical principles of integrity and objectivity? Ans. The CIMA ‗Code of Ethics‘ identifies five fundamental principles of integrity and objectivity which are as follows: 1. Integrity: Integrity is the quality of being honest and having strong moral principles; moral uprightness. It is generally a personal choice to hold oneself to consistent moral and ethical standards. In ethics, integrity is regarded by many people as the honesty and truthfulness or accuracy of one's actions. 2. Objectivity: Generally, objectivity means the state or quality of being true even outside of a subject's individual biases, interpretations, feelings, and imaginings. 3. Professional competence and due care: The principle of professional competence and due care imposes the following obligations on all professional accountants: Sabolil Academy Professional Questions Bank

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- To maintain professional knowledge and skill at the level required to ensure that clients or employers receive competent professional service; and - To act diligently in accordance with applicable technical and professional standards when providing professional services. 4. Confidentiality: Confidentiality is the protection of personal information. Confidentiality means keeping a client's information between you and the client, and not telling others including co-workers, friends, family, etc. Examples of maintaining confidentiality include: individual files are locked and secured. 5. Professional behavior: A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession. Q-11. What are the disclosures of confidential information required by law? Briefly discuss the concept of independence, scepticism, accountability and social responsibility. Ans. The disclosures of confidential information: In identifying whether confidential information can be disclosed it is necessary to consider whether any parties would be harmed by such disclosure, whether all relevant information is known and substainted and the type of disclosure and to whom it is to be made. The following are circumstances where professional accountants are or may be required to disclose confidential information or when such disclosure may be appropriate: - Disclosure is permitted by law and authorised by the client or the employer - Disclosure is required by law

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The concept of independence: It is the public interest and required in CIMA‘s ‗Code of Ethics‘ that members of assurance engagement teams and their firms is to be independent of the assurance clients. Scepticism: It is generally any questioning attitude or doubt towards one or more items of putative knowledge or belief. It includes auditor‘s questioning, evaluative, attitude toward evidence: - Management‘s assertions without sufficient corroboration - Financial trends need investigation - Documents are checked for authenticity or alteration - Ask questions, get answers and then verify the answers. Accountability: The concept of accountability is that of the professional accountant being responsible to someone and for something or action and being able to explain those actions. It is an important aspect of the profession and to leadership in the wider business environment. Social responsibility: Social responsibility of business deals with taking those decisions and performing those actions that benefit the society. By assuming social responsibility, the business enterprise not only respects the aspiration of society but also helps in implementing these aspirations along with their profit interest.

অভযা প্রতপ঱নার প্রলেষ্ঠাতনয (পমভনঃ ICMAB, ICAB, ICSB) ছাত্র-ছাত্রীতেয চূ ড়ান্ত ঩যীক্ষায প্রস্তুলে ক্লা঳ প঳ফা লেতে থালক।

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Segment- B: Ethical conflict

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Q-1. Is there any relationship between ethics and the law? What is unethical behavior? Briefly describe the roots of Unethical Behavior. ICMA- Dec‘15 Ans. The relationship between ethics and law: Ethics and law are closely interrelated as they both have a focus on right and wrong, preventing immoral acts and on creating rules for trade groups such as doctors and social workers. However, ethics and law are quite different as well and ethical obligations often exceed a person's duty to the law. The law also can force people to perform what they believe to be unethical conduct. Physicians who feel that a law forces them to be unethical must work within the legal world to change the law. Of course, a physician who has been exonerated from a criminal charge in the eyes of the law may have still been guilty and been ethically irresponsible. The relationship that clearly exists between law and ethics is now being pressed by the new technology. Recent cases that have come before the courts indicate just how complex the issues are. They highlight the fact that there is a need for the establishment of suitable decision-making processes to deal with the issues and to provide for some certainty and consistency in approach. Unethical behavior: Unethical behavior is an action that falls outside of what is considered morally right or proper for a person, a profession or an industry. Individuals can behave unethically, as can businesses, professionals and politicians. The roots of unethical behavior: There are certain factors that make the employees think and act in unethical ways. Some of the influencing factors are ‗pressure to balance work and family, poor communications, poor leadership, long work hours, heavy work load, lack of management support, pressure to meet sales or profit goals, little or no recognition of achievements, company politics, personal financial worries, and insufficient resources‘. Sabolil Academy Professional Questions Bank

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Q-2. What are the elements of organizational conflict? A conflict of interest can be actual, potential or perceived – briefly describe. ICMA- Dec‘15 Ans. The elements of organizational conflict: Managerial expectations: It is the job of an employee to meet the expectations of his manager, but if those expectations are misunderstood, conflict can arise. Breakdown in communication: If a department requires information from another department in order to do its job, and the second department does not respond to the request for information, a conflict can arise. Some interdepartmental disagreements might trigger a nonresponsive attitude that can quickly become an internal conflict. Misunderstanding the information: Internal conflict can sometimes arise as the result of a simple misunderstanding. One person may misunderstand information, and that can trigger a series of conflicts. Lack of accountability: Organizational conflict might arise from frustration. One source of frustration is a lack of accountability. If something has gone wrong, and no one is willing to take responsibility for the problem, this lack of accountability can start to permeate throughout the entire company until the issue is resolved. A conflict of interest can be actual, potential or perceived: A conflict of interest can be actual, potential or perceived and may or may not lead to negative outcomes. An actual conflict of interest is one that has already occurred or currently exists. A potential conflict of interest is one that could possibly develop in the future. A perceived conflict of interest occurs when others perceive that a conflict of interest may influence a nurse‘s judgment. Sabolil Academy Professional Questions Bank

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Q-3. What are the differences between ethical codes and contracts? Ans. The differences between ethical codes and contracts: Ethical codes: Ethical codes are adopted by organizations to assists members in understanding the difference between ‗right‘ and ‗wrong‘ and in applying that understanding to their decisions. An ethical code generally implies documents at three levels: 1. Codes of business ethics, 2. Codes of conduct for employees, and 3. Codes of professional practice. Contracts: When creating a contract, a negotiator is not only doing so to reach an agreement between two or more parties, but to create an agreement that is durable; whereby parties of the contract are legally bounded and committed to its promises. A legally binding contract is defined as an exchange of promises or an agreement between parties that the law will enforce and there is an underlying presumption for commercial agreements that parties intend to be legally bound. Q-4. Define ethical conflict. What are the consequences of unethical behavior? Ans. Ethical conflict: Ethical conflicts arise when individuals are confronted with a collision between general belief systems about morality, ethics or justice and their own personal situations. Right and wrong are not always perfectly clear, and some situations involve choosing between two ―evils,‖ where, perhaps, the ethical decision Sabolil Academy Professional Questions Bank

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might result in personal or social injury or where an individual stands to gain from an unethical decision. Such conflicts could take place at the individual, professional, or societal level. The consequences of unethical behavior: The sad truth is that almost every company has individuals that partake in unethical behaviour for their personal benefit or supported by the company. Unethical behaviour might be as simple as using company property and time for personal benefit to inside trading and financial fraud. Many companies sadly make it part of their operational policy to cut corners, accept and give kick-backs in order to get juicy contracts and maximize profit. In today‘s business environment, the line between right and wrong is fade. Workers with high moral standard are helpless against unethical behaviour they notice in their colleagues, and to make it worse, many unethical conducts go unpunished because of legal insignificance. An employee working for an employer or company with unethical, deceptive, and dishonest conduct will be directly affected physically and mentally, and may even come down with emotional and health related problems because of it. Workers involved in unethical practices are almost always directly or indirectly held accountable for their actions. Even though they may not be found guilty by any court of law, the physiological impact of immoral acts leads to intense mental and physical stress. When a company is found guilty of financial improprieties, the workers undergo a series of questions from investigators and if they were found to be involved, they may be blacklisted or their professional license revoked. Many workers involved in immoral behavior may not know the source of anxiety or other health issues, but the human conscience has a strong effect on our physical and mental stability. Unethical behavior in a company can also: – Harm sales of goods, as customers may boycott goods produced by a company known for unethical behavior. – Lead to a drop in stock price. Investors will be unwilling to buy shares from companies known to transact business dishonestly. Investing in dishonest firms will result in poor returns. Sabolil Academy Professional Questions Bank

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Immoral dealings amongst individuals or in a company builds a work atmosphere of malice and mistrust. Workers tend to go further down the drain when they are surrounded with people who practice the same. This will lead to lower productivity, promote conflict, and subsequently cripple the company. Many workers are hesitant to turn in their colleagues involved in unethical practices. It is up to the company to manage unethical practices by creating processes that stem the tide. It should be part and parcel of the company‘s policy, well documented, and new workers should be briefed on the ‗do‘s and don‘ts‘ in respect to the company‘s policy on unethical conduct. Q-5. What is the conflict of interest? How they arise? Ans. Conflict of interest: A conflict of interest is a situation in which a person or organization is involved in multiple interests, financial or otherwise, one of which could possibly corrupt the motivation or decision-making of that individual or organization. A widely used definition is: "A conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest." How they arise: A conflict of interest arises in the workplace when an employee has competing interests or loyalties that either are, or potentially can be, at odds with each other. A conflict of interest causes an employee to experience a struggle between diverging interests, points of view, or allegiances. Conflicts of interest are generally forbidden in company codes of conduct and / or employee handbooks. Conflicts of interest can cause an employee to act out of interests that are divergent from those of his or her employer or coworkers.

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In workplaces, employees want to avoid any behavior or choices that could potentially signal a conflict of interest. They are bad news for the employee's reputation, integrity, and trustworthiness in the eyes of management. Q-6. Define and narrate the natures of ethical dilemma? How to resolve ethical dilemma in business?

Ans. Definition and nature of ethical dilemma: An ethical dilemma is one in which a person has to choose between two options, both of which are morally correct but in conflict. Ethics and morals are inseparable. They both deal with questions of right and wrong. What constitutes ethical behavior is determined by societal or cultural norms. What constitutes moral behavior is up to the individual to decide based on his own sense of right and wrong. It is a complex situation that often involves an apparent mental conflict between moral imperatives, in which to obey one would result in transgressing another. Sometimes called ethical paradoxes in moral philosophy, ethical dilemmas are often invoked in an attempt to refute an ethical system or moral code, or to improve it so as to resolve the paradox.

Resolve ethical dilemma in business: Though there are no golden rules to resolve ethical issues but managers can take a number of initiatives to resolve ethical issues. A brief description is given below. Know the principles: In ethical decision making there are three basic principles that can be used for resolution of problem. These three principles are that of intuitionism, moral idealism and utilitarianism.

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Debate moral choices: Before taking a decision, moral decisions need to be thought upon and not just accepted blindly. It is a good idea to make hypothetical situations, develop case studies and then engage others in brainstorming upon the same. Balance sheet approach: In balance sheet approach, the manager writes down the pros and cons of the decision. This helps arrive at a clear picture of things and by organizing things in a better way. Engage people up and down the hierarchy: One good practice is to announce ones stand on various ethical issues loudly such that a clear message to every member of the organization and to those who are at the greater risk of falling prey to unethical practices. This will prevent the employees from resorting to unethical means. Integrating ethical decision making into strategic management: Morality and ethical make up for a perennial debate and ethical perfection is almost impossible. A better way to deal with this is to integrate ethical decision making into strategic management of the organization. The way the HR manager gains an alternate perspective rather than the traditional employee oriented or stakeholder oriented view. Q-7. What do you mean by „Ethical conflict resolutionâ€&#x;? What are the steps involved in conflict resolution?

Ans. Ethical conflict resolution: To understand ethical conflict resolution we have to consider the word conflict in isolation and consider what it means. The most likely interpretation of conflict might be that of disagreement with a professional colleague or disagreement with a customer or client.

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The steps involved in conflict resolution: Conflict resolution is only a five-step process. Step 1: Identify the source of the conflict. The more information an organisation has about the cause of the conflict, the more easily it can help to resolve it. To get the information need, the organisation can use a series of questions to identify the cause. Step 2: Look beyond the incident. Often, it is not the situation but the perspective on the situation that causes anger to fester and ultimately leads to a shouting match or other visible—and disruptive—evidence of a conflict. Step 3: Request solutions. After getting each party‘s viewpoint on the conflict, the next step is to get each to identify how the situation could be changed. Step 4: Identify solutions both disputants can support. Point out the merits of various ideas, not only from each other‘s perspective, but in terms of the benefits to the organization. Step 5: Agreement. The mediator needs to get the two parties to shake hands and agree to one of the alternatives identified in Step 4. Some mediators go as far as to write up a contract in which actions and time frames are specified.

অভাতেয প্রধান বফল঱ষ্ট্যঃ ঳কর ল঱ক্ষক এফং ল঱ক্ষাথী প্রতপ঱নার প্রলেষ্ঠাতনয

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Segment- C: Corporate governance

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Q-1. Briefly describe the recent developments of corporate governance in Bangladesh. Who can be an “Independent Director”? Explain. ICMA- June‘16 Ans. The recent developments of corporate governance in the Bangladesh: i) Like many other developing nations, Bangladesh has also adopted the AngloAmerican shareholder model of corporate governance. ii) Analysis of behaviors of principal sectors in the Bangladeshi corporate governance scenario, using new institutionalism as a theoretical foundation, then reveals that such adoption may be promoted by exposure to legitimacy threats rather than efficiency reasons. Independent Director: An independent director is a person other than an exclusive officer or employee of the company. An independent director is a director who either does not hold any share in the company or holds less than one percent share of total paid-up shares of the company and he is not a sponsor of the company and he is not connected with the company‘s any sponsor or director or shareholders who holds one percent or more shares of the total paid-up shares of the company. His family members also should not hold above mentioned shares in the company. Q-2. Critically discuss the „Corporate Governance Notification‟ for listed companies issued by the Bangladesh Securities Exchange Commission. ICMA- June‘16 Ans. Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Each listed company may determine its own policies, but all listed companies should address the ‗Corporate Governance Notification‘, including the following:

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• Corporate opportunities: Employees, officers and directors should be prohibited from (a) taking for themselves personally opportunities that are discovered through the use of corporate property, information or position. • Confidentiality: Employees, officers and directors should maintain the confidentiality of information entrusted to them by the listed company or its customers, except when disclosure is authorized or legally mandated. • Fair dealing: Each employee, officer and director should endeavor to deal fairly with the listed company's customers, suppliers, competitors and employees. • Protection and proper use of listed company assets: All employees, officers and directors should protect the listed company's assets and ensure their efficient use. • Compliance with laws, rules and regulations: The listed company should proactively promote compliance with laws, rules and regulations, including insider trading laws. • Encouraging the reporting of any illegal or unethical behavior: The listed company should proactively promote ethical behavior. The listed company should encourage employees to talk to supervisors, managers or other appropriate personnel when in doubt about the best course of action in a particular situation. Q-3. What is corporate governance? Briefly describe the principles of good corporate governance. ICMA- Dec‘ 15 Ans. Corporate governance: Corporate governance is the system by which corporate entities are directed and controlled. The structure of corporate governance specifies the distribution of right and responsibilities among company‘s different participants such as board of directors, management, shareholders and other stakeholders.

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The principles of good corporate governance are described below: 1. Fairness: Fairness refers to the equal treatment, for example, all shareholders should receive equal consideration for whatever shares they hold. 2. Accountability: Corporate accountability refers to the obligation and responsibilities to give an explanation or reason for the company‘s actions are conduct. The board should maintain sound risk management and internal control systems. 3. Responsibility: The Board of Directors is given authority to act on behalf of the company. They should accept full responsibility for the powers that it is given and the authority that it exercises. 4. Transparency: A principle of good governance is that stakeholders should be informed about the company‘s activities, what it plans to do in the future and any risks involved in its business activates. Q-4. Briefly describe the recent development of corporate governance in the Bangladesh with the Board size. Who would be an „Independent Director‟? ICMA- Dec‘15 Ans. The recent development of corporate governance in the Bangladesh: i) Like many other developing nations, Bangladesh has also adopted the AngloAmerican shareholder model of corporate governance. ii) Analysis of behaviors of principal sectors in the Bangladeshi corporate governance scenario, using new institutionalism as a theoretical foundation, then reveals that such adoption may be promoted by exposure to legitimacy threats rather than efficiency reasons.

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Independent Director: An independent director is a person other than an exclusive officer or employee of the company. An independent director is a director who either does not hold any share in the company or holds less than one percent share of total paid-up shares of the company and he is not a sponsor of the company and he is not connected with the company‘s any sponsor or director or shareholders who holds one percent or more shares of the total paid-up shares of the company. His family members also should not hold above mentioned shares in the company. Q-5. Company secretary is an advisor to the Board of Directors- Do you agree? How? Explain. ICMA- Aug‘ 15 Ans. Yes, I agree to the statement because a secretary cum director has to play dual role. As a member of the Board he is an agent of the company and a trustee of its funds and properties. On the other hand as secretary he is a professional and is the principal officer of the company to safeguard and protect the interests of the company. However, whether or not as a director, the secretary also requires to play an advisory role in the company. In that case he should remember the order of preference in case of any conflict in decisioning which is that: i) Management order cannot go past the Board resolution ii) Board resolution cannot more beyond members resolution iii) Members resolutions cannot override the articles of association iv) Articles of association cannot go beyond the Companies Act or any other legislation. v) Any act cannot surpass the constitution of the country. একাউলটং লফলেগুতরা ফুঝতে ঳ভ঳যা ঴তে? প্রতপ঱নার ফযাতচ বলেশ ঴ন-০১৭১১১৩৭০৩৯

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Q-6. “Company Secretary is the chief compliance officer of the company”Discuss. ICMA- Apr‘ 15 Ans. The company secretary plays an important role of a company as their virtue and as per law and contract. The success of a company management usually depends on the efficiency and capability of the company secretary. In an organizational structure, the position of the company secretary is just below that of a Director. We can realize the importance of a company secretary in today‘s complex management through the following points: i) Status as an employee of the company ii) Status as an officer or agent of the company iii) Status as an advisor to the company iv) Status as a custodian of the company v) Status as a chief administration officer or chief compliance officer of the company vi) Status as a laison among the employees and other parties of the company. From the above discussion we can conclude that the company secretary works under the direct control and supervision of the Board of Directors. He is a spokesman of the Board of Directors. If the Board of Directors is compared to the brain of the company, he can be said to be its eyes, ears and hands that is he is an eye witness of the company. The company cannot be run effectively without the company secretary. Q-7. What is code of conduct of board of directors as per corporate governance guidelines 2012 of BSEC? ICMA- Apr‘ 15 Ans.

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Every board of director shall be bound by code of conduct of the company. The code includes the following guidelines for the board of directors. a) Support ethical standards of integrity b) Act objectively and constructively while exercising his duties c) Dedicate sufficient time and attention to his professional obligations for balanced decision making d) Not abuse his position for the purpose of indirect personal advantage or advantage for any associated person e) Assist the company in implementing the best corporate governance practices f) Safeguard the interests of all stakeholders particularly the minority shareholders Q-8. Discuss the role of company secretary as a catalyst for good governance of a company ICMA- Aug‘ 14 Ans. A Secretary cum Director has to play dual role. As a member of the Board, he is an agent of the company and a trustee of its funds and properties. On the other hand as Secretary he is a professional and is the principal officer of the company to safeguard and protect the interests of the company. However, whether or not as a Director, the Secretary also requires to play an advisory role in the company. The other major roles of a company secretary are: i) Convene a Board or shareholders meetings in time ii) Sign notices of such meeting iii) Watch that the notices are dispatched properly and timely iv) Send the annual and held yearly accounts to shareholders. v) Prepare minutes of the meeting timely and correctly. vi) It is his role to see before exclusion various deeds, contracts and agreements, where the company is a party, are properly framed. vii) If authorized, the company Secretary should be one of the signatory of such agreements or at least a knowledge able witness.

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viii) It is his role to prepare the allotment list, process the share transfer instruments and make out the definitive share certificates for approval of the Board. Q-9. As a company secretary, you have been asked by the chairman of a company, as to what are the requirements of the companies Act 1994, regarding the holding of an Annual General Meeting? You are also required to state the ordinary business of an Annual General Meeting of a company. ICMA- Aug‘ 14 Ans. An annual general meeting is a general meeting that certain companies are required to hold each year: - A public limited company must hold an Annual General Meeting each year within the period of six months beginning with the date following its accounting references date, and - A private company is not required to hold an Annual General Meeting each year. The requirements of the companies Act 1994, regarding the holding of an Annual General Meeting (AGM): 1. Notice of an annual general meeting: The notice period required to convene and AGM depends upon the type of company: i) A private company can hold an AGM by giving notice of at least 14 days to its members. ii) A public company (not a traded company) can hold an AGM by giving 21 days notice to its members. iii) A traded public company can hold an AGM by giving notice of at least 21 days to its members. Sabolil Academy Professional Questions Bank

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2. Short notice of an AGM: It is possible to call an AGM of a private company or a non-traded public company on shorter notice if such shorter notice is agreed by the members. 3. Special notice of an AGM: Special notice of an AGM is required where at that meeting there is to be proposed a resolution to: - remove a director by ordinary resolution - appoint somebody in place of director - remove an auditor from office - appoint auditor 4. Quorum requirements: An AGM must satisfy the relevant quorum requirements for business to be validly transacted at the meeting. If the relevant quorum requirements are not satisfied, any business transacted will be void. In practice, quorum requirements are often set out in a company‘s articles of association. Where the articles contain no such provisions, then the relevant provisions will apply. In case of private company, if the number of member is less than six, the required number of member for quorum is two and it such number is more than six, the required number of member is three for the quorum. In case of public company, the number of members must be 5 for quorum irrespective of the number of members of the company. Q-10. Discuss the functions of the company secretary in a public listed company. ICMA- Apr‘ 14 Ans.

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The functions of the company secretary in a public listed company: i) Convene a board or shareholders meeting in time ii) Sign notices of such meeting iii) Watch that the notices are dispatched properly and timely iv) Send the annual and half yearly accounts to shareholders v) Prepare minutes of the meeting timely and correctly vi) It is his function to see before execution various deeds, contracts and agreements, where the company is a party, are properly framed vii) If authorized, the company secretary should be one of the signatory of such agreements or at least a knowledgeable witness. Q-11. As company secretary, please advise the chairman of your company the procedures to be followed on the followings: (a) The Board of Directors would like to declare Bonus shares against Revaluation Reserve. (b) The company wishes to go for IPO for Tk. 1000 crore. ICMA-Apr‘ 14 Ans. a) As a company secretary, I will advise the chairman of my company to follow the following procedures: i) To take steps as per the relevant provisions ii) To convene a meeting of the Board of Directors iii) To issue a notice to the shareholders relating to the Annual General Meeting iv) To convene another meeting of Board of Directors to approve and pass provisional allotment list and resolution v) To give a public notice through newspapers regarding the closure of the register of members and transfer books vi) To issue allotment letters to the members along with a circular explaining how the allotment has been made. vii) To take necessary entries in the register of members viii) To prepare and issue new share certificate after obtaining signature of concerned Directors or Officers. Sabolil Academy Professional Questions Bank

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b) The procedures to be followed in case of IPO: i) If it is private company, to convert into public company ii) To appoint an issue manager iii) Apply to Securities and Exchange Commission for the consent of raising capital iv) Apply for the IPO placement determination v) Agreement with underwriter vi) To approve by SEC the issue of prospectus vii) To open subscription viii) To allotment of shares ix) Listing with DSE/CSE Q-12. How does a company secretary assist the chairman and the managing director in a public listed company? ICMA- Dec‘ 13 Ans. One of the main tasks of the secretary is to convene and conduct meetings of the directors and shareholders. He should make ready necessary papers and documents which are likely to be needed at the meeting and arrange for other things as are incidental to it. If the chairman is to present a report at the meeting, the secretary should remind him of that in advance. If the chairman drafts the report, the secretary should supply him with all necessary references, notes information and data. Otherwise, the secretary should himself draft the chairman‘s report and get it approved by him before the meeting. If it is necessary to distribute the report of the chairman among the members present, sufficient number of copies of the same should be ready beforehand for this purpose.

একাউলটং লফলতেয গালনলেক ঳ভ঳঳াগুতরা, IAS এফং IFRS ঄নু঳যতন ঳ভাধান কযা ঴ে।

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Q-13. As a Company Secretary advise the chairman of Sonar Bangla Pharmaceuticals Limited what would be the procedures on the following: (a) The Board of Directors would like declare Bonus shares against Revaluation reserve. (b) The company wishes to go for rights issue. ICMA- Dec‘ 13 Ans. (a) Procedures of the company in case of declare bonus share: i) To take steps as per the relevant provisions ii) To convene a meeting of the board of directors iii) To issue a notice to the shareholders relating to the Annual General Meeting iv) To convene another meeting of Board of Director to approve and pass provisional allotment list and resolution v) To give a public notice through newspapers regarding the closure of the register of members and transfer books vi) To issue allotment letters to the members along with a circular explaining how the allotment has been made. vii) To take necessary entries in the register of members viii) To prepare and issue new share certificate after obtaining signature of concerned directors or officers. (b) Procedures of the company in case of issue of right share: i) To take steps as per the relevant provision ii) To convene a meeting of the board of directors iii) To issue a notice to the shareholders relating to the Annual General Meeting iv) To preserve provisional allotment lists of members on the basis of resolution passed in the Annual General Meeting v) To convene anther meeting of Board of Directors to approve and pass provisional allotment list and resolution. vi) To dispatch letters of rights to the members along with the following form of acceptance, remuneration, acceptance by the nominee and request for additional shares Sabolil Academy Professional Questions Bank

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vii) To make arrangement with the bankers of the company for the collection of money and acceptance forms. viii) To dispose of the shares, if no application has been received till the last date of application ix) To convene another board meeting after the expiry of the last date for receipt of application for adopting an allotment resolution x) To issue final allotment letters to the members or their nominees within 40 days from the date of closing of subscription xi) To file with the registrar a return of allotment within 60 days of allotment. xii) To take necessary entries in the register of members Q-14. A company secretary is an eye witness to the Board. Do you agree with the statement? Explain in details. ICMA- Aug‘ 13 Ans. The company secretary plays an important role of a company as their virtue and as per law and contract. The success of a company management usually depends on the efficiency and capability of the company secretary. In an organizational structure, the position of the company secretary is just below that of a director. We can realize the importance of a company secretary in today‘s complex management through the following points: i) Status as an employee of the company ii) Status as an officer or agent of the company iii) Status as an advisor to the company iv) Status as a custodian of the company v) Status as a chief administration officer or chief compliance officer of the company vi) Status as a laison among the employees and other parties of the company. From the above discussion we can conclude that the company secretary works under the direct control and supervision of the Board of Directors. He is a spokesman of the Board of Directors. If the Board of Directors is compared to the brain of the company, he can be said to be its eyes, ears and hands that is he is an eye witness of the company. The company cannot be run effectively without the company secretary. Sabolil Academy Professional Questions Bank

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Q-15. What are the qualifications and experience required and the duties of a company secretary of a public listed company? ICMA- Apr‘13 Ans. The qualifications of a company secretary of a listed company: Professional qualifications: i) The secretary must have sound knowledge about company law, labor law, income tax law, banking and insurance law and foreign exchange regulation act. ii) He must have proper knowledge about various books of accounts of the company iii) He must be capable to prepare budgets iv) He must have sound practical knowledge of secretarial practice and the different methods of filing, indexing, reports and minutes v) He must also have through knowledge of the law relating to the conduct and procedure at company meetings vi) He must possess a good command of the English language vii) He needs to have the capability of organizing the office efficiently and directing and controlling his subordinates effectively. Personal qualifications: i) A company secretary must have high sense of duty and responsibility. ii) He must have self-control, sympathy for others and a strong true sense of justice iii) He should be a man of personality, integrity and command. Q-16. What are the duties of a company secretary? ICMA- Apr‘ 12 Ans. চাকুলয কতয ঳ভে ঩ান না? শুক্রফাতযয ফযাতচ বলেশ ঴ন। Sabolil Academy Professional Questions Bank

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The duties of a company secretary: i) Convene a Board or shareholders meeting in time ii) Sign notices of such meeting iii) Watch that the notices are dispatched properly and timely iv) Send the annual and half yearly accounts to shareholders v) Prepare minutes of the meeting timely and correctly vi) It is his duty to see before exclusion various deeds, contracts and agreements, where the company is a party, are properly framed. vii) If authorized, the company secretary should be one of the signatory of such agreements or at least a knowledgeable witness viii) It is his duty to prepare the allotment list, process the share transfer instruments and make out the definitive share certificates for approval of the Board. Q-17. What are the rights, obligations and qualification of a company secretary as per law? ICMA- Apr‘12 Ans. The rights of a company secretary: i) Controlling and supervising the activities of subcontractors ii) Receiving notice and attending meetings iii) Signing the documents and contract papers on which company seal is affixed iv) Exercising the powers as authorized by the Board of Directors v) Issuing testimonials to employees on behalf of the company. The obligations of a company secretary: i) The company secretary is responsible with the company for any fraud or wrong doing in the course of his employment. ii) He is responsible for maintaining secrecy of every matters of the company iii) He is responsible to file various returns in due time iv) He is responsible for the maintenance of various statutory registers also. Sabolil Academy Professional Questions Bank

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The qualifications of company secretary: i) A sound academic background is must ii) A professional degree from ICMAB is desirable. But a degree in law or accounting / finance is also desirable. iii) He must be very conversant in the language of both Bengali and English with proficiency. iv) He should be familiar with such legislations as company law, SEC laws, DSE/CSE listing regulations, etc. v) Computer literacy is must vi) He should be a man of personality, integrity and command. Q-18. What are the salient features of secretarial practices of a public Ltd. co? ICMA- Dec‘ 11 Ans. The salient features of secretarial practices of a public Ltd. co. 1. As a servant of the company: The secretary of a company is a servant of the company, whose duty is to act in accordance with instructions given to him by the directors. In the performance of his duties, the secretary can properly act only under the orders of the directors. A secretary is a mere servant; his position is that he is to do what he is told. 2. As an agent of the company: The secretary of a company, being the chief administrative officer of the company is also an agent of the company. As agent, he must conduct the business with reasonable care. It may be noted that he is an agent in the capacity of servant and cannot act for the company without authority from the directors except the matters covered within his administrative function.

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3. As an officer of the company: The secretary is also an officer of the company. The secretary, like any other officer of the company, will be punishable with imprisonment, if he falsifies the books of the company or if he willfully and knowingly makes a material false statement in the balance sheet or in certain returns, reports or other documents or the company. Q-19. As a company secretary, advise the chairman about the procedures to be followed in the following cases: (i) The Board of directors would like to pay an interim dividend of a 25% (ii) The company wishes to go for IPO of taka 500 crores. ICMA-Aug‘11 Ans. i) As a company secretary, I will advise the chairman to follow the following procedures in case of payment of interim dividend. a) To incorporate the recommended rate of dividend in the directors report. b) To issue notice of the closing of the share transfer books c) To obtain approval of the Board regarding all transfers received before the specified date d) To make the registrar of members up-to-date by entering in to transfer of share approved by the board. e) To prepare a list of members who are entitled to receive dividend and determine how much is payable to each. f) To prepare draft of the form of dividend notice and warrant g) To call the Annual General Meeting in this regard h) To send a copy of resolution, minutes book regarding dividend to the bankers of the company along with a copy of dividend list. i) To see that the dividend warrants are dispatched to the members in time and date. j) To give notice in the newspaper within 60 days from the date of Annual General Meeting about the declaration of dividend and warrant. k) To send the necessary information to the stock exchange

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l) To fax the declaration matter of dividend to Securities and Exchange Commission and stock exchange within held an hour of such declaration and to publish price sensitive information in national dailies. m) To give return as to payment of dividend and other relevant information to the Securities and Exchange Commission and stock exchange. ii) The procedures to be followed in case of IPO: i) If it is private company, to convert into public company ii) To appoint an issue manager iii) Apply to Securities and Exchange Commission for the consent of raising capital iv) Apply for the IPO placement determination v) Agreement with underwriter vi) To approve by Securities and Exchange Commission the issue of prospectus vii) To open subscription viii) To allotment of shares ix) Listing with Dhaka Stock Exchange/Chittagong Stock Exchange Q-20. What do you mean by corporate culture? ICMA- Apr‘ 11 Ans. Corporate culture means the values, beliefs, norms and traditions within an organization that influence the behavior of its members. The difference in level of formality, loyalty, respect for long service, etc, may vary between firms, giving each one a distinctive ethics, which often conditions the behavior of new employees. Q-21. A company secretary is an important person in the management of a public limited company. Discuss. ICMA- Aug‘ 10 Ans.

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The company secretary plays an important role of a company as their virtue and as per law and contract. The success of a company management usually depends on the efficiency and capability of the company secretary. In an organizational structure, the position of the company secretary is just below that of a Director. We can realize the importance of a company secretary in today‘s complex management through the following points: i) Status as an employee of the company ii) Status as an officer or agent of the company iii) Status as an advisor to the company iv) Status as a custodian of the company v) Status as a chief administration officer or chief compliance officer of the company vi) Status as a laison among the employees and other parties of the company. From the above discussion we can conclude that the company secretary works under the direct control and supervision of the Board of Directors. He is a spokesman of the Board of Directors. If the Board of directors is compared to the brain of the company, he can be said to be its eyes, ears and hands that is he is an eye witness of the company. The company cannot be run effectively without the company secretary. Q-22. As per SEC notification regarding corporate governance what is the minimum and maximum number of directors to be appointed for a listed company? ICMA- Aug‘ 09 Ans. Every public limited company and a private limited company which is subsidiary of a public limited company, shall have at least three directors. Every private limited company other than a private limited company which is the subsidiary of a public limited company, shall have at least two directors.

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The maximum numbers of directors are determined by the articles of association of a company. A company can increase or decrease the number of directors according to its requirements within the limits mentioned in the articles of association. An additional director may be appointed if necessary. According to the companies Act 1994, the directors appointed by the managing agent shall not exceed in number one third of the whole number of directors.

অভাতেয বফল঱ষ্ট্য ঳ভূ঴ঃ * অভযা ACCA, CIMA) * অভাতেয *

(তমভনঃ ICMAB, ICAB, ICSB, চূ ড়ান্ত ঩যীক্ষায প্রস্তুলে ক্লা঳ প঳ফা লেতে থালক। IAS,

* * *

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Segment-D: Comparison of English law with alternative legal systems

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Q-1. What do you mean by “Tort”? Explain Tort of Negligence. ICMA- June‘16 Ans. Tort: Torts are wrongdoings that are done by one party against another. As a result of the wrongdoing, the injured person may take civil action against the other party. For example, let's say while walking down the aisle of a grocery store, a man slip on a banana that had fallen from a shelf. He becomes the plaintiff, or injured party, and the grocery store is considered the tortfeasor or defendant, the negligent party. Tort of negligence: The Tort of negligence is a legal wrong that is suffered by someone at the hands of another who fails to take proper care to avoid what a reasonable person would regard as a foreseeable risk. In many cases there will be a contractual relationship (express or implied) between the parties involved, such as that of doctor and patient, employer and employee, bank and customer, and until relatively recently it was necessary for such a contractual relationship to exist in order for a claim for negligence to succeed. Q-2. Discuss the benefits of international regulations for commerce and professional practice through the International Federation of Accountants (IFAC). ICMA- June‘16 Ans. The benefits of international regulations for commerce and professional practice:

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i. Develops international education standards ii. Develops the international code of ethics for professional accountants iii. Sets International Public Sector Accounting Standards (IPSAS) for use by the public sector iv. Overseas IFAC‘s standard-setting activities, particularly with respect to auditing, assurance, ethics and independence. Q-3. Though Common Law & Equity seem identical, there are some unique features which have set out the distinctiveness. Write down the distinction between the two. ICMA- June‘16 Ans. The distinction between Common Law & Equity: 1. Common Law is a body of law based on precedent or court decisions. Equity constitutes general principles and serves as a supplement to Common Law. 2. Equity, simply put, is a form of legal relief in the event such relief cannot be found in the rules of common law. 3. Equity is based on a judicial evaluation of fairness, reason, good faith and justice. Common Law entails applying the rules of common law to the issue before the court. Q-4. In business, Shari‟ah law is emerging as a good alternative to traditional law. Describe the elements of Shari‟ah law. ICMA- June‘16 Ans.

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The elements of Shari‟ah law: 1. The first and primary element of Shari‘ah law is the Quran. It is the final arbitrator and there is no other appeal. 2. The second element of Shari‘ah law is known as the Sunna. The teachings of the Prophet Mohammed not explicitely found in the Quoran. The Sunna are a composite of the teachings of the prophet and his work. The Sunna contain stories and anecdotes, called Hadith, to illustrate a concept. 3. The third element of Shari‘ah law is known as Ijma. The mulim religion uses the term Ulama as a label for its religious scholars. These Ulamas are consulted on many matters both personal and political. When the Ulamas reach a consensus on an issue, it is interpreted as a Ijma. 4. The Qiyas are a fourth element of Shari‘ah law. The Qiyas are nor explicitely found in the Quran, Sunna or given in the Ijma. The Qiyas are new cases or case law which may have already been decided by a higher judge. 5. The fifth element is Shari‘ah law. It is very broad and all encompassing. This secondary body of knowledge may be ideas contained in the other written works. Legal disclosures based upon Civil Law or Common Law may be example of Shari‘ah law. Q-5. Shariah has been connected to the idea of „spiritual law‟ and system of divine law. What are primary sources of Shariah Law? ICMA- Dec‘15 Ans. Various sources of sharia are used by Islamic jurisprudence to elucidate the body of Islamic law. The primary sources, accepted universally by all Muslims, are the Qur'an and Sunnah. The Qur'an is the holy scripture of Islam, believed by Muslims to be the direct and unaltered word of God. The Sunnah consists of the religious actions and quotations of the Islamic prophet Muhammad and narrated through his Companions and the Imams. Sabolil Academy Professional Questions Bank

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As Islamic regulations stated in the primary sources do not explicitly deal with every conceivable eventuality, jurisprudence must refer to resources and authentic documents to find the correct course of action. According to Sunni schools of law, secondary sources of Islamic law are consensus, the exact nature of which bears no consensus itself; analogical reason; pure reason; seeking the public interest; juristic discretion; the rulings of the first generation of Muslims; and local customs. Q-6. Bangladesh Legal System is based on English law. What are the sources of English law? ICMA- Dec‘15 Ans. The main sources of English law are as follows: - Legislation (Statute Law), - Common Law (Judge-made law) and - European Communities Law English Law was historically based on customs and social tradition. Today Custom Law is a part of Common law, notably being in cases where there was no judicial precedent but which were known to exist since time memorial (i.e. since 1189). Custom law can still be used to argue a case provided the conditions set out by law are met. It is important to remember though that ‗law never goes out of date, and it does not become obsolete because of passage of time‘. Q-7. What do you mean by Civil and Criminal law? Write the differences between them. Ans. প্রস্তুলে ক্লাত঳ ঄ং঱গ্র঴ণ কযতফন লকনা, ল঳দ্ধান্ত লনতে ঩াযতছন না? ফ্রী ক্লা঳ কতয ল঳দ্ধান্ত লনন। Sabolil Academy Professional Questions Bank

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Civil law: Civil law is the system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs. It is the set of rules that govern private rights, such as contracts, property, and family law. Criminal law: Criminal law is the body of law that relates to crime. It regulates social conduct and proscribes whatever is threatening, harmful, or otherwise endangering to the property, health, safety, and moral welfare of people. It includes the punishment of people who violate these laws. The differences between Civil and Criminal law: The difference between civil law and criminal law turns on the difference between two different objects which law seeks to pursue - redress or punishment. The object of civil law is the redress of wrongs by compelling compensation or restitution: the wrongdoer is not punished; he only suffers so much harm as is necessary to make good the wrong he has done. The person who has suffered gets a definite benefit from the law, or at least he avoids a loss. On the other hand, in the case of crimes, the main object of the law is to punish the wrongdoer; to give him and others a strong inducement not to commit same or similar crimes, to reform him if possible and perhaps to satisfy the public sense that wrongdoing ought to meet with retribution. Examples of criminal law include cases of burglary, assault, battery and cases of murder. Examples where civil law applies include cases of negligence or malpractice. Q-8. Discuss the „Precedent of Lawâ€&#x; and its sources. What is its effect on lower court? Ans.

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Precedent of Law: In common law legal systems, a precedent is a legal case that establishes a principle or rule. This principle or rule is then used by the court or other judicial bodies use when deciding later cases with similar issues or facts. The use of precedent provides predictability, stability, fairness, and efficiency in the law. Sources of Precedent Law: 1. The number of judges constituting the bench and their eminence is a very important source in increasing the authority of precedent. 2. A unanimous decision carries more weight. 3. Affirmation, approval or following by other courts, especially by a higher tribunal, adds to the strength of a precedent. 4. If an Act is passed embodying the law in a precedent, the gains an added authority. Effect of Precedent Law in lower Court: A lower court may not rule against a binding precedent, even if the lower court feels that the precedent is unjust; the lower court may only express the hope that a higher court or the legislature will reform the rule in question. If the court believes that developments or trends in legal reasoning render the precedent unhelpful, and wishes to evade it and help the law evolve, the court may either hold that the precedent is inconsistent with subsequent authority, or that the precedent should be distinguished by some material difference between the facts of the cases. If that judgment goes to appeal, the appellate court will have the opportunity to review both the precedent and the case under appeal, perhaps overruling the previous case law by setting a new precedent of higher authority. This may happen several times as the case works its way through successive appeals.

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Q-9. What are the essential elements of „Tort of Negligenceâ€&#x;? Briefly describe the judiciary system of Bangladesh. Ans. The essential elements of tort of negligence: i) Presence of a duty of care. The first element is establishing the presence of a duty owed by one person to another. ii) Someone breached their duty. The second element is a breach of the duty owed by one person to another. iii) The breach directly causes injuries. iv) Proving monetary losses. The judiciary system of Bangladesh: The Judicial system of Bangladesh is based on the Constitution and the laws are enacted by the legislature and interpreted by the higher courts. Bangladesh Supreme Court is the highest court of Bangladesh. The jurisdiction of the Supreme Court of Bangladesh has been described in Article 94(1) of the Constitution of Bangladesh. It consists of two divisions, the High Court Division and the Appellate Division. The High court division of the Supreme Court consists of Civil courts, Criminal courts and some Special courts and tribunals. The Appellate Division is the apex court of Bangladesh. The Supreme Court of Bangladesh has two divisions namely the Appellate Division and the High Court Division (HCD). Q-10. Point out the five pillars of Islam. Ans. 1. Shahada: It is a declaration of faith and trust that professes that there is only one God (Allah) and that Muhammad is God's messenger. Sabolil Academy Professional Questions Bank

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2. Salat: It is the Islamic prayer. Salat consists of five daily prayers according to the Sunna; the names are according to the prayer times: Fajr, Dhuhr, Aṣr, Maghrib, and Isha. 3. Zakat: It is the practice of charitable giving based on accumulated wealth. The word zakat can be defined as purification and growth because it allows an individual to achieve balance and encourages new growth. 4. Sawm: Three types of fasting (Siyam) are recognized by the Quran: Ritual fasting, fasting as compensation for repentance (both from sura Al-Baqara), and ascetic fasting (from Al-Ahzab). 5. Hajj: The Hajj is a pilgrimage that occurs during the Islamic month of Dhu alHijjah to the holy city of Mecca. Every able-bodied Muslim is obliged to make the pilgrimage to Mecca at least once in their life.

মাযা আো থাকা ঳তেও অভাতেয ক্লাত঳ ঄ং঱গ্র঴ণ কযতে ঩াযতছন না, োযা অভাতেয প্রতপ঱নার প্রশ্ন ফযাংক ঳ংগ্র঴ করুন।

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Segment- E: The law of contract

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Q-1. What do you mean by “Contract�? Briefly explain the elements of a valid contract giving relevant examples. ICMA- June‘16 Ans. Contract: A contract is a voluntary arrangement between two or more parties that is enforceable at law as a binding legal agreement. A contract is like a promise between people. It is an understanding, a deal between two or more people or organisations to do certain things. The essential elements of a valid simple contract: Offer and acceptance: There must be a lawful offer by one party and a lawful acceptance of the offer by other party or parties. Intention to create legal relationship: There must be an intention among the parties that the agreement shall create legal relations. Lawful consideration: An agreement comes into existence when one or more persons promise to another or other persons to do or not to do something. Every promise forming the consideration for each other leads to a contract. Only those considerations are valid which are lawful. Capacity of parties: The parties to an agreement must be legally capable of entering into an agreement otherwise it can not be enforceable by law. The parties must not suffer from minority, lunacy, idiocy, drunkenness and other similar factory. Free consent: In order to be enforceable by law, an agreement must by based on the free consent of all the parties. The consent is not free if the agreement is induced by coercion, undue influence, mistake, misrepresentation and fraud.

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Certainty: The agreement must not be vague. The meaning of the agreement must be certain otherwise it can not be enforceable by law. Writing: An oral contract is sometimes difficult to prove. Therefore important agreements should be made in writing. Q-2. “All contracts are agreements, but all agreements are not contracts” – Explain the statement with examples. ICMA- June‘16 Ans. All agreements are not contracts but all contracts are agreements. A contract is an agreement enforceable by law made between two or more persons. An agreement enforceable by law is a contract. Therefore in a contract there must be i) an agreement, and ii) the agreement must be enforceable by law. An agreement comes into existence when one or more persons promise to other (s), to do or not to do something. Some agreements cannot be enforceable by law, such as an agreement to go to a cinema. An agreement which can not be enforceable by law is not a contract. Q-3. “No consideration, no contract” – Explain the statement with examples. ICMA- June‘16 Ans. A contract without consideration is not a contract. Consideration is essential for the validity of a contract. An agreement comes into existence when one or more persons promise to other less, to do or not to do something. Every promise forming the consideration for each other leads to a contract. Sabolil Academy Professional Questions Bank

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A promise without consideration can not create a legal obligation. A promise without consideration is a gift. An agreement without consideration is not enforceable by law. And an agreement which can not enforceable by law is not a contract. Contract must be supported by consideration. Q-4. Write and discuss the key features of “Sale of Goods Act 1930” with reference to provision. ICMA- June‘16 Ans. The key features of ―Sale of Goods Act 1930‖: 1. Title or the seller‟s right to sell the goods: Section 12(1) implies into contracts for the sale of goods an undertaking as to title, confirming that the seller has a right to sell. Section 12(2) implies undertakings as to freedom from other claims and quiet possession. 2. Description of the goods: Section 13 applies to all sales. Section 13(1) and (2) provide that where there is a contract for the sale of goods by description, there is an implied condition that the goods corresponded with the description. 3. Quality of the goods: There is an implied condition that goods supplied under a contract are of satisfactory quality. The Act (section 14(2B)) identifies factors which may in appropriate cases be aspects of the quality of goods: - Fitness for all the purposes for which goods of the kind in question are commonly supplied, - Appearance and finish, - Safety, - Durability.

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4. Fitness of the goods: Section 14(3) implies a condition that the goods be fit for any particular purpose which the buyer expressly or by implication makes known to the seller. 5. Sale by sample: Under section 15 of the Act there are requirements in a sale by sample. In the case of a contract for sale by sample there is an implied condition. Q-5. What is misrepresentation in terms of Contract Act 1872? How can an agreement be avoided due to misrepresentation? ICMA- June‘16 Ans. Misrepresentation: A misrepresentation is a false statement of fact or law which induces the representee to enter a contract. Where a statement made during the course of negotiations is classed as a representation rather than a term an action for misrepresentation may be available where the statement turns out to be untrue. There are three types of misrepresentation: innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation.

Avoiding agreement due to misrepresentation: When a misrepresentation has been made and an agreement was (or at any rate appeared to be) concluded, the misrepresentee does not have to bring a halt to the deal. Misrepresentations generally do not render a contract void, as does the contractual doctrine of common mistake or frustration; it makes a contract voidable at the option of the misrepresentee. Not all contracts entered into on the strength of misrepresentations will be bad for the misrepresentee, who may choose not to void the contract.

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Q-6. What is a contract? Briefly describe the essential elements of a valid simple contract. State valid reasons for non-performance of a contract. ICMA- Dec‘ 15 Ans. Contract: A contract is a voluntary arrangement between two or more parties that is enforceable at law as a binding legal agreement. A contract is like a promise between people. It is an understanding, a deal between two or more people or organisations to do certain things. The essential elements of a valid simple contract: 1. Offer and acceptance: There must be a lawful offer by one party and a lawful acceptance of the offer by other party or parties. 2. Intention to create legal relationship: There must be an intention among the parties that the agreement shall create legal relations. 3. Lawful consideration: An agreement comes into existence when one or more persons promise to another or other persons to do or not to do something. Every promise forming the consideration for each other leads to a contract. Only those considerations are valid which are lawful. 4. Capacity of parties: The parties to an agreement must be legally capable of entering into an agreement otherwise it can not be enforceable by law. The parties must not suffer from minority, lunacy, idiocy, drunkenness and other similar factory. 5. Free consent: In order to be enforceable by law, an agreement must by based on the free consent of all the parties. The consent is not free if the agreement is induced by coercion, undue influence, mistake, misrepresentation and fraud.

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6. Certainty: The agreement must not be vague. The meaning of the agreement must be certain otherwise it can not be enforceable by law. 7. Writing: An oral contract is sometimes difficult to prove. Therefore important agreements should be made in writing. Reasons for non-performance of a contract: A contract without consideration is not a contract. Consideration is essential for the validity of a contract. An agreement comes into existence when one or more persons promise to other less, to do or not to do something. Every promise forming the consideration for each other leads to a contract. A promise without consideration can not create a legal obligation. A promise without consideration is a gift. An agreement without consideration is not enforceable by law. And an agreement which can not enforceable by law is not a contract. Contract must be supported by consideration. Q-7. Mention the type of contract discharge. Describe the factors that need to be considered when discharge issue arises. ICMA- Dec‘ 15 Ans. The type of contract discharge: Contract creates relation between the parties and binds them over. Termination of such contractual relations is called discharge of contract. The following are different types of contract discharge. 1. Discharge by Performance. 2. Discharge by Breach of Contract. 3. Discharge by Impossibility. 4. Discharge by Operation of Law. 5. Discharge by Lapse of Time. 6. Discharge by Mutual understanding or by Agreement. Sabolil Academy Professional Questions Bank

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The factors that need to be considered when discharge issue arises: Impossibility of Performance: The company has the right to terminate the contract in the case of an impossibility of performance. Breach of Contract: A material breach of contract allows the company to terminate the contract. Prior Agreement: A party may terminate a contract if he and the other party have a prior written agreement that calls for a contract termination because of a specific reason. Rescission: A rescission of a contract is when a contract is terminated because an individual misrepresented themselves, acted illegally or made a mistake. Completion: A contract is essentially terminated once the obligations outlined in the contract are completed. Q-8. Distinguish between a contract of sale and Agreement to sell. ICMA- Aug‘ 15 Ans. Distinction between sale and agreement to sale: Contract of sale

Agreement to sale

1. Where under a contract of sale if the ownership of the goods is transferred from the seller to the buyer, at the time of sale the contract is called a sale.

1. Under an agreement of sale if the ownership of the goods is transferred from the seller to the buyer at a future time, the contract is called an agreement to sale.

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2. In case of contact of sale, the unpaid can resale the goods or stoppage in transit. 3. Sale is an executed contract.

2. In case of agreement to sell, the seller can claim for damages for the breach of contract. 3. Agreement to sell in an executor contract. 4. Generally a sale is done for present 4. Generally an agreement to sell goods is done for future goods. Q-9. What is contingent contract? ICMA-Apr‘15 Ans. A contingent contact is a contract to do or not to do something. This is a valid contract. In this contract either party or both party may have an interest is the subject matter of the contract. For example, A agrees to pay Tk. 20 lac to B, if B‘s house is burnt. This is a contingent contract. Q-10. Discuss the essential elements or features of contract. ICMA-Apr‘ 15 Ans. The basic elements of a valid contract are described below: 1. Offer and acceptance: There must be a lawful offer by one party and a lawful acceptance of the offer by other party or parties. 2. Intention to create legal relationship: There must be an intention among the parties that the agreement shall create legal relations. 3. Lawful consideration: An agreement comes into existence when one or more persons promise to another or other persons to do or not to do something. Every promise forming the consideration for each other leads to a contract. Only those considerations are valid which are lawful. Sabolil Academy Professional Questions Bank

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4. Capacity of parties: The parties to an agreement must be legally capable of entering into an agreement otherwise it can not be enforceable by law. The parties must not suffer from minority, lunacy, idiocy, drunkenness and other similar factory. 5. Free consent: In order to be enforceable by law, an agreement must by based on the free consent of all the parties. The consent is not free if the agreement is induced by coercion, undue influence, mistake, misrepresentation and fraud. 6. Certainty: The agreement must not be vague. The meaning of the agreement must be certain otherwise it can not be enforceable by law. 7. Writing: An oral contract is sometimes difficult to prove. Therefore important agreements should be made in writing. Q-11. What are the essential elements of contract for sale of goods. ICMA- Apr‘ 15 Ans. The essential of contract of sale are as follows: 1. Movable goods: The sale of goods act deals only with movable goods. This act does not applicable immovable goods. 2. Money consideration: In a sale there must be money consideration . there must be a contract for the exchange of movable goods for money . An exchange of goods for goods is not sale. 3. Two parties: Since a control of sale involves a change of ownership it follows that the buyer and the seller must be different persons. A men cannot buy from or sell goods to himself. 4. Offer and acceptance: A contract of sale is made by an offer of by or sells goods for a price and the acceptance of such offer. 5. Method of forming the contract: A contract of sale may be in writing or by word of mouth. But important contract should be made in writing. Sabolil Academy Professional Questions Bank

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6. Method of forming the contract: A control of sale may be in writing or by word of mouth. But an important contract should be made in writing. Q-12. “No seller can give the buyer a better title of good, than he himself has”.-Explain. Write the exceptions of this rule. ICMA- Apr‘ 15 Ans. No seller can give the buyer a better title of goods than he himself has. The general rule in that only the owner of goods can sell the goods. If a person transfer goods who is not owner of that goods, the transferee gets no title. This gets no title. This rule is applicable to both movable and immovable goods. In case of movable goods. They suffers from certain exceptions. In following cases a person who is not owner of the goods, can give the buyer a better title of goods: 1. Sale by one of several joint owners: If one of several joint owners has the sole possession of goods, by permission of the co-owners, the goods can be transferred to the buyer from such joint owner with a better title 2. Sale of goods under a voidable agreement: Where the seller of goods has obtained a possession of that goods under a voidable agreement and the agreement has not been terminated at the time of sale, the buyer gets a good title of the goods. For example, X buys a ring from Y at a lower price by undue influence and sells it to Z without notice of X‘s defective title. Here, Z gets a good title and Y cannot recover the ring. 3. An unpaid seller: An unpaid seller of goods under certain circumstances can re-sell the goods. The purchaser of such goods gets a valid title. 4. Sale under the contract act: The pledge may sell the goods of pledge or if the pledge or makes a default of his dues. The purchaser under such a sale gets a goods title.

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5. Sale by an agent: Sale of goods by an agent gives the buyer a better title if it satisfied the following conditions. - The agent has the possession of goods - Such possession is agreed by the owner - The purchase has no notice that the agent had no authority to sell Q-13. “A contract without consideration is void”-Discuss. ICMA-Dec‘14 Ans. A contract without consideration is void. Consideration is essential for the validity of a contract. An agreement comes into existence when one or more persons promise to other (s), to do or not to do something. Every promise forming the consideration for each other leads to a contract. A promise without consideration can not create a legal obligation. A promise without consideration is a gift. An agreement without consideration is not enforceable by law. And an agreement which can not been forceable by law is not a contract. Contract must be supported by consideration. Q-14. Define a contract of guarantee, Distinguish between a contract of indemnity and contract of guarantee? ICMA-Dec‘14 Ans. The differences between contract of indemnity and contract of guarantee are as follows: Contract of indemnity Contract of guarantee 1. A contract of indemnity is a contract 1. A contract of guarantee is a by which one party promises to save the contract to perform the promise of other party from loss caused to him by a third person in case of his the conduct of the promisor himself or default. by the conduct of any other person. Sabolil Academy Professional Questions Bank

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2. In contract of indemnity, there are 2. In a contract of guarantee there two parties: the indemnifier and the are three parties: the creditor, the indemnity holder. principal debtor and the surely. 3. In a contract of indemnity it is 3. In a contract of guarantee it is necessary to have only one contract necessary to have three contracts between the parties. between the parties. 4. Here, the liability of the indemnifier 4. Here, the liability of the surety is primary. is secondary. Q-15. What is a continuing guarantee- Explain with an example. How it is revoked? ICMA-Dec‘14 Ans. A guarantee which covers a series of transactions is called continuing guarantee. For example, A is a tea dealer supplies tea to B from time to time. C guarantees the payment of B to A. Here the guarantee given by C is a continuing guarantee. A continuing guarantee can be revoked under the following circumstances. i) If the surety gives notice of revocation, the continuing guarantee will be revoked ii) The continuing guarantee will be revoked if the surety died iii) A continuing guarantee is terminated under the same circumstances under which a surety‘s liability is discharged. Q-16. Explain “No consideration, no contract”. ICMA-Apr‘14 Ans.

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A contract without consideration is not a contract. Consideration is essential for the validity of a contract. An agreement comes into existence when one or more persons promise to other less, to do or not to do something. Every promise forming the consideration for each other leads to a contract. A promise without consideration can not create a legal obligation. A promise without consideration is a gift. An agreement without consideration is not enforceable by law. And an agreement which can not enforceable by law is not a contract. Contract must be supported by consideration. Q-17. Narrate exceptions of the above comments with examples. ICMA-Apr‘14 Ans. There are some exceptional cases where a contract is enforceable by law even though there is no consideration. These are as follows: 1. Natural love and affection: An agreement made without consideration is valid if it is done by a written document and the document is registered according to the law and the agreement is made on account of natural love and affection and the parties to the agreement hold a near relation to each other. For example, A for natural love and affection promises to give Tk. 10,000 to his son B. A puts his promise in writing to B and registers it. This is a contract. 2. Voluntary compensation: An agreement made without consideration is valid if a person voluntarily done something for another person. For example, A finds B‘s money bag and gives it to him. B promises to give Tk.100 to A. This is a contract. 3. Agency: No consideration is needed to create an agency. Sabolil Academy Professional Questions Bank

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Q-18. “All contracts are agreement but all agreements are not contract” Discuss with a suitable example. ICMA-Apr‘13 Ans. All agreements are not contracts but all contracts are agreements. A contract is an agreement enforceable by law made between two or more persons. An agreement enforceable by law is a contract. Therefore in a contract there must be - an agreement, and - the agreement must be enforceable by law. An agreement comes into existence when one or more persons promise to other (s), to do or not to do something. Some agreements cannot be enforceable by law, such as an agreement to go to a cinema. An agreement which can not be enforceable by law is not a contract. Q-19. Describe circumstances in which a contract would be enforceable without consideration. ICMA-Dec‘12 Ans. There are some exceptional cases where a contract is enforceable by law even though there is no consideration. These are as follows: 1. Natural love and affection: An agreement made without consideration is valid if it is done by a written document and the document is registered according to the law and the agreement is made on account of natural love and affection and the parties to the agreement hold a near relation to each other.

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2. Voluntary compensation: An agreement made without consideration is valid if a person voluntarily done something for another person. For example, A finds B‘s money bay and gives it to him. B promises to give Tk. 100 to A. This is a contract. 3. Agency: No consideration is needed to create an agency. Q-20. What are the rules of a valid offer? ICMA-Aug‘12 Ans. The contract act contains various rules of a valid offer or proposal: These are stated below: 1. An offer may be express or implied: An offer may be made in two ways: i) by words, spoken or written and ii) by conduct. When an offer is made by statins in words or in writings, it is called an express offer. When an offer is made by the conduct of a person, it is called an implied offer. 2. An offer may be specific or general: An offer may be made to a definite person or to some definite class of persons. An offer made to a definite person or to a definite class of persons is called specific offer. An offer made to all persons is called general offer.

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For example: - A offers to sell his car to for Tk. 10 lac. It is a specific offer. - A transport company runs car on the road to carry passengers at the scheduled fares. It is a general offer by the company. 3. The terms of the offer must be certain, definite and unambiguous. 4. Legal relationship is required: The offer must be one which is capable of creating a legal relationship between the parties. An invitation to play cards can not create any legal relationship ,so it is not an offer. 5. An offer must be communicated to the offeree: The person to whom the offer is made is called the offeree. A person can not accept an offer unless he knows the existence of the offer. For example, A offers a reward to anyone who returns his lost toy. B finds the toy and returns it to A without having heard the offer. Here, B is not entitled to the reward. Q-21. Differentiate between the terms misrepresentation and Fraud. ICMA- Aug‘12 Ans. Distinction between fraud and misrepresentation: Fraud

Misrepresentation

1. The term fraud includes all acts committed by a person with a view to induce a man to believe that a thing is true which is false. 2. If the statement is dishonest, it is fraud.

1. Misrepresentation arises when the representation made is inaccurate but the inaccuracy is not due to any desire to cheat the other party. 2. If the statement is honest, even though it was wrong, it is misrepresentation. 3. In case of fraud, the contract is 3. In case of misrepresentation the voidable contract is not voidable Sabolil Academy Professional Questions Bank

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Q-22. “ Mental acceptance, is no acceptance”- Explain ICMA- Apr‘12 Ans. A mental acceptance is no acceptance. No contract is formed, if the office remains silent and does nothing to show that he has accepted the offer. An acceptance must be communicated to the offer or shown by conduct. The offeree may expert his acceptance by word of mouth, telephone, telegram or by post. Where the offeror or prescribes a particular made of acceptance, the offeree must follow the particular mode of acceptance. For example: A person received an offer by letter. He acceptance and put it in his drawer. It helds that there was no contract because the other party was not informed the acceptance. Q-23. When a contract is said to be discharged? What are the various modes in which a contract may be discharged? ICMA- Apr‘11 Ans. Discharge of a contract means termination of the contractual relationship between the parties of a contract. When the contractual relationship between the parties of a contract is terminated when the rights and obligation of the parties under the contract come to an end, it is said to be discharged of a contract. The various modes of discharge of a contract are as follows: 1. By performance: When the parties of a contract perform the obligation of the contract, it is said to be discharged by performance 2. By lack of acceptance: A contract is discharged when a promisor made an offer of performance but it has not been accepted by the promise. 3. By lapse of time: A contract is discharged if it is not performed within a specific period of time.

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4. By mutual agreement: A contract can be discharged by mutual agreement of the parties. 5. By death of the promisor: A contract is discharged if the promisor of the contract is died. 6. By insolvency: When a party of the contract declares himself as an insolvent, his liability is discharged from the date of insolvency. Q-24. “Insurance contract are basically wagering agreements”. - Discuss. ICMA- Dec‘10 Ans. A wager is an agreement by which money is payable by one person to another on the happening or non-happening of a future, uncertain event. The nature of wagering is that one party is to win and the other party is to lose upon a future event, which at the time of the contract remains uncertain. Insurance contract are basically wagering agreements because it holds the following wagering characteristics: i) The consideration for the promise under an insurance agreement is to pay or get money ii) The money is payable on the happening or the non-happening of an event. iii) The agreement depends on a future and uncertain event. iv) In this agreement no party has control over the event Q-25. “Acceptance must be given by the person to whom the proposal is made”, Discuss. ICMA- Dec‘10 Ans. Sabolil Academy Professional Questions Bank

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A proposal can be accepted only by the person or persons for whom the proposal is made. A proposal made to a particular person can only be accepted by him because he is the only person intended to accept. A proposal made to a class of persons can be accepted by any member of that class. For example, suppose X sold his business to Y without informing the fact to his customer Z. Z sent an order to x for goods. Y received this order and sent a letter of acceptance. Here, there was no contract between Y and Z because Z never made any proposal to Y. Q-26. What do you understand for „performance of contract‟? ICMA- Apr‘10 Ans. When the parties of the contract perform the obligation of the contract, the contract is said to be discharged by performance of contract. Q-27. What is the effect of refusal to accept performance by the promisee? ICMA- Apr‘10 Ans. When a promisor made an offer of performance but it has been refused to accept performance by the promisee, the contract is said to be discharged by attempted performance Q-28. What is meant by free consent? ICMA- Apr‘10 Ans. অভাতেয প্রস্তুলে ক্লাত঳ অ঩লন পকন ঄ং঱গ্র঴ণ কযতফন? কাযন অভাতেয ঳কর ল঱ক্ষক-ল঱ক্ষাথী প্রতপ঱নার প্রলেষ্ঠাতনয। Sabolil Academy Professional Questions Bank

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When two or more persons agree the same thing in the same sense, it is known as tree consent. In order to be enforceable by law, an agreement must be based on the free consent of all the parties. The consent is not free it the agreement is induced by coercion, undue influence, mistake, misrepresentation and fraud. Q-29. Discuss the contractual liability of a minor with reference to a leading case. ICMA- Dec‘09 Ans. The contractual liability of a minor is that the minor is not personally liable for the payment of a reasonable price for necessaries supplies to the minor. Only the minor‘s property is liable. The reasonable price is to be determined from the status and social position of the minor. The price which the trader will get is reasonable price, not the price ―agreed to‖ by the minor. For example, a trader supplies rice to a minor needed for his consumption. He can recover the price from the minor‘s property. Q-30. State the rule with regard to revocation of an acceptance. ICMA- Aug‘09 Ans. An acceptance can be revoked any time before the acceptance comes to the knowledge of the offer or but not afterwards. The rules with regard to revocation of an acceptance are stated below: 1. By notice: If the offeree gives notice of revelation to the offeror before the acceptance is reached, the acceptance comes to an end. Sabolil Academy Professional Questions Bank

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For example, X offers to sell his house to Y. Y accepts the offer and a letter of acceptance is sent by post. Y then revokes his acceptance any time before the letter reaches to x. 2. By lapse of time: When the proposer prescribes a time within which the acceptance must be given, the acceptance revoke as soon as the time expires. 3. After expiry of reasonable time: If no time has been prescribed, the acceptance lapses after the expiry of a reasonable time. What is reasonable time will depend on the circumstances of the case. 4. By death: An acceptance revoke by the death of the acceptor and if the fact of his death comes to the knowledge of the offeror before acceptance Q-31. Describe situations in which silence may constitute fraud. ICMA- Apr‘09 Ans. Silence may constitute fraud in case of following situations: 1. False statement A false statement willing fully made is fraud. 2. Active concealment: Non-disclosure is not fraud where the party is not bound to disclose all facts. But active concealment is fraud. For example, A sells by action to B a horse. The horse is unfound and A knows that. Here A is not bound to disclose the fact to B. But if between A and B there is a near relationship (i.e., if B is A‘s son), it is the duty to disclose the fact to B.

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3. Intentional non-performance: A promise made without any intention to perform it, is constitutes fraud. Example: Purchase of goods without any intention of paying for it. 4. Omission: Under the act, the seller of immovable proper) is bound to disclose all material defects to the buyer. Failure to do so leads to fraud. Q-32. “Ignorance of law is no excuse” Ans. Ignorance of law is no excuse. The reason is that every man is presumed to know the law of his own country and if he does not know, he must suffer from such lack of knowledge. Therefore, mistake on a point of own country‘s law does not affect the contract. It is a valid contract. But mistake on a point of foreign country‘s law affects the contract and this contract can be avoided. Q-33. “Consideration may be past, present or future”- Discuss Ans. Consideration may be past, present on future. Past consideration: When the consideration of one party is given before the date of promise, it is known as past consideration. For example, suppose x does some work for Y in the month of January without expecting any payment. In February Y promises to pay him some money. Here the consideration of X is past consideration. Present consideration: When consideration is given with the promise is called present consideration. For example, X buys an article from a shop and pays the price immediately. Here the consideration of X is present consideration Sabolil Academy Professional Questions Bank

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Future consideration: When the consideration of a promise is given at a future date, it is known as future consideration. Q-34. Explain the term „Fraud‟ as per the contract Act. What are its effects upon the validity of a contract? Ans. The term ‗fraud‘ includes all acts committed by a person with a view to induce a man to believe that a thing is true which is false. The contract Act states that ‗fraud‘ means and includes false statement, active concealment, intention to non-performance, omission, etc. A contract made by fraud is voidable. The aggrieved party can avoid the contract whenever inform the fraud. He can claim for damages. For example, A made an offer to B that he will sell his house for Tk. 50 lac. B accepted this offer and purchase it. But A conceal that his house is in mortgage. B can avoid this contract. Q-35. “Mere silence as to facts is not fraud”. Explain with illustration. Ans. Mere silence as to facts is not fraud under the following circumstances: 1. The general rule is that mere silence is not fraud. For example, A and B are traders enter upon a contract. A has private information of a change in price which would affect B‘s willingness to proceed with the contract. Here, A is not bound to inform B. 2. If it is the duty of the person keeping silence 3. If his silence is equivalent to speech. For example, A says to B, if you do not tell anything, I shall assume that the horse is sound. A says nothing. Here, A‘s silence is equivalent to speech. Sabolil Academy Professional Questions Bank

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Q-36. Explain the meaning of the term revocation of acceptance and communication of revocation. Ans. Revocation of acceptance: An acceptance can be revoked any time before the acceptance comes to the knowledge of the proposer but not afterwards. For example: X offers to sell his house to y. Y accepts the offer and sent a letter of acceptance by post. Y may revoke his acceptance any time before the letter reaches to x. Communication of revocation: The communication of revocation complete- As against the person who makes it, when it is put into a course of transmission to the person to whom it is made. - As against the person to whom it is made, when it comes to his knowledge. Q-37. Briefly discuss unilateral contract and bilateral contract. Ans. Unilateral contract: In certain contracts one party has to fulfill his obligations whereas the other party has already performed his obligations. Such a contract is called unilateral contract. Bilateral contract: For the purpose of making a contract, there must be at least two parties. Therefore all contracts are bilateral or multilateral

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Q-38. “There can not be a contract to make a contract”- comment Ans. All contracts are made by the process of a lawful offer by one party and the lawful acceptance of the offer by other party. For example, if A says to B, will you buy my house for Tk. 50 lac? This is an offer. If B says yes, the offer is accepted and a contract is formed. An offer involves making of a proposal. When the person to whom the proposal is made signifies his assent, the proposal is said to be accepted. When a proposal is accepted becomes a promise. Offer alone and acceptance alone are powerless. When separate they can not lead to the formation of a contract. But an offer together with acceptance leads to a contract which is enforceable by law. Therefore, there can not be a contract to make a contract. Q-39. What essential conditions are necessary to convert a proposal into a promise? Ans. An offer involves making of a proposal. When one person signifies his willingness to another to do or not to do form anything with a view to obtaining the assent of that, he is said to make a proposal. The person making the proposal is called the ‗promisor‘. The person accepting the proposal is called the ‗promisee‘. When the person to whom the proposal is made signifies his assent, the proposal is said to be accepted. When a proposal is accepted becomes a promise. A proposal may be removed for lack of acceptance or be revoked before acceptance. Acceptance converts the proposal into a promise and then it is too late to remove it. For example, if A says to B, will you buy my house for Tk. 50 lac? This is a proposal. If B says yes, the proposal is accepted and becomes a promise.

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Q-40. Distinguish between contingent contract and wagering agreement. Ans. Distinction between contingent contract and wagering agreement. Contingent contract wagering agreement 1. A contingent contract is a 1. A wagering agreement is an agreement by contract to do or not to do which money is payable by one person to something. another on the happening or non-happening of a future, uncertain event 2. A contingent contract is 2. A wagering agreement is void valid 3. In a contingent contract 3. In a wagering agreement the parties have either party or both may have no interest except getting or passing money an interest in the subject matter of the contract 4. Contingent contract may 4. Wagering agreement contains reciprocal not contain reciprocal promises promises 5. For example, A agrees to 5. For example, A agrees with B, if there is a pay Tk. 20 lac to B, if B‘s rain on a certain day A will pay to B tk 500. house is burnt. This is a If there is no rain B will pay to A tk. 500. contingent contract. Q-41. Why it is needed that a person must be of sound mind for the purpose of making a contract. Explain with an illustration. Or, “Parties to a contract must be competent to contract�. Explain Ans. One of the essential conditions for the validity of an agreement, all the parties to it must have the capacity to enter into contracts and they must have a sound mind. A person is said to be of sound mind for the purpose of making a contract if at the time when he makes it, he is capable of understanding it and is capable of Sabolil Academy Professional Questions Bank

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making a rational judgment. A person who is usually of unsound mind, but occasionally of sound mind, may make a contact when he is of sound mind. The contract act states that every person is capable to enter into a contact who has attained the age of majority according to the law and who is of sound mind and who is not disqualified by law for making a contract. The contract act follows that a person is not capable of entering into a contract under the following circumstances: i) If he has not attained the age of majority according to the law ii) If he is not of sound mind, i.e. if he is a lunatic or an idiot or suffering from a similar disability. iii) If he is disqualified by law for making a contract. For example, A person agreed to sell a property worth Tk. 25 lac for Tk. 10 lac. His mother proved that he is an idiot and requested for cancellation of the contract. The court holds the agreement as null and void. Q-42. “A stranger to a contract cannot sue�. - Discuss. Ans. A stranger to a contract is one who is not a party to it. A stranger to a contract cannot sue. It is a fundamental principle of law that only a person who is a party to a contract can sue on it. For example, a contract between A and B cannot be enforced by C. But a stranger to the consideration can sue to enforce it implies that he is a party to the contract. For example, a contract between A, B and C whereby A pays money to B for delivering goods to C can be enforced by C.

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Q-43. What are the essential elements of a valid consideration? Ans. The following elements are essential of a valid consideration: 1. Desire of request of the promisor: The person making the proposal is called the promisor. For a valid consideration, desire or request of the promisor is essential. An act done without any request is voluntary act and any voluntary act does not come into the definition of consideration. For Example, A sees that B‘s house on fire and helps him. A cannot demand any payment for his services because B did not requested him to help. 2. The consideration must be real: The consideration must have some value in the eye of law. The impossible acts or non-existing goods cannot support a contract. 3. The consideration must not be illegal, immoral or opposed to public policy 4. The consideration may be past, present or future: When the consideration of one party was given before the date of the promise, it is said to be past consideration. When the consideration moves simultaneously with the promise, it is said to be present consideration. When the consideration is to move at a future date, it is said to be future consideration. The consideration may be past, present or future. 5. Consideration may move from the promise: The person accepting the proposal is called the ‗promise‘. Consideration may move from the promise Sabolil Academy Professional Questions Bank

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Q-44. “An invitation to offer is not an offer”- Elucidate the statement . Ans. An invitation to offer is not an offer. An offer involves making of a proposal. The offer must be one which is capable of creating a legal relationship between the parties. An invitation to play cards cannot create any legal relationship, So it is not an offer. But if A says to B, will you buy my house for Tk. 50 lac? This is an offer. Because it can creates legal relationship. A quotation of prices is not an offer, but an invitation for offer. A newspaper advertisement inviting applications for a job is not an offer. A banker‘s catalogue of various charges is not an offer. A railway time-table is not an offer. Therefore, if a train does not work according to the table, the ticket holder cannot claim for breach of contract. For example, in a shopkeeper a lable on a good shows Tk. 100. It is considered as to sell the good at tk. 100. It is not an offer. But an invitation for offer. Q-45. What are the legal rules as to acceptance? Ans. The legal rules as to acceptance are as follows: 1. All the terms of offer and acceptance should be specifically defined: If there is any variation between the terms of the offer and the terms of the acceptance, there is no contract. 2. Conditional acceptance: An acceptance with variation is no acceptance, it shows as a counter offer, which must be accepted by the original offer or before a contract is made. For example, X offered to sell his house for Tk. 50 lac to Y. Y said accepted for Tk.30 lac. This is not an acceptance but a counter offer.

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3. The acceptance must be expressed in some reasonable manner: The offeree (the person to whom the offer in made) may express his acceptance by word of mouth, telephone, telegram or by post. An offer may also be accepted by conduct. 4. Mental acceptance or uncommunicated acceptance is no acceptance: No contract is formed if the offeree remains silent. Acceptance must be communicated to the offeror. For example, a person received an offer by letter. He accepted the offer and wrote a letter of acceptance and put the letter in his drawer. There was no contract because the other party was not informed about the acceptance. 5. The mode of acceptance: When the offeror prescribes a particular mode of acceptance, the offeree must follow the particular mode of acceptance. For example, if the offeror says, a letter of acceptance to be sent by telegram, the offeree must send a telegram. 6. Time of acceptance: If the offeror prescribes a time, the acceptance must be done within that time. If no time is prescribed, the acceptance must be done within reasonable time. What is the reasonable time depends on the facts of the case. Q-46. “ A contract can be void ab-initio” - Discuss Ans. একটি লফলতেয প্রস্তুলেয জনয কেটি ফআ এয ঳ভাধান পেখতে ঴তফ? লনেভ ল঱খুন পমন অ঩লন লনতজআ ঳কর ফআ ঳ভাধান কযতে ঩াতযন।

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Any contract the object of which is unlawful in illegal. Such contracts are void ab-initio: A contract is an agreement enforceable by law made between two or more persons. A contract the object of which is illegal cannot be enforceable by law and the contract which cannot be enforceable by law is void ab-intio. Therefore in a contract there must be i) an agreement, and ii) the agreement must be enforceable by law iii) the object of an agreement must be legal. Q-47. “ The law of contracts is not the whole law of agreements.� Discuss. Ans. The law of contracts is not the whole law of agreement because it does not deal with all the agreement. It deals with the right and obligation of those agreements which can be enforceable by law. All agreements are not contract. An agreement enforceable by law is a contract. An agreement comes into existence when on or more persons promise to another or others, to do or not to do something. Some agreements cannot be enforceable by law, such as an agreement to go to a cinema. An agreement which cannot be enforceable by law is not a contract. The law of contract is the law of agreement which is enforceable by law. Q-48. What do you mean by breach of contract? What are the remedies for a breach of contract? Ans. If any party of a contract refuses or fails to perform the act of contract, it is said to be a breach of contract. A breach of contract comes into existence when it becomes impossible for any party of a contract to perform his obligation. The remedies for a breach of contract: The contract is not discharged under the following cases: Sabolil Academy Professional Questions Bank

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Default of a third party: A contract is not discharged if it cannot be performed because of the default of a third party on whose work the promisor relied. Partial impossibility: A contract is not discharged in case of impossibility of some of the objects of the contract. Difficulty of performance: A contract is not discharged if its performance has become more difficult, more expensive or less profitable than that agreed on the date of execution of the contract. Strikes and lockouts: A contract is not discharged by strikes and lockouts. Q-49. Distinguish among void contract, voidable contract and void agreement. Ans. Distinction among void contract, voidable contract and void agreement: Void contract

Voidable contract

Void agreement

1. A void contract is a contract which was valid when entered into but after that become void due to impossibility of performance for changing of law or other reason. 2. It is void because of missing any essential element of a contract

1. A Voidable contract is a contract which is enforceable by law at the option of one or more parties of a contract but not at the option of other or others.

1. An agreement which cannot be enforceable by law is a void agreement

2. It is void because the 2. It is void because of consent of a party is not mistake, lack of face. consideration, etc.

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3. It is void ab-initio

3. It is valid until the aggrieved party refuses it. 4. It cannot be 4. It is enforceable enforceable by any until the aggrieved party of the contract. party refuse it. 5. It can never become a 5. On the expiry of a valid contract. reasonable time it may become a valid contract

3. It is void ab- initio

4. It cannot enforceable by law

be

5. It can become a valid agreement when enforceable by law.

Q-50. Distinguish with examples among (i) void contract (ii) voidable contract and (iii) illegal agreement. Ans. Distinction among void contract, voidable contract and illegal agreement: Void contract 1. A void contract is a contract which was valid when entered into but after that become void due to impossibility of performance for changing of law or other reason. 2. It is void because of missing any essential element of a contract 3. It is void ab-initio

4. It cannot be enforceable by any party of the contract 5. It can never become a valid contract

voidable contract 1. A voidable contract is a contract which is enforceable by law at the option of one or more parties of a contract but not at the option of other or others. 2. It is void because the consent of a party is not free 3. It is valid until the aggrieved parties refuse it. 4. It is enforceable until the aggrieved parties refuse it. 5. On the expiry of a reasonable time it may become a valid contract.

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Illegal agreement 1. An illegal agreement is one which is against a law.

2. It is void because of unlawful consideration 3. It is void ab- initio.

4. It cannot be enforceable by law 5. It can become a valid agreement when enforceable by law. Page 88


6. For example, the contract of marriage become void become of death of a party of the contract.

6. For example, X coerces Y into entering a contract for sale of Y‘s house to X .Then contract can be avoided by Y.

6. For example, an Agreement to murder, robbery, or cheating 936.

Q-51. Distinguish among (i) voidable agreement (ii) void agreement (iii) Enforceable agreement. Ans. Distinction among voidable agreement, void agreement and enforceable agreement: Voidable agreement

Void agreement

Enforceable agreement

1. A voidable agreement 1. A void agreement is 1. An enforceable is one which can be one which cannot be agreement is one which avoided enforceable by law can be enforceable by law and both of the parties 2. It is valid until the 2. It is void ab-initio 2. It is not void aggrieved party refuses it. 3. It is enforceable until 3. It cannot be 3. It can be enforceable the aggrieved party enforceable by any by law refuges it. party of the contract 4. On the expiry of a 4. It con never becomes 4. It is a valid contract. reasonable time it may a valid contract. become a valid contract

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Q-52. Distinguish between a void agreement and an illegal agreement. Ans. Distinction between a void agreement and illegal agreement: Void agreement 1. A void agreement is one which cannot be enforceable by law 2. It cannot be enforcement by any patty of the contract. 3. It can never become a valid contract. 4. A void agreement may not be illegal

Illegal agreement 1. An illegal agreement is one which is against a law. 2. It cannot be enforceable by law 3. It can become a valid agreement when enforceable by law. 4. An illegal agreement is void.

Q-53. Distinguish among (i) Pledge (ii) Bailment and (iii) Hypothecation. Ans. Distinction among pledge, bailment and hypothecation are as follows: Pledge

Bailment

Hypothecation

1. The bailment of goods as security for payment of a debt is called pledge

1. A bailment is the delivery of goods by one person to another for some purpose, when the purpose is accomplished be returned

2. The bailer is called the pledge or and the bailey is called the pledge.

2. The person delivering the goods is called the bailer and the person to who these are delivered is called the bailey

1. The hypothecation is a transaction in which money is lent on the security of movable property but the property remains in the. Custody of the owner of the property. 2. The owner of goods which are hypothecated is called the hypothecated and the person to hypothecated is called the hypothecated

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Q-54. Distinguish between Coercion and undue influence. Ans. Distinction between coercion and undue influence: Coercion

Undue Influence

1. Coercion is the threatening any person to com it an act or influencing with the intention to enter in to an agreement.

1. A contract said to be induced by undue influence where one of the parties influence the will of the other and he influences to obtain an unfair advantage over the other 2. Generally, coercion takes place 2. Generally, undue influence takes with the use of physical force. place with the use of mental pressure. Q-55. Distinguish between mistake of law and mistake of fact. Ans. Distinction between mistake of law and mistake of fact: Mistake of law

Mistake of fact

1. Mistake on a point of own countries 1. Mistake on a point of foreign law is known as mistake of law. countries law is known as mistake of fact 2. It does not affect the contract. 2. It affects the contract 3. It is a valid contract. 3. This contract can be avoided. Q-56. What are the consequences of coercion? Ans. The consequences of coercion: A contract induced by coercion is voidable. The aggrieved party can refuse to perform it. The aggrieved party may, if heresies, abide the contract.

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Special cases: 1. A tract to execute: A threat to execute a contract does not constitute coercion, Undue influence, fraud, misrepresentation or mistake. 2. High prices and high interest vats: If is not coercion to charge high prices or high interest rates. 3. A threat to commit suicide: A threat to commit suicide is not coercion because suicide in not punishable by the law. Only the attempt to commit suicide is punishable. Therefore, suicide is not a crime. Q-57. State how offer is made revoked and accepted. Ans. An offer can be revoked under the following circumstances: 1. By notice: If the offer or gives notice of revocation to the other party, the offer comes to an end. An offer may be revoked any time before acceptance but not afterwards. For example, A proposal in sent by X to Y and is accepted by Y by letter. The proposal can be revoked any time before the letter of acceptance was posted but it cannot be revoked after the letter is posted. 2. By lapse of time: When the proposer prescribes a time within which the proposal must be accepted, the proposal lapses as soon as the time expires. 3. By expiry of reasonable time: When the proposer does not prescribe any time, the proposal lapses after the expiry of a reasonable time. What is reasonable time will depend on the circumstances of the case.

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4. By death: An offer lapses by the death of the proposer, if the fact of his death comes to the knowledge of the acceptor before acceptance. 5. Counter offer: When a counter offer is given, the original offer lapse. An offer can be accepted by the following ways: An offer involves the making of a proposal. When one person signifies his willingness to another to do any with a vice to obtaining the assent of that, he is said to make a proposal. A proposal is also called an offer. When the person to whom the proposal is made signifies his assent, the proposal is said to be accepted. A proposal when accepted becomes a promise. For example, X offers to sell his car to Y at the price of Tk. 5 lac. This is a proposal. If Y agrees to buy the car at the price stated, the proposal is accepted and Y becomes the acceptor.

একাউলটং লফলেগুতরা কঠিন ভতন ঴তে? ফুঝতর ঳ফ লফলে আ ঳঴জ।

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Segment- F: The law of employment

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Q-1. Write short notes on Civil Liability for Occupational Injuries. ICMA- June‘16 Ans. Workers often sustain an injury or contract a disease arising out of their employment. Workemen's Compensation Act 1923 states that employers must pay a certain amount of money into a central fund each month for occupational injuries. The amount depends on how dangerous the industry is, how many workers are employed in the company and the wages paid to the workers. This fund is called the Compensation Fund. If workers are injured at work or get a disease caused by their work (occupational disease), they get paid out of this fund. It is not always necessary for the worker to be able to identify a specific event or date of injury for the claim to be compensable. This is because some injuries are not easily identifiable. For example, a person who works in a coal mine, cement factory, foundry, or motor vehicle manufacturing plant, and as a result of the dirty, dusty, oily air, contracts a lung disease would never be able to identify a specific traumatic event that caused the condition, or a specific date of injury or disease. Q-2. What are the prevailing rules for health & safety at work? What are the remedies to employees if not complied by employers? ICMA- Dec‘15 Ans. The prevailing rules for health & safety at work: Health and Safety at Work Act 1974 make provisions for securing the health, safety and welfare of persons at work, for protecting others against risks to health or safety in connection with the activities of persons at work, for controlling the keeping and use and preventing the unlawful acquisition, possession and use of dangerous substances, and for controlling certain emissions into the atmosphere. The prevailing rules of health and safety at work are pointed below: (1) It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees. Sabolil Academy Professional Questions Bank

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(2) Without prejudice to the generality of an employer‘s duty under the Act, the matters to which that duty extends include in particular— a) the provision and maintenance of plant and systems of work that are, so far as is reasonably practicable, safe and without risks to health; b) arrangements for ensuring, so far as is reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances; c) the provision of such information, instruction, training and supervision as is necessary to ensure, so far as is reasonably practicable, the health and safety at work of his employees; d) so far as is reasonably practicable as regards any place of work under the employer‘s control, the maintenance of it in a condition that is safe and without risks to health and the provision and maintenance of means of access to and egress from it that are safe and without such risks; e) the provision and maintenance of a working environment for his employees that is, so far as is reasonably practicable, safe, without risks to health, and adequate as regards facilities and arrangements for their welfare at work. The remedies to employees if not complied by employers: If the employers not ensure the health and safety at workplace the employees should be demotivated employee. They feel lack of security during the working hour and it will leads to less productivity and labour unrest. Q-3. Write short notes on: (a) Unfair and wrongful Dismissal of Employee; (b) Independent Contractor; (c) Quasi Contract. ICMA- June‘16 Ans. Sabolil Academy Professional Questions Bank

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(a) Unfair and wrongful Dismissal of Employee: Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner. The Fair Work Commission (the Commission) decides on cases of unfair dismissal. Wrongful dismissal, also called wrongful termination or wrongful discharge, is a legal phrase, describing a situation in which an employee's contract of employment has been terminated by the employer, if the termination breaches one or more terms of the contract of employment, or a statute provision in employment law. (b) Independent Contractor: An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time he or she may be subject to law of agency. Independent contractors are usually paid on a freelance basis. Contractors often work through a limited company or franchise, which they themselves own, or may work through an umbrella company. (c) Quasi Contract: A quasi contract is an agreement between two parties without previous obligations to one another that has been created and legally recognized by the court system. Under a quasi-contract, neither involved party is expected to create such an agreement; this contract is arranged and imposed by a judge to correct a circumstance in which one party acquires something at the expense of the other party. Q-4. Write short note on i) Dismissal ii) Social Security Compensation ICMA- Dec‘15 Ans. ঳াফলরর একাতেলভ পভাফাআরঃ ০১৭১১১৩৭০৩৯ Sabolil Academy Professional Questions Bank

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i) Dismissal: Dismissal (referred to informally as firing or sacking) is the termination of employment by an employer against the will of the employee. Such a decision can be made by an employer for a variety of reasons, ranging from an economic downturn to performance related problems on the part of the employee. At the time of dismissal, the employer must show a valid reason that can be justified. To be dismissed, as opposed to quitting voluntarily (or being laid off), is often perceived as being the employee's fault. ii) Social Security Compensation: Social Security Compensation is paid out monthly to retired workers and their spouses who have, during their working years, paid into the Social Security system. Social Security Compensation is also available to qualifying individuals who are completely and permanently disabled, and are determined by a specific and rigid set of criteria issued by the Social Security Administration. Q-5. Distinguish between an employee and an independent contractor. ICMA- Dec‘15 Ans. Distinction between an employee and an independent contractor: Employee

Independent contractor

1. Performs work, under the direction 1. Has a high level of control in how and control of their employer, on an the work is done. ongoing basis. 2. Generally works standard or set 2. Under agreement, decides what hours. hours to work to complete the specific task. 3. Usually has an ongoing expectation 3. Usually engaged for a specific task. of work. 4. Bears no financial risk.

4. Bears the risk for making a profit or loss on each task.

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5. Tools and equipment are generally 5. Uses their own tools and equipment. provided by the employer, or a tool allowance is provided. Q-6. Mention the express and implied terms of a contract of employment. Ans. All employees have an employment contract, which can be verbal, written or a combination of both. It is better to have a written contract of employment so that the conditions of employment are recorded. The contract should cover the following terms: - the main duties of the employee, - the location of the employment site, - whether the employee is casual, part-time or full-time, see casual employees, - the normal hours of work and whether the employee is entitled to payment for overtime, - the level of salary or wages including whether the employee is entitled to pay rises upon certain occurrences, including cost of living increases, national wage increases, increments for age or years of service, - whether the job is for a fixed period or is ongoing, - whether there is a probationary period and the period of probation, and - where there is a probationary period, or where the position is for a fixed period but is renewable, the form of the review process. Q-7. What are the rights and duties of employers and employees? Ans. The rights of employers: a) To determine whether the person can perform the inherent requirements of the job. b)) To identify if any reasonable adjustments may be needed, either in the selection and recruitment process or in the work environment and role. c) To establish facts for entitlements such as sick leave, superannuation, workers‘ compensation and other insurance. Sabolil Academy Professional Questions Bank

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The duties of employers: a) Provide and maintain a safe workplace, machinery and equipment. b) Prevent risks from use of any article or substance and from exposure to physical agents, noise and vibration. c) Prevent any improper conduct or behaviour likely to put the safety, health and welfare of employees at risk. d) Provide instruction and training to employees on health and safety. e) Provide protective clothing and equipment to employees (at no cost to employees). f) Appoint a competent person as the organisation‘s Safety Officer. The rights of employees: a) A safe and healthful workplace b) To ask the employer to correct dangerous conditions. c) To participate in enforcement inspections. d) To not be discriminated against for exercising the health and safety rights. e) To refuse work that puts the employee in immediate danger of serious harm. f) To get information from the employer about organisation standards, worker injuries and illnesses, job hazards and workers' rights. The duties of employees: a) Obey a lawful, reasonable order within the terms of the contract of employment b) Serve faithfully c) Co-operate with the employer d) Perform duties with proper care and diligence e) Not to misuse the confidential information acquired while in service.

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Segment- G: Company administration and finance

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Q-1. What are the different types of shares that can form capital and what are the rights that attach with each class of shares. ICMA- DEC‘15 Ans. The different types of shares that can form capital and their rights: Ordinary Shares: This is the most commonly issued share type, essentially the same as common stock shares. They carry voting rights but not usually any special rights beyond that. Ordinary shares may be subdivided into different classes such as A or B and have different share prices. Preference Shares: This is a slightly less preferred share type. Preference shareholders have the right to be paid dividends prior to dividends being paid for other share types. Preference shares do not typically carry voting rights. Cumulative Preference Shares: This share type roughly corresponds to preferred stock shares. Like preferred stock shares, they come with the stipulation that any scheduled dividends that cannot be paid when due are carried forward and must be paid before the company can pay out ordinary share dividends. Redeemable Shares: As the name implies, redeemable shares are issued with the shareholder agreeing that the shares can be redeemed – bought back by the company – either after a certain time period or on a given date. Redeemable shares can vary according to which party, either the company or the shareholder, has the option to exercise the company buyback provision. Bearer Shares: Bearer shares are most commonly in the form of warrants - a legal document certifying that the bearer is entitled to own the shares designated in the warrant. The warrants usually come with vouchers enabling the bearer to claim any due dividends. Warrants are completely transferable. Sabolil Academy Professional Questions Bank

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Q-2. Draft a comparison statement (in terms of essential factors) on Soletradership, partnership & companies limited by shares. ICMA- Dec‘15 Ans. Ownership: A sole-tradership is a business that has a single owner who is responsible for making decisions for the company. A partnership consists of two or more individuals who share the responsibility of running the company. A company limited by shares is one of the most recognizable business structures and has a separate identity from the owners of the company. One or more owners may participate as shareholders of a corporation. Formation: Sole-tradership begins automatically when a single business owner decides to open a business. A partnership business automatically begins when two or more people decide to go into business. A company limited by share is required to file articles of incorporation. Documents: There are no documents to file to begin a sole-tradership or a partnership. However, companies limited by shares are required to file articles of incorporation, also known as a certificate of formation. Liability: Sole-tradership and partnership business have unlimited liability for all debts and liabilities. But companies limited by shares have limited liability for all debts and liabilities.

চাকুরীর কারনে ফযস্ত থাকতে ঴ে? আপোর জেয রনেনে শুক্রবানরর বযাচ।

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Q-3. How do you distinguish between ordinary Resolution and Special Resolution? ICMA- Dce‘15 Ans. Ordinary Resolution: Company resolution that is not extraordinary or special resolution is known as ordinary resolution. Such as, resolution for approval of accounts. Ordinary resolution require only ordinary or simple majority (over half of the votes of shareholders or their proxies) to be adopt or passed and may not require any notice of their proposal. Special resolution: This is passed in a meeting by the three-fourth majority of the members present in person or by proxy of which 21 days notice has been given. Special resolutions are necessary for: - to change the name of the company - to alter the memorandum - to alter the articles Q-4. What restrictions are there in payment of dividend under the Financial Institutions Act 1993? ICMA- Aug‘15 Ans. As per the Financial Institutions Act 1993: 1. No banking company except new and special banks shall pay any dividend on its shares unlessa) all its capitalized expenses including preliminary expenses, organization expenses, commission for share selling and brokerage, losses and other items have been completely written off, or b) it manages to maintain paid-up capital and reserve fund Sabolil Academy Professional Questions Bank

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2. Any banking company may pay dividends on its shares without writing off under the following circumstances: a) in any case where the depreciation of its investments in approved securities has not actually been capitalized b) in any case where adequate value of its investments in shares, debentures or bonds has been made to the satisfaction of the auditory of the banking company c) in any case where adequate provision for bad debt had been made to the satisfaction of the auditor of the banking company. Q-5. Mention for what reasons the license of a non-banking financial institution can be cancelled as per Financial Institutions Act 1993? ICMA- Aug‘ 15 Ans. The license of a non-banking financial Institution can be cancelled for the following reasons: i) To cease the business for which it has been established ii) For suspension of the business iii) Is furnished false information or document for obtaining license iv) If carry on business to miscalled the interest of its depositors v) Holds in insufficient assets to cover the liabilities of its depositors vi) Carrying on business while paid-up capital is less than the minimum capital vii) If done any activities out of the conditions of license viii) For any offense of its director পান্ডাতভটার঳ ঄ফ লফজতন঳ ভযাথভযাটিক঳ এবার পরীক্ষা দিনবে? প্রস্তুদি ক্লানস চনে আসুে। Sabolil Academy Professional Questions Bank

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Q-6. Discuss the various returns to be filled to different Authority every year by a public Limited company. ICMA- Aug 15 Ans. Companies Act 1994 requires certain return to be filed with the Registrar. It is the duty of the secretary to see that these returns are field property. The following are the various returns to be filled: i) Annual return ii) Return as to allotment iii) Return of Director iv) Return as to Alternation of Memorandum v) Return as to Alteration of share Capital vi) Return as to Reduction of capital vii) Return by Foreign companies penalties for non-compliance of such returns: Penalties for non-compliance of such returns: i) Annual return: For non-compliance of such return, the company and every responsible officer of the company shall be liable to a penalty of Tk. 100 for every day during which the default continues. ii) Return as to allotment: If default is made in filing the return for such, every officer responsible for the default shall be liable to a fine not exceeding Tk. 1000 for every day during which the default continues. iii) Return of directors: The Director and every officer of the company who is willing in default shall be liable to a fine of Tk. 500 Sabolil Academy Professional Questions Bank

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iv) Return as to Alteration of Memorandum: If this return is not filed in time, the alteration and all proceedings connected with it shall become null and void. v) Return as to Alteration of share capital: If a company and every officer made default in filing the return with Register, it shall be liable to a fine not exceeding Tk. 200 for every day during which the default continues. vi) Return for Foreign companies: If the company and every officer fails to file with the Register, shall be liable to fine not exceeding Tk. 1000 and in case of continuing offence, with additional Tk. 500 for every day during which the default continues. Q-7. Narrate the circumstances under which Bangladesh Bank can dissolve the Board of Directors of a Banging company. ICMA- Aug‘15 Ans. As per the Banking companies Act 1991, power of the Bangladesh Bank to dismiss the Board of Directors of a Banking company. 1. Where the Bangladesh Bank has reasonable grounds to believe that the Board of Directors of a Banking company conducts its activities in a manner contradict to the interest of the banking company or its depositors; it is necessary to dismiss that Board of directors after giving its occasions in writing. The Board of Directors shall dismiss by a direction and the direction to dismiss that Board shall come into effect form such date and be in force for such period as mention there in. 2. A Board of Directors being dismissed, the person appointed on this behalf from the Bangladesh Bank shall have all the powers and functions and accomplish all the duties of the board.

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Q-8. What are the consequences when Director acts without acquiring his qualification shares? ICMA- Aug‘15 Ans. The Articles of Association of a company usually fix a minimum number of shares which every Director must subscribe in order to become a Director. This minimum number is known as the qualification shares of Director‘s. It is the duty of every director who is acquired by the Articles of Association to hold a specified number of shares for qualification and who has not already qualified himself accordingly, to obtain his qualification within two months after his appointment or such shorter time as may be fixed by the Articles of Association. If after the expiration of the period mentioned above any such unqualified person acts as a Director of the company, he shall be liable to a fine not exceeding two hundred taka for every day between the expiration of the said period and the last day on which it is proved that he acted as a Director (both days inclusive). Q-9. What is a debenture? ICMA-Aug‘15 Ans. A debenture is a document which shows on the face of it that the company has borrowed a sum of money from the holder there of upon certain terms and conditions. According to the companies Act, 1994, debenture includes debenture stock, bonds and any other securities of a company whether or not constituting a charge on the assets of company. ফযাংলকং লেতলাভা ঩যীক্ষায প্রস্তুলে লনতেন? প্রতপ঱নার ল঱ক্ষকতেয পথতকআ প্রস্তুলে প঳ফা লনন।

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Q-10. NO dividend can be paid by a company except out of profit comment. ICMA- Apr‘15 Ans. Dividend is paid out of profit of the company. But the companies Act 1994, has not mentioned anything about the composition of profit, i.e., capital profit or revenue profit. The dividend can be paid out of capital profit if the profit is realized. But the dividend must not be paid out of capital profit which reduces the capital and the company will not be able to maintain its financial strength for continuity. But dividend may be paid out of profit acquired by the company after making all adequate provision as required by the policy and regulations. Generally dividends are paid from the revenue profit for the year. But in some cased dividend can be paid out of capital profit if it is realized in full. Q-11. Critically examine the following statements: Dividends once declared become debts of the company. ICMA-Apr‘15 Ans. When a dividend is declared it becomes debt arising out of the contract payable by the company to the shareholders who are on the register of members when the dividend is declared. The company is obligated to send dividend warrants or checks to the registered addresses or the shareholders. Once the dividend is paid out, the liability on company‘s part is discharged. If a shareholder fails to collect the money from the company‘s account, for whatever reasons, it is a lapse of his part. It is to be noted that the company is in no way expected to hold the dividends as a trustee for the shareholders.

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Q-12. What do you understand by the principle of majority rule? Who can act as remedy if there is an ambiguity? ICMA- Apr‘ 15 Ans. The principle of minority rule: 1. Any member or debenture holder of a company may either individually or jointly bring to the notice of the court by application thata) the affairs of the company are being conducted or the powers of the directors are being exercised in a manner prejudicial to one or more of its members or debenture holders; or b) the company is acting or is likely to act in a manner which differentiate or is likely to differentiate the interest of any member or debenture holder c) a resolution of the members, debenture holders or any class of them has been passed or is likely to be passed which is discriminates 2. The court shall on receipt of an application send a copy there of to the Board and fix a date for hearing the application 3. If after hearing, the court is of opinion that the interest of the applicant is likely to be affected for reasons specified in the application, it may make such order, includinga) to cancel or modify any resolution or transaction b) to amend any provision of the memorandum and articles of the company Q-13. Explain the legal personality of a company. ICMA- Apr‘15 Ans.

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According to the company law, a registered company is a legal person in its own right and quite destined from its members. This fact is that a company has a separate entity from its director and shareholders. For this reason anybody cannot wish to wind up the company without the rules of company law. So, if all the members are died, the company can continue its entity by its own name and seal. A company makes liable itself to others and also makes others liable to company. Even, a company can purchase and sale assets in its own mane. Q-14. Is it lawful for a public limited company to appoint a person as its managing Director who is also the Managing Director of another public limited company? ICMA- Apr‘ 15 Ans. As per companies Act 1994, no public limited company or no private limited company which is subsidiary of a public limited company shall after the commencement of this Act, appoint any person as a Managing Director, if he is a Managing Director or Manager of any other company. Provided that no appointment shall be made to any person as the Managing Director of the company without the consent of the shareholders in the general meeting Q-15. How a company is dissolved? What are the preferential claims at the time of dissolution of a company? ICMA- Apr‘ 15 Ans. According to the Companies Act, 1994, a company may be wound up by the following ways1. Compulsory winding up under order of the Court or, Government; 2. Voluntary winding up by members or creditors; 3. Winding up subject to the supervision of the court.

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1. Compulsory winding up under order of the court: Compulsory winding up takes place when a company is directed to be wound up by an order of the Court. A company may be wound up by the court under the following circumstance: i. Default to hold the statutory meeting and to file the statutory report; ii. Fail to commence business within a year of its incorporation; iii. Reduction of number of members to below 7 in case of public ltd. co. and below 2 in case of private ltd. co.; iv. Unable to pay its debts; v. On just & equitable opinion of court. Procedures for compulsory winding up: i. Application or petition for winding up to the court by the company, creditors, members, contributories or authorized person by Govt. ii. Hearing of application in a certain date and taking decision for further activities. iii. Commencement of wingding up by court at the time of the presentation of petition. iv. Appointment of winding up & order of winding up v. Preparation of the list of the contributories. vi. Collection of documents & assets of company vii. Proof of claim and payment of due viii. Declaration of dissolution of company and reporting it to the Registrar by the official liquidator within 15 days. 2. Voluntary winding up by members or creditors: Voluntary winding up means winding up by the creditors or members themselves without the intervention of the court. A company may be wound up voluntarily under the following circumstances: i. When the period fixed for the duration of the company by the articles that the company is to be dissolved and the company in general meeting has passed an ordinary resolution; ii. If the company wishes to resolve by special resolution; iii. It the company fails to continue its business then by passing an extraordinary resolution. Sabolil Academy Professional Questions Bank

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Procedures for voluntary winding up by members or creditors: i. Declaration of financial solvency; ii. Submission of this declaration to the Registrar; iii. Adoption of decision for winding up in the general meeting. iv. Notification of decision within 10 days by passing the resolution in the general meeting; v. Calling of general meeting if the winding up event continues for more than 01 year; vi. Final meeting & dissolution; vii. Submission of documents to the registrar within 01 week of this meeting. 3. Winding up subject to supervision of the court: After passing the resolution for winding up the company, if the winding up is completed voluntarily on the application of the shareholders or creditors or both of the parties but with the supervision of the court, it is called winding up of a company subject to supervision of the court. The object of such winding up is to protect the interests of the creditors and contributors. A company may be winding up subject to the supervision of the court, Ifi. The liquidator under voluntary liquidation is partial or is negligent collecting the assets; ii. The rules relating to winding up are not being observed; iii. The resolution for winding up was obtained by fraud. Preferential claims at the time of dissolution of a company: According to the company Act 1994, a company has to pay the creditors in preferential claims which are as follows: 1. All revenues, taxes, rates whether payable to the government or a local authority. 2. All wages and salary of any clerk and other servant and any labor or workman up to Tk 1000 or Tk 500 each respectively. 3. Compensation of any officer or employee of the company in respect of the death or disablement which is payable under the Workmen‘s Compensation Act, 1923. Sabolil Academy Professional Questions Bank

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4. All sums due to any employee from a provident fund, a pension fund and gratuity fund or any other fund for the welfare of the employee maintained by the company. 5. The expenses of any investigation held in pursuance of the Act. Q-16. Draft a notice of a statutory meeting. ICMA- Apr‘ 15 Ans. Notice of the statutory meeting ABC Limited (Registered office address) Date:....... Notice is hereby given that in pursuance of the provision of the companies Act, 1994, the statutory meeting of the ABC Company Ltd. Will be held at it‘s registered office on the day of ---/---/2016 at --- a.m/p.m to transact the following business. 1.To read the notice convening the meeting 2.To welcome the members 3.To consider and adopt the statutory report 4.Any other matters that may be considered at this statutory meeting. By order of the Board of Directors Sd/Secretary

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Q-17. Mention the financial and non-financial benefits of an investor for investing in share market. ICMA- Apr‘ 15 Ans. The financial benefits of an investor for investing in share market: a) One of the primary benefits of investing in share market is investment gain. Over time, the stock market tends to rise in value, resulting in a profit even if some of individual stocks lose value. b) Some stocks provide income in the form of a dividend c) Most investors intend to buy low and then sell high. d) If the investor needs each in a hurry, he can sell his stock at any time. The non-financial benefits of an investor: a) Buying shares of a company means taking ownership of that company. This means that investing in share market also brings benefits of being a business owner. b) Investing in share market has the benefits of providing diversification. c) For investors who put money into different types of shares, minimizes the risk. Q-18. What are the difference between extra ordinary resolution and special resolution? ICMA- Dec‘14 Ans. Difference between extra ordinary resolution and special resolution: Extra ordinary resolution: This is passed by the three-fourth majority vote at general meeting of which 14 days notice has been given. The notice must specify the intention to propose the resolution as an extra ordinary resolution. Such resolution is necessary when a company is sought to be wound-up voluntarily on the ground that it cannot continue its business on account of its liabilities and also for a number of other reasons. Sabolil Academy Professional Questions Bank

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Special resolution: This is passed in a meeting by the three-fourth majority of the members present in person or by proxy of which 21 days notice has been given. Special resolutions are necessary for: - to change the name of the company - to alter the memorandum - to alter the articles Q-19. Draft a notice of an AGM of X & Y limited mentioning hypothetical date, time & place of the meeting. ICMA- Dec‘14 Ans. X & Y Limited 9, Motijheel C/A, Dhaka Date: August 20, 2016 Notice of Annual General Meeting All concerned of the company are hereby notified that the 20th annual general meeting of X & Y Limited is going to be held on Tuesday, September 20, 2016 at 10.00 am in the head office of the company. You are specially requested to remain present in that meeting in time.

By orders of the Board M Company secretary

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Agenda: 1.Reading out and approval of the director‘s report 2.Declaration of dividend 3.Filling-up the vacant post of Director 4.Increasing the tenure of the company auditor 5.To approve the appointment of the independent directors Q-20. Mention the agenda of the meeting. ICMA- Dec‘ 14 Ans. The agenda of the meeting 1. Reading out the notice by the secretary 2. Drawing attention of the members as to whether the report of directors will be read out or not 3. Approval of the directors‘ report 4. Reading out the auditors‘ report 5. Declaration of dividend 6. Filling up the vacant post of director 7. Increasing the tenure of auditor 8. President‘s speech and closing the meeting. Q-21. What are the most important documents required for the formation of the public limited company and what their salient features? ICMA- Dec‘ 14 Ans. There are several most important documents required for the formation of a public limited company. They are pointed below with their salient features: 1. Memorandum of association; It is a principal document of a company. It includes name, address, objective and capital of the company

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2. Articles of association: The articles of association are the domestic regulations of the company and govern its internal administration. 3. Directors schedule: The name of the agreed persons as director is to be enclosed with the application for registration. 4. Letter of agreement: Submit the agreement letter of directors signed by them. 5. Agreement of qualification shares: Submit the director‘s qualification shares. 6. Include the word `Limited‟: The word `Limited‘ should be added at the end of the name of the company 7. Letter of declaration: A declaration by an advocate of high court or by a person named in the articles of association as a director, manager or secretary of the company compliance with all of the said requirements shall be filed with the registrar. 8. Collection of certificate of incorporation: If the registrar is satisfied on the above documents, he listed the name of company and issued a certificate of incorporation. Q-22. How a Public Limited Company is formed and registered? ICMA- Dec‘ 14 Ans.

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They are several stages of forming a company. These are as follows? 1. Taking initiative: At first one or more persons develop the idea of forming a company. Then 2 persons in case of forming private limited company and 7 persons in case of forming public limited company are required for this purpose. 2. Preparation and submission of documents: In this stage, the promoters prepare at least two important documents memorandum of association and articles of association. A memorandum of association includes name, nature whether limited or unlimited, objects, liabilities of the members and the proposed approximate amount of the company, etc. Articles of association govern internal administration of the company. After preparing all the documents, they are required to be sent to the office of registration with the payment of fees prescribed. 3. Registration or incorporation: After the submission of document, the registrar shall register the documents within 30 days from the date of receipt upon his satisfaction and in case of refusal the grounds to be communicated within 10 days after that period. 4. Capital subscription: A private company raises capital personally, where a public company raises capital by issuing prospectus and performing other necessary activities. 5. Obtaining the certificate of commencement of business: A private company can commence its business immediately after registration but a public company must for commencing its business obtain a certificate of commencement by fulfilling specific conditions and submitting the necessary document to the office of Registrar. অনেক জজনেও একাউদটিং দবষেগুনোনি সফে হনেে ো? এর কারে প্রনফশোে প্রদিষ্ঠানে একাউদটিং দবষেগুনো IAS এবিং IFRS অেুসরনে সমাধাে করনি হনব।

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Q-23. What are Reinsurance?

the

differences

between Double

insurance

and

ICMA-Aug‘14 Ans. Differences between double insurance and reinsurance Double insurance: When the same risk and same subject matter is insured with more than one insurer, there is said to be double insurance. For example, Mr. X, owner of a house, insures it against fire for Tk 1 million with Mr. Y and Tk 0.5 million with Mr. Z. This is a double insurance. Reinsurance means the transfer of a part of the risk by the insurers. For example, suppose that a ship has been insured for Tk 100 million. They may feel that the risk is too heavy to be borne by him alone. If so, he can transfer a part of the risk to another insurer, this is known as reinsurance. Q-24. Discuss the business at a Board Meeting can be validly transacted only if there is a quorum. ICMA- Aug‘ 14 Ans. The term ‗quorum‘ refers to the minimum number of people who must be present at a meeting. By this minimum number means the number of members whose presence is must to make the meeting valid. The business at a Board meeting can be validly transacted only if there is a quorum. In case of private limited company, if the number of member is less than 6, the require number of member for quorum is 2 and if such number is more than 6, the required number of member be 3 for the quorum. In case of public limited company, the number of members must be 5 for quorum irrespective of the number of members of the company

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Q-25. What are the reasons for which a listed company can be delisted or suspended by the Dhaka stock Exchange as per its listing regulations in force? ICMA- Aug‘ 14 Ans. A listed company may be delisted or suspended for any of the following reasons: i. If its securities are quoted below 50% of face value for a continuous period of their calendar years. ii. Failed to declare dividend or bonus: - for 5 years form last dividend - for 5 years from commencement of business - for 5 years from the date of commercial operation iii. Failed to hold AGM for a continuous period of three years iv. Gone into liquidation v. Failed to pay listing fees or penalty for two years vi. Failed to comply any provision of the regulations. Q-26. What is price sensitive Information? Mention the events or transactions which will be considered as price sensitive information. ICMA- Aug‘ 14 Ans. Price sensitive information means any such information which, if published may influenced market price of the concerned security. The events or transaction which will be considered as price sensitive information are as follows: i) Report in respect of financial condition of the company or any basic information in respect there of ii) Information relation to dividend iii) Decision of giving right, bonus shares to the share holders iv) Decision of buying or selling immovable asset v) Basic change of activities of the company vi) Any others as determined by the commission Sabolil Academy Professional Questions Bank

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Q-27. Draft specimen resolutions for transacting the following items indicating the kind if meeting at which the resolutions are to be passed and the types of resolution required: i. To open a branch office of the company. ii. To change registered office of the company from one city to another. iii. To close register of members or debenture holders. iv. To change the name of the company. ICMA- Apr‘ 14 Ans. i. Resolution to open a branch office of the company. Resolution as an ordinary resolution passed in the general meeting that a branch office of the company would be opened at 16, Motijheel C/A, Dhaka on 15th September, 2016. Resolved further that a press release to this effect should be made for the notification of all concerned. ii. Resolution to change registered office of the company. Resolved as a special resolution passed in the AGM that registered office of the company is hereby changed from Dhaka to Chittagong. iii. Resolution to close register of members or debenture holders: Resolved as a director‘s resolution passed in of members or debenture holders and the share transfer Book of the company shall remain closed with effect from September 01 to September 22, 2016 (both days inclusive). During this period no transfer of shares will be affected. iv. Resolution to change the name of the company: Resolved as a special resolution passed in the AGM that the name of the company is hereby changed by altering the name clause of Memorandum of Association of the company in substitution for and to the exclusion of the existing name of the company.

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Q-28. A company cannot issue right share as an when they like Discuss. ICMA-Apr‘14 Ans. A company cannot issue right share as an when they like. To issue right shares following conditions are to be fulfilled: 1. Such right issue and price thereof have been approved by the shareholders in a general meeting. 2. The proceed of previous public offering or right issue has been utilized fully 3. AGM has been held regularly 4. The right issue has been fully underwritten on a firm commitment basis by the underwriter. 5. The financial statements of the company is prepared as per IAS as applicable in Bangladesh and audited as per ISA as applicable in Bangladesh 6. The issuer or any of its director is not a bank defaulter 7. The issuer has been credit rated by a credit rating company if the offer is made at a premium. Q-29. What are the object clauses of the Memorandum of Association of a public limited company? Is there any scope for doing business beyond object clause? ICMA- Apr‘ 14 Ans. The object clauses of the memorandum of association provide the objects for which the company is incorporated. The all possible functions of a company are mentioned in this clause. The company cannot do any business beyond the object clause. Anything, done beyond the object clause of memorandum is ultra vires.

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A company is allowed to select any object for the company, excepti) Anything illegal, i.e., formation of company for gambling ii) Against the public policy, i.e., trading with enemies According to the companies Act 1994, the object clauses of the memorandum of association are as follows: 1. Name clause: In this clause, the name of a company with the word `Limited‘, at the end of the name in case of public company and private company must be contained. To select the name of a company, certain prohibited names to be avoided: i. Name which is similar to that of the company already exists. ii. Any name of UN/WHO/ Red Cross/ Subsidiary body, etc. 2. Registered office clause: It states the place where the registered office of the company is situated full and permanent address of the registered office must be communicated to the Registrar within 28 days from its incorporation or from the date of commencement of business. 3. Liability clause: It mentions the limited liability of shareholders. It should be clearly mentioned whether it is limited by share or by guarantee 4. Capital clause: It mentions the total amount of share capital with which the company propose to register. The company cannot issue more shares than are authorized by the memorandum. This clause is to be omitted in case of the company limited by guarantee having no share capital or in case of an unlimited company.

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5. Subscription clause: In this clause, the members state that they are desired to form a company and agree to take shares stated against their names. The memorandum shall be signed by each subscriber who shall add his address and description in the presence of at least two witnesses. Q-30. ABC is a Private Limited Company. They like to raise capital by issuing shares to the public. Describe the steps required for the purpose? ICMA- Apr‘ 14 Ans. The steps to be taken to raise capital by issuing shares to the public: 1. Adoption of special resolution and alteration of articles: At first, a private limited company needs to be altered its articles of association by taking special resolution. The following items of articles of association of private limited company are to be changed: i. The right to transfer of share is limited. ii. The company cannot invite to sell its share or securities. iii. The total membership of the shareholder should not exceed fifty. The following item are to be replaced on exchange of the above items: i. The share of the company is transferable ii. The share or debenture of the company is issuable iii. Minimum numbers of members are seven and maximum numbers are limited by the number of shareholders. 2. Submission of prospectus: Submitting a new prospectus or a statement in licu of prospectus to the registrar within 30 days from the changing date of articles of association.

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3. Enhancement of the number of directors: The number of directors of converted public limited company is to be increased at least three and the new schedule to be submitted to the registrar. 4. Rectification of name: If the word ‗private‘ exists at the end of the name of the previous private company, it should be deleted. 5. Submission of documents: All the documents need to be submitted to the registrar. After that the private limited company will be converted into a public limited company and can raise capital by issuing shares to the public. Q-31. Critically examine the following statement: Managing Director cannot be appointed for more than five years. ICMA- Dec‘ 13 Ans. As per companies Act 1994, -No company shall, after the commencement of this Act, appoint or employ any individual as its managing director for a term exceeding five years at a time. - The office of a managing director in a company shall, unless his term expires earlier, be deemed to have vacated immediately on the expiry of five years from the commencement of this act. - The re-appointment, re-employment or the extension of the term of office of a managing director shall not exceed five years on each occasion. Provided that any such re-appointment, re-employment or the extension shall not be sanctioned earlier than two years from the date on which it is to come in to force. These rules shall not apply to a private company unless it is a subsidiary of a public company.

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Q-32. Critically examine the following statement: On winding up a company it ceases to be a legal entity. ICMA- Dec‘ 13 Ans. The winding up or liquidation of a company means the termination of the legal existence of a company by stopping its business, collecting its assets and distributing the assets among creditors and shareholders in the manner laid down in the act and in the articles of the company. An administrator is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights. Q-33. Is a prospectus is mandatory to offer shares of a public limited company to the public if so when and why a statement in lieu of prospectus is needed? ICMA-Dec‘13 Ans. A prospectus is mandatory to offer shares of a public limited company to the public for the following reasons: 1. To collect capital from public 2. To provide incentives to investment and to create confidence among shareholders 3. To express the means of financial soundness Though a prospectus is mandatory, there are some exceptions: i) When a company offers its shares or debentures to its present shareholders or debenture holders rather than public to purchase. ii) It is invited the underwriter to take liabilities of shares or debentures. A statement in lieu of prospectus is needed when promoters of public limited company procure their capital from private arrangement and when minimum subscription is not collected from directors. Sabolil Academy Professional Questions Bank

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Q-34. Draft a Notice of the First Meeting of Board of Director‟s of BRIGHTLIFE ELECTRONICS LIMITED. ICMA- Dec‘ 13 Ans. BRIGHTLIFE ELECTRONICS LIMITED Dhaka Date:..............

Subject: Notice of the meeting of Board of Directors.

Dear Sir, Being authorized, I am informing you that a meeting has been called on September 20, 2016 at 10.00 am in the Head Office, 33 Motijheel C/A, Dhaka of the Company. You are earnestly requested to be present in that meeting in time.

Sincerely Yours, M Company Secretary Agenda : 1.Reading out and approved of the minutes of last meeting 2.Reviewing Bank account and progress of the company 3. Discussing on importing raw materials from abroad 4.Setting up new factory 5.Fixing the time, date and venue of next meeting 6.Thanks giving

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Q-35. Draft Minutes of the First Meeting of Board of Directors of BRIGHTLIFE ELECTRONICS LIMITED. ICMA- Dec‘13 Ans. BRIGHTLIFE ELECTRONICS LIMITED Dhaka Minutes of the first Board meeting Minutes of the first Board Meeting will be held on September 20, 2016 at 10: 00 am in the Head Office, 33 Motijheel C/A, Dhaka of the Company. Present Mr. A President Mr. B MD Mr. C Director Mr. D Director Mr. F Director and Company Secretary Sl. No. Heading 01

Electing the Chairperson of the meeting of the company

02

Presenting certificate of commencement and incorporation, Memorandum and Articles of Association Appointment of MD, Director, Auditor, Secretary, etc. Approving prospectus

03 04 05 06 07

Description

Determining the quorum of the Board meetings Deciding about the date & time of the next meeting Closing the meeting Signature

Signature

Secretary

President

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Q-36. Draft a notice for the forthcoming Annual General Meeting of a Public Limited Company with common agendas. ICMA- Aug‘13 Ans. X & Y Limited 9, Motijheel C/A, Dhaka Date: August 20, 2016 Notice of Annual General Meeting All concerned of the company are hereby notified that the 20th annual general meeting of X & Y Limited is going to be held on Tuesday, September 20, 2016 at 10.00 am in the Head Office, 9 Motijheel C/A, Dhaka of the Company. You are specially requested to remain present on that meeting in time.

By orders of the Board, M Company secretary

Agenda: 1.Reading out and approval of the director‘s report 2.Declaration of dividend 3.Filling-up the vacant post of Director 4.Increasing the tenure of the company auditor 5.To approve the appointment of the independent directors

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Q-37. “A company is an artificial person created by law with a perpetual succession and a common seal”. Explain this statement and point out the basic features of a company registered with RJSC. ICMA- Aug‘ 13 Ans. According to the company law, a registered company is a legal person in its own right and quite distinct from its members. This fact is that a company has a separate entity from its director and shareholder. For this reason anybody cannot wish to wind up the company without the rules of company law. So, if all the members are died, the company can continue its entity by its own name and seal. A company makes liable itself to others and also made others liable to company. Even, a company can purchase and sale assets in its own name. The management and director are separated from the ownership of the company by the law. Although, the owners and entity of the company are quite separate. As a result, the company and owners are not liable to each other for their own function. The basic features of a company: 1. It is considered as an artificial legal person which can run business in its own name. 2. The liability of the members may be either limited by shares or by guarantee as provided by memorandum of the company 3. A company has a separate legal entity which is not affected by the death, insolvency or exit of any shareholder 4. As a company is an artificial person, it has a common seal 5. The numbers of shareholders are 2 to 50 in case of private company and 7 to unlimited in case of public company. 6. The shares are easily transferable in case of public company and closely restricted in case of private company. বার বাতফ প্রস্তুলে লনতেআ ঩লযক্ষা লেন! সাবদেে একানেদম-০১৭১১১৩৭০৩৯

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Q-38. Who are considered to be related party? What disclosures are required in the Annual Report of a listed company regarding related party transactions? ICMA- Aug‘ 13 Ans. An affiliated company, a principal owner of the client company or any other party with which the client deals where one of the parties can influence the management or operating policies of the other are considered to be related party. The following disclosures are required in the Annual Report of a listed company regarding related party transaction: 1. The nature of the relationship between the entity and these related parties 2. The identity of the entity‘s related parties including charges from the prior period 3. Review shareholder records to determine the name of principal shareholder from the share register. 4. Review minutes of the meeting of shareholders and other related statutory record. 5. Enquire other auditors currently involved in the audit. 6. Review the entity‘s income tax returns and other information supplied to regulatory agencies Q-39. What are the procedures to offer right shares of a public limited company? ICMA-Aug‘13 Ans. A right offer is an option to buy a security to the existing shareholders at a specified price during a designated period (60 to 90 days). It is a special offer, the number of which is determined by the company, such shares are transferable. The procedures to offer right shares of a limited company: 1. Offering the existing shareholder of the equity shares of the company irrespective of class. Sabolil Academy Professional Questions Bank

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2. Offer to be made by notice within a time limit not less than 15 days from the date of offer. 3. Shareholders have the right to revoke the such offer within the prescribed time limit. 4. Directors have the power to dispose of the unaccepted shares in such manner as they may think most beneficial to the company. Q-40. A Company‟s object is of fundamental importance not only to members but also to non-members. Explain this statement. ICMA- Aug‘ 13 Ans. The object clauses of the memorandum of association provide the objects for which the company is incorporated. The all possible functions of a company are mentioned in this clause. The company cannot do any business beyond the object clause. Anything, done beyond the object clause of memorandum is ultra vires. A company‘s object clause is fundamental important not only to members but also to non-members because - Memorandum defines the limitations on the powers of the company established under the Act. - The whole structure of the company is built upon memorandum. - It explains the scope of activities of the company. The investment knows where their money will be spent and outsiders also know the nature of activities the company is authorized to take up. - It is a basic document of the company with regard to its constitution. - It is a charter of the company which sets out its written goals. Q-41. What are the restrictions imposed on the borrowing powers of the Board of Directors? ICMA- Aug‘13 Ans.

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The Board of Directors cannot Borrow money on the Security of its books of accounts because such books are required to be kept in the registered office and these are open to inspection. Also, they cannot borrow money on the security of the reserve capital. Other restrictions are: 1. Restrictions as contained in the Memorandum of Association or Articles in ultra-vires borrowing 2. Restrictions of borrowing before obtaining the certificate of commencement in case of public Ltd. co. and certificate of incorporation in case of private Ltd. co. 3. Borrowed amount cannot be exceeded the amount of issued share capital without sanction of the company in the general meeting. 4. Borrow only in the name of the company. Q-42. What are the contents of a prospectus? ICMA- Apr‘13 Ans. According to the companies Act 1994, following particulars are necessary to have in a prospectus: 1. Name and address of the company and issuing date of the prospectus 2. The main objects of the company with the name, occupation and address of the directors and signatories to the memorandum and number of shares subscribed by them and their remuneration. 3. The numbers and classes of shares and debentures and the interest of the shareholders in the profit and property of the company 4. Dividend policy and expected dividend to be declared by the company 5. Name and address of auditors and their reports 6. Voting power and obligations of shareholders 7. Name and address of vendors 8. The underwriting commission 9. Amount of preliminary expenses

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Q-43. What are the contents of the notice of an AGM? When it is to be published in the Newspaper? ICMA-Apr‘13 Ans. The written message which is served for inviting the members to attend the meeting on specific time, date, place and occasionally agenda is called a notice. The notice must contain the following contents: i) The date, time, place of holding the meeting must be clearly mentioned ii) It must be signed by the proper authority iii) The objects of the meeting should be mentioned iv) It must contain the agenda of the meeting v) It should contain the voting rights of the members whether by person or by proxy vi) Official pad and seal must be used in the notice The notice is to be circulated and published in the newspaper by the proper authority within the legal time. The rules regarding publishing in the newspaper are as follows: i) It must be published by the legal authority. ii) It should be served to the legal persons within specified time and date iii) It should be duly signed by the legal authority at its concluding stage iv) Using appropriate media to send it and also following organizational rules Q-44. Explain the function of various Board Committees, excluding the Audit Committee. ICMA- Apr‘ 13 Ans. Committee is the smaller body of the Board and may comprise of one or move members. The Directors may delegate their powers to different committees. These committees may be temporary or permanent, like management committee, budget committee, requirement committee, etc. or adhoc such as project committee, tender committee, inquiry committee, etc. Such a committee Sabolil Academy Professional Questions Bank

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often includes non-director to assist the directors. The functions of such committees must be within the scope of articles of the company. The functions are: i) Meeting together ii) Electing their respective chairman iii) Transacting their specific business according to their conveniences. iv) Reporting to the Board of Directors Q-45. What are the contents of an Annual Report of a public listed company? ICMA- Apr‘ 13 Ans. An annual report is comprise of the audited account of the company with auditor‘s report, directors report and any other presentation on the result, funds and activities of the company such as the cash flow statement, etc. Such report is to be produced before the AGM within 9 months from the date of the Balance sheet of the company concerned. According to the companies Act 1994, the annual report must contain the followings: i) Auditor‘s appointment ii) Company‘s future plan iii) Company‘s progress Q-46. Why and how are Alternate Directors appointed? ICMA- Apr‘13 Ans. An alternate director is appointed by somebody to act as his alternate if such arrangement is provided in the articles of association of the company or authorized by the company in general meeting. According to the law, to appoint an alternate, the director is supposed to be: a) away from the meeting place b) away for at least the three months c) Such appointment should be approved by the board. Sabolil Academy Professional Questions Bank

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The appointment of an alternate director will automatically terminated when the appointing director returns to the place where Board meeting normally takes place. Also on resignation, retirement or other reasons when the appointing director ceases to hold office, his alternate will vacate the office at once. Q-47. When does the resignation of a director become effective? ICMA- Dec‘ 12 Ans. The Company Act does not provide provision for resignation of a director. But the articles of a Company may express provision for it. The resignation of a director is effective only when it is accepted by the Board of Directors of the company. If a director part his qualification shares he has to vacate his office. If it is voluntary, then parting his qualification shares is equivalent to resignation. Rules regarding the resignation of a director are as follows: 1. Resignation is to be made as per the articles of the company. 2. Resignation must be in written. But oral resignation is also effective id it is accepted in a meeting in a meeting of the company. 3. As an agent of a company, director can resign his office by giving a reasonable notice. 4. Intention of resignation is to be made clearly 5. A resignation cannot be withdrawn without the consent of the company of board of directors of the company. Q-48. Write a procedure for appointment of an Independent Director. ICMA- Dec‘ 12 Ans.

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The procedures for appointment of an independent director: 1. The independent director shall be appointed by the board of directors and approved by the shareholders in the Annual General Meeting. 2. The post of independent director cannot remain vacant for more than 90 days. 3. The board shall lay down a code of conduct of all board members 4. The tenure of office of an independent director shall be for a period of three years which may be extended for one term only. 5. An individual can only be appointed as independent director maximum for three listed companies. Q-49. “A promoter is not a trustee or agent of the company but he stands in a fiduciary position towards it.� Comment. ICMA- Dec‘ 12 Ans. A promoter is people who builds a company or take initiative to build a company. They undertake all steps to prepare the necessary document. The legal position of a promoter is as follows: 1. Promoters are not an agent: Since the legal entity of the company does not exist as artificial person before incorporation, so the promoters cannot be an agent of the company which he formed. 2. Promoters are not a trustee: Promoters are not trustee either before or after formation of the company. 3. Fiduciary position: A fiduciary relationship exists between the company and promoter. Any secret profit obtained by the promoters in course of promotion of a company is prohibited. For such profit, promoter should inform to the authority. Authorities are the board of directors and existing shareholders. So, a promoter has fiduciary position in the company which he formed but he is not an agent or trustee of the company before or after incorporation. Sabolil Academy Professional Questions Bank

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Q-50. The Board of Directors of Golden Star Limited met only three times in the previous year. A fourth meeting was adjourned twice for lack of quorum Discuss whether provisions of the companies Act have been contravened. ICMA-Dec‘12 Ans. The meeting may adjourn from time to time for various reasons, i.e., lack of quorum, lack of time, difference in opinion, external interruptions, etc. and a resolution may be passed at any such adjourned meeting if notice has been provided on the matter duly. Generally, the Chairman of the meeting declares the adjournment. The adjourned meeting shall have the same power as an original meeting. If the quorum is not present within 5 minutes of the stipulated time, the meeting is adjourned to next week, same day and same time. If at the adjourned meeting, there is no quorum also, the members present will form the quorum. Q-51. Can the Board of Directors grant leave of absence to a Director for any number of consecutive meetings? Explain. ICMA- Dec‘12 Ans. The Board of directors can grant leave of absence if a director is unable to attend the meeting. But a long and continuous absence may cut out him to remain a director where the articles provide that to remain a director‘s office will be vacated on absenting himself (either voluntarily or non-voluntarily) from the board meeting for a certain period. If the director has reasonable ground to be absent then he does not automatically vacate his office of director. Reasonable grounds may be illness, accident or such other ground beyond the control of the director. In such a situation, the board will grant him leave of absence from attending consecutive meetings which will protect his position as a director.

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Q-52. What is „floating charge‟? When does it crystallize? What is effect of crystallization of a floating charge? ICMA- Aug‘ 12 Ans. A charge is said to be floating when it does not attach any specific property. In this case, the company is allowed to dispose of its property without consulting the holders of the charge. Generally, debentures are secured by a floating charge on the assets of the company in such a position where it is allowed to deal with its property until the charge is crystallized. A floating charge is crystallized or converted into a fixed charge under the following events: 1. On the liquidation of the company willingly or compulsory. 2. When the debenture holders take steps to enforce their rights in case of default of the company to pay the principle amount or interest. 3. When the company is barred to carry on its business Q-53. What is meant by “ultra vires”? Discuss the effects of ultra vires transaction as far as the company and its directors are concerned. ICMA- Aug‘ 12 Ans. The term ―ultra- vires‖ derives from two words, ―ultra‖ which means beyond and ―vires‖ which means power. So ultra-vires means to do any act which is beyond the power. A company is incorporated only for the objects and purposes expressed in the memorandum. The effect of ultra-vires transaction as far as the company is concerned: 1. Injunction: Any member is entitled to get an injunction to restrain the company from further proceeding. Sabolil Academy Professional Questions Bank

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2. Ultra vires acquired property: If the directors spend money ultra vires in purchasing property, the company has the right to protect its property. 3. Litigation for indemnity against directors: In a company, directors are personally responsible for ultra vires payment. The litigation can be made against directors for such payment. 4. Ultra vires contracts: In case of ultra vires contract, the company is not liable to sue and be sued. Even it cannot be made intra vires by using the principle of estoppels. The defects of ultra vires transactions as far as its directors are concerned: 1. Ultra vires loan of directors: If the ultra vires loan of directors are approved by the shareholders in the general meeting, it is legal and the company is responsible for such. If not so the general agency law will be applied and the directors will be responsible. 2. Power of the directors to accept loan: If the loan is given by knowing the credit limit of directors, such loan will be void. In this case the company or directors are not liable for such. 3. Breach of warranty of authority: Being an agent of company, a director must act within the act of his authority. But if a director breaches the warranty of authority and does any ultra vires act including the third party, he will be liable to that third party for his loss. Q-54. Articles of Association of a company reserved the powers for calling the annual general meeting. The Managing Director of the company, without reference to the Board, called an annual general meeting. It the annual meeting valid called? If not, what should be done to make it valid? Discuss with reference to case law, if any. ICMA- Aug‘ 12 Ans. Sabolil Academy Professional Questions Bank

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A meeting or AGM without reference to the Board is invalid. To make a meeting valid, the Following pre-requisites should be maintained: 1. There should be a right of convening authority, i.e., board of directors, directors, court, etc. who will call a meeting and a chairman must be selected for the meeting if any chairman is not selected earlier. 2. Notice must be properly issued to all the members and proper communication must be used and proper date, time, place must be mentioned in the notice. 3. The purpose of convening meeting must be legal. 4. The meeting must full-fill a quorum 5. Authorized persons should present in the meeting. 6. The meeting must confined to agenda 7. The meeting must have voting, polling and adopting a resolution. 8. Decision of the meeting should be written in the minute‘s book. Q-55. What are the matters to be stated in Memorandum of Association and Articles of Association of a public company limited by shares? ICMA- Aug‘ 12 Ans. According to the company Act, 1994 the following matters should be stated in memorandum of association: i) The name of the company with the word ‗Limited‘ at the end of the name in case of public company and private company must be contained. ii) The place where the registered office of the company is situated. iii) To state that the liability is limited. iv) The total amount of share capital with which the company proposes to register. v) The members desire to form a company and agree to take shares must be stated against their names. According to the companies Act 1994, the following matters should be stated in articles of association: i) Share capital rights of shareholders, payment of commission, share certificates. ii) Calls on shares iii) Transfer and transmission of shares Sabolil Academy Professional Questions Bank

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iv) Conversion of shares into stock v) Alteration of shares vi) General meeting and voting rights of member. vii) Appointment, remuneration of directors, board of directors, managers and secretary. viii) Dividends and reserves ix) Capitalization of profits x) Winding-up Q-56. Draft specimen resolutions along with necessary explanatory statements, wherever required for transacting the following items of business indicating the kind of meeting at which each resolution is to be passed and the type of resolution required for: (i) EDXL Ltd. has authorized share capital of Tk. 20 crore (2 crore shares of Tk. 10 cach). The company decides to increase its authorized capital to Tk. 25 crore by adding 50 lakh new shares of Tk 10 cach. (ii) X was a director of ABC Ltd. all on a sudden X expired. The company decides to appoint Y to till that casual Vacancy. ICMA- Aug‘ 12 Ans. i) Resolution to increase authorized capital: Resolved unanimously as a special resolution passed in the AGM that be and is hereby exchanged from existing Tk.20 crore (2 crore equity shares of Tk.10 each) to Tk.25 crore by adding 50 lakh new shares of Tk.10 each and the capital clause of the memorandum of association and articles of association of the company be and is here by amended to read as follows: ― The share capital of the company is Tk.25 crore divided into 2.50 crore equity shares of Tk.10 each.‖ ii) Resolution to appoint alternate director to fill the casual vacancy: Resolved unanimously that ABC Ltd‘s Board of Directors be and are hereby declared by special resolution passed in the AGM appointment of Y as an alternate director on the expiry of existing director X of the company to hold the office for not more than 3 executive months Sabolil Academy Professional Questions Bank

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Q-57. Draft a notice to be published in the newspaper regarding forthcoming annual general meeting of your company. ICMA- Aug‘ 12 Ans. Notice of the 14th Annual General Meeting Notice is hereby given to the members of ABC Company Ltd. that the 14th Annual General Meeting of the company will be held at 30, Motijheel C/A, Dhaka- 1000, Bangladesh on Sunday 24th September 2016 at 11.00 a.m. to transact the business mentioned in the notice covering the said meeting, which is being sent to the members on 5th September 2016, along with the Annual Report for the year ended 31st March 2016.

Date: 07.09. 2016 Place: Dhaka

For, ABC Company Ltd. Y Managing Director

Q-58. State the procedure to increase the number of directors beyond the maximum limit fixed by the articles of association. ICMA- Aug‘ 12 Ans. A director is a person who takes the responsibility to direct, manage and control the affairs of the company on beheld of the Shareholders. Every public company shall have at least three directors and in case of all other companies, the minimum number of directors in two. The number (whether maximum or minimum) of directors may be fixed by the articles of association of the company. The company has the right to increase or reduce the number of directors by a resolution passed in a general meeting of the company. No one is eligible to hold the position of director in more than 20 companies at a time. The directors appointed by the AGM shall not exceed in number one third of the whole number of directors. Sabolil Academy Professional Questions Bank

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Q-59. What are the contents of a prospectus? Distinguish between „Prospectus‟ and a „Statement In-Lieu of Prospectus‟. ICMA- Aug‘ 12 Ans. The contents of a prospectus: According to the companies Act 1994, following particulars are necessary to have in a prospectus: 1. Name and address of the company and issuing date of the prospectus 2. The main objects of the company with the name, occupation and address of the directors and signatories to the memorandum and number of shares subscribed by them and their remuneration. 3. The numbers and classes of shares and debentures and the interest of the shareholders in the profit and property of the company 4. Dividend policy and expected dividend to be declared by the company 5. Name and address of auditors and their reports 6. Voting power and obligations of shareholders 7. Name and address of vendors 8. The underwriting commission 9. Amount of preliminary expenses Distinction between prospectus and a statement in lieu of prospectus: Prospectus

Statement in lieu of prospectus

1. Prospectus is an invitation, notice or advertisement to the public to subscribe the share capital or debenture of a company. 2. Prospectus is issued for offering sale of shares or debentures 3. Any public limited co. can publish prospectus

1. When promoters of a public limited co. procure their capital from private arrangement, a statement in lieu of prospectus is issued. 2. A statement in lieu of prospectus is issued in the absence of prospectus. 3. When minimum subscription is not collected, the public limited co. prepares a statement in lieu of prospectus 4. It can invite public for subscription 4. It cannot invite public for purchase or purchase of any share or debenture. of any share or debenture. Sabolil Academy Professional Questions Bank

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Q-60. “ A Limited company can be formed without the word “ Limited” as the last word of its name” Explain. ICMA- Apr‘ 12 Ans. The name of a company with the word ‗Limited‘ at the end of the name in case of public company and private company must be contained. But where it is in the satisfaction of the government that a company has been formed for the purpose of promoting commerce, art, science, religion, charity or any other useful object then the government may issue a license to drop the word ‗Limited‘ at the end of name of the company. Q-61. Who is an independent Director of a PLC? How he is appointed? ICMA- Apr‘ 12 Ans. Independent director: An independent director is a person other than an executive officer or employee of the company. An independent director is a director who either does not hold any share in the company or holds less than one percent share of total paid-up shares of the company and he is not a sponsor of the company and he is not connected with the company‘s any sponsor or director or shareholders who holds one percent or more shares of the total paid-up shares of the company. His family members also should not hold above mentioned shares in the company. Procedures for appointment of independent director: 1. The independent director shall be appointed by the board of directors and approved by the shareholders in the Annual General Meeting. 2. The post of independent director cannot remain vacant for more than 90 days. 3. The board shall lay down a code of conduct of all board members. 4. The tenure of office of an independent director shall be for a period of three years which may be extended for one term only. 5. An individual can only be appointed as independent director maximum for three listed companies. Sabolil Academy Professional Questions Bank

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Q-62. Draft an appointment letter of an Independent Director. ICMA- Apr‘ 12 Ans. Draft letter of appointment for independent Director Date : To Mr./Mrs. …............ ................................. ................................. Dear Sir/ Madam, On behalf of all the Board Members of X Limited, I would like to express my gratitude to appoint you as independent director on the Board of Director of the Company with effect from––––. This letter of appointment set out the terms and conditions which are as follows: 1. Appointment: 1.1.Your appointment is subject to approval of shareholders in the general Meeting 1.2.You are appointed for a period of––––––– up to –––––––. 2. Status of appointment: You will not be an employee of the company and this letter shall not constitute a contract of employment. 3. Commitment: As an independent director you are expected to bring objectivity and independence of view to the Board‘s discussions. 4. Code of conduct: It will be expected to perform your duties with efficient and diligent manner. 5. Liabilities: As an independent director you will be liable only such acts which had occurred with your knowledge. Sabolil Academy Professional Questions Bank

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If you are willing to accept these terms of appointment, kindly confirm your acceptance by signing and returning to us the enclosed copy of this letter. Yours sincerely, For X Limited ––––––––– Y Managing Director Q-63. Who are the Independent Directors? Why they are appointed? ICMA- Dce‘11 Ans. Who are the independent directors? An independent director is a person other than an exclusive officer of employee of the company. An independent director is a director who either does not hold any share in the company or holds less than one percent share of total paid-up shares of the company and he is not a sponsor of the company and he is not connected with the company‘s any sponsor or director or shareholders who holders one percent or more shares of the total paid-up shares of the company. His family members also should not hold above mentioned shares in the company. Why they are appointed: All companies shall appoint independent directors on their Board of Directors so that the Board, as a group, includes core competencies considered relevant in the context of each company. All independent directors is comprised of people who totally have no material interest in the company other than their directorship. অেযােয দবষনের প্রনফশোে প্রশ্ন বযািংক সিংগ্রহ কনরনেে দক?

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Q-64. The object clause of a public Ltd. co. is to manufacture cement. The company started to produce paint in addition to cement. Whether it is permission under law. Discuss. ICMA- Dec‘ 11 Ans. The object clauses of the memorandum of association provide the objects for which the company is incorporated. The all possible functions of a company are mentioned in this clause. The company cannot do any business beyond the object clause. Anything, done beyond the object clause of memorandum is ultra vires. A company is allowed to select any object for the company, excepti) Anything illegal, i.e., formation of company for gambling ii) Against the public policy, i.e., trading with enemies According to the companies Act 1994, the object clauses of the memorandum of association are as follows: 1. Name clause: In this clause, the name of a company with the word `Limited‘, at the end of the name in case of public company and private company must be contained. To select the name of a company, certain prohibited names to be avoided: i) Name which is similar to that of the company already exists. ii) Any name of UN/WHO/ Red Cross/ Subsidiary body, etc. 2. Registered office clause: It states the place where the registered office of the company is situated full and permanent address of the registered office must be communicated to the Registrar within 28 days its incorporation or from the date of commencement of business.

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3. Liability clause: It mentions the limited liability of shareholders. It should be clearly mentioned whether it is limited by share or by guarantee 4. Capital clause: It mentions the total amount of share capital with which the company propose to register. The company cannot issue more shares than are authorized by the memorandum. This clause is to be omitted in case of the company limited by guarantee having no share capital or in case of an unlimited company. 5. Subscription clause: In this clause, the members state that they are desired to form a company and agree to take shares stated against their names. The memorandum shall be signed by each subscriber who shall add his address and description in the presence of at least two witnesses. Q-65. Explain the procedures of borrowing working capital from a commercial bank by pledging, hypothecation and mortgaging its fixed and floating assets. ICMA- Aug‘ 11 Ans. The procedures of borrowing working capital from a commercial bank by pledging hypothecation and mortgaging its fixed and floating assets are briefly explained below: 1. Taking decision by the directors of the company. 2. Passing of resolution at a board meeting 3. Determining the amount of money to be issued which shall not exceed the aggregate of the share capital 4. Applying for the money to the authority. 5. Determining the methods of borrowing money, such as pledge, hypothecation or mortgage by using the fixed or floating assets 6. Issuing certificate of debenture within 90 days of allotment of debentures after sanctioning the amount by the authority 7. No return as to allotment of debentures is required to be filed with the RJSC. Sabolil Academy Professional Questions Bank

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Q-66. What are the duties and powers of the inspection committee in respect of compulsory winding up? ICMA- Dec‘ 10 Ans. The inspection committee is a joint committee of creditors and contributors consisting of not more than 5 persons. The duties and powers of the inspector committee are as follows: a) To keep a general watch over the acts of the liquidator for the protection of the interest of creditors and contributors. b) Right to inspect the accounts of the liquidator of all reasonable times. c) Power to call a meeting. Q-67. State the provisions of the companies Act-1994 regarding appointment of Managing Director. ICMA- Dec‘ 10 Ans. According to the companies Act 1994, Managing Director is a director who is entrusted with any substantial powers of management of the company. He is a member of the Board of Directors. He is also a whole time director and chief executive of a company. Managing Director may be appointed in the following provisions: a) By an agreement with the company b) By a resolution passed in the general meeting of the company. c) By the provisions of the memorandum or articles of the company d) By the government

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Q-68. State the proper date & time for holding different kinds of meeting in the case of a newly registered public limited company. ICMA- Dec‘ 10 Ans. Proper date & time for holding different kinds of meeting: 1. The meeting of shareholders: a) Statutory meeting: Every public company limited by shares and guarantee and having a share capital shall within a period of not less than 30 days and not more than 180 days from the date at which the company is entitled to commence its business, must hold such meeting. This in held only once during the life time of the company. b) Annual General Meeting (AGM): The first AGM must be held within 18 months from the date of its incorporation and there after at least once in every calendar year and not more than 15 months after holding of the last preceding AGM. c) Extra- ordinary General Meeting (EGM): This meeting of the shareholders is generally held to consider a particular matter of urgent important business which cannot be deferred till the next AGM. For this type of meeting, 21 days‘ notice in writing is required to serve to all the concerned parties. 2. The meetings of Board of Directors: a) Board meeting: A notice in writing is required to send the directors for which no specific time period in the provision. b) Committee meeting: Committee is the smaller part of the board and may be consisted of only one member. Such committee may be budget committee, inquiry committee, monitoring committee, etc.

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Q-69. What are the consequences for the following defaults? (i) Default in holding AGM within the stipulated time (ii) Default in holding statutory meeting and forwarding statutory report to the members and registrar. Who are responsible for the above defaults? ICMA- Dec‘ 10 Ans. i) The consequences for the default in holding AGM within the stipulated time: The meeting of the shareholders which is held once every year is called AGM. The 1st AGM must be held within 18 months from the date of its incorporation and there after at least once in every calendar year and not more than 15 months after holding of the last preceding AGM. If default is made in holding an AGM in accordance with the provision, the company and every officer of the company is at responsible, shall be liable to a fine which may extend to Tk 10,000 and in case of a continuing default, with a further fine may be up to Tk 250 per day during which the default continues. ii) The consequences for the default in holding statutory meeting and forwarding statutory report to the statutory report to the members and registrar: Statutory meeting is the first meeting of the shareholders of a public limited company. It is not required for a private limited company. Every public company limited by shares and guarantee shall within a period of not less than 30 days and not more than 180 days from the date at which the company is entitled to commence its business, must hold such meeting. This is held only once during the life time of the company. If default is made in holding such a meeting, the directors or the defaulting officer may be fined up to Tk 5000. The court may even wind up the company if default is made in filing the statutory report to the registrar or in holding such meeting. Sabolil Academy Professional Questions Bank

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Q-70. Under what circumstances a company may be wound up by court or voluntarily? ICMA- Dec‘ 10 Ans. A company may be wound up by the court under the following circumstances: a) Default to hold the statutory meeting and to file the statutory report; b) Fail to commence business within a year of its incorporation or suspends its business for a whole year; c) Reduction of no of members to below 7 in case of public and below 2 in case of private ltd. co; d) Unable to pay its debts; e) On just & equitable opinion of court. A company may be wound up voluntarily under the following circumstances: i. When the period fixed for the duration of the company by the articles that the company is to be dissolved and the company in general meeting has passed an ordinary resolution; ii. If the company resolve by special resolution; iii. It the company fails to continue its business then by passing an extraordinary resolution. Q-71. How and why a Director can be removed? ICMA-Dec‘10 Ans. A director can be removed by an extraordinary meeting for the following reason: 1. Failure of obtaining qualification shares within two months from their appointment 2. Founding to be of unsound mind, 3. Failure to pay calls made on him within six months from the date of such calls being made. Sabolil Academy Professional Questions Bank

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4. Holding any office or secret profit without the sanction of the company in general meeting 5. Absence from three consecutive meetings of the directors without approval from the Board of directors 6. Getting loan from the company by means of illegal ways. 7. In case of penalty and fraud. Q-72. Briefly comment on the following statement: Act done outside the objects and outside the Articles of the company are ultra-vires. ICMA- Aug‘ 10 Ans. The term ultra- vires derives from two words, ―ultra‖ which means beyond and ―vires‖ which means power. So, ultra- vires means to do any act which is beyond the power. A company is in corporate only for the objects and purposes expressed in the memorandum. Whenever, a company does any act which is not authorized by the object clause of its memorandum or when it practices in excess of object clause it is ultravires, i.e., doctrine of ultra- vires. The doctrine is found in 1875 in the case Ashbury Railway carriage and Iron Co. Ltd vs. Riche. Q-73. What do you mean by statutory meeting? When does a company hold statutory meeting? ICMA- Aug‘ 10 Ans. Statutory meeting is the first meeting of the shareholders of a public limited company. It is not required for a private limited company. Every public company limited by shares or guarantee and having a share capital, shall within a period of not less than 30 days and not more than 180 days from the date at which the company is entitled to commence its business, must hold such meeting. This is held only once during the life time of the company. A notice is required to be sent to every member of the company at least 21 days Sabolil Academy Professional Questions Bank

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before the meeting. A statutory report is also required to send along with the notice and after such report shall be delivered to the RJSC. Q-74. What are the contents of statutory meeting? ICMA- Aug‘ 10 Ans. The statutory meeting contains the following information: 1. The total number of shares allotted whether fully or partially paid-up 2. The total amount of cash received by the company in respect of all the shares allotted. 3. The names, occupations and address of all the directors, managers and secretary of the company. 4. The particulars of any contracts, modification of contracts or proposed modification of contracts. 5. The details of arrears (if any) 6. Due from directors, managers, etc. 7. The particulars of any commission or brokerage paid or to be paid. Q-75. Advise the chairman of your company on the following: The Managing Directors office is going to be vacant on September 20, 2010. ICMA- Aug‘10 Ans. A director can be removed by an extraordinary meeting for the following reason: 1. Failure of obtaining qualification shares within two months from his appointment. 2. Founding to be of unsound mind. 3. Failure to pay calls made on him within six months from the date of such calls being made. 4. Holding any office or secret profit without the sanction of the company in general meeting. 5. Absence from three consecutive meetings of the directors without approval from the Board of Directors. 6. Getting loan from the company by means of illegal ways. 7. In case of penalty and fraud. Sabolil Academy Professional Questions Bank

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Q-76. What are the preferential payments in the case of dissolution of a company? ICMA- Aug‘ 10 Ans. According to the company Act 1994, a company has to pay the creditors in preferential claims which are as follows: 1. All revenues, taxes, rates whether payable to the government or a local authority. 2. All wages and salary of any clerk and other servant and any labor or workman up to Tk 1000 or Tk 500 each respectively. 3. Compensation of any officer or employee of the company in respect of the death or disablement which is payable under the workmen‘s compensation Act, 1923. 4. All sums due to any employee from a provident fund, a pension fund and gratuity fund or any other fund for the welfare of the employee maintained by the company. 5. The expenses of any investigation held in pursuance of the Act. Q-77. How and why is a company dissolved? ICMA- Aug‘ 10 Ans. According to the Companies Act, 1994, a company may be wound up by the following ways1. Compulsory winding up under order of the Court or, Government: Compulsory winding up takes place when a company is directed to be wound up by an order of the Court. Sabolil Academy Professional Questions Bank

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2. Voluntary winding up by members or creditors: Voluntary winding up means winding up by the creditors or members themselves without the intervention of the court. 3. Winding up subject to the supervision of the court: After passing the resolution for winding up the company, if the winding up is completed voluntarily on the application of the shareholders or creditors or both of the parties but with the supervision of the court, it is called winding up of a company subject to supervision of the court. The object of such winding up is to protect the interests of the creditors and contributors. A company is dissolved for the following reasons: a) Default in holding statutory meeting b) Failure to commence business within the time prescribed by law. c) Failure to pay its debts d) Carrying with illegal or ultra-vires acts e) Completion of such specific purpose for which it was not established f) Meeting with any situation for which it becomes bound to dissolve. Q-78. Briefly comment on the following statement: All listed companies are public companies but not the vice-versa. ICMA-Aug‘ 10 Ans. As per listing regulation, only the public limited company can be listed with the stock Exchanges. As per companies Act 1994, Securities of a private limited company are prohibited for transfer and it cannot be sold publicly. So, the stock Exchanges deal with those securities which are transferable. So, no private limited company is eligible for listing with any stock exchange but a public limited company is not mandatory to be listed. So, it can be said that ―All listed companies are public companies but not the vice-versa‖

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Q-79. Advise the chairman of your company on the following: One of the Directors of the Board submitted his resignation to the chairman. ICMA- Aug‘ 10 Ans. The Company Act does not provide provision for resignation of a director. But the articles of a Company may express provision for it. The resignation of a director is effective only when it is accepted by the Board of Directors of the company. If director parts his qualification shares he has to vacate his office. If it is voluntary, then parting his qualification shares is equivalent to resignation. Rules regarding the resignation of a director are as follows: 1. Resignation is to be made as per the articles of the company. 2. Resignation must be in written. But oral resignation is also effective if it is accepted in a meeting of the company. 3. As an agent of a company, director can resign his office by giving a reasonable notice. 4. Intention of resignation is to be made clearly 5. A resignation cannot be withdrawn without the consent of the company of board of directors of the company. Q-80. Discuss the qualifications of a director of a company. ICMA- Apr‘ 10 Ans. Directors must contain the following qualifications: 1. He must obtain qualification share 2. He must be of sound mind 3. He must be solvent 4. He must pay the call money if demanded to him 5. He must be a major 6. He must be a person of high morality 7. He must be a natural person, i.e., not an artificial person such as association, firm or any other juristic person. Sabolil Academy Professional Questions Bank

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Apart from the above mentioned qualifications directors must contain some additional qualifications. Which are: i) A person who must give a written consent to act as a director which shall be signed and filed with the Registrar. ii) Directors must obtain qualification shares within a period of 60 days after his appointment. Q-81. Directors are trustees as well as agents of the company- Discuss. ICMA- Apr‘ 10 Ans. Since, a company is only a legal existence, it cannot act by itself. In the absence of any provision, Directors are sometimes termed as trustees as well as agents and sometimes as managing partners. Directors as trustees: Directors are considered to be trustees of the company‘s money and property. They must apply the property in good faith and for the specified purpose. Any miss-application of such property will be considered as breach of trust. Directors as agent: The relationship between the company and the directors is somewhat similar to the principal and agent relationship. As agent the directors must exercise their power with reasonable care. If they act within the scope of their authority, they will incur no personal liability. But if they act ultra-vires and exercise such powers which are not authorized by the memorandum and articles of association, they shall be liable for breach of warranty of authority. Directors as officers or managing partners or employees: Directors may also term as officers of the company. When they act as directors they may be held liability for non-compliance with the provisions of the Companies Act. কুদরোনর আমানির প্রনফশোে প্রশ্ন বযািংক পাবার জেয জফাে করুেঃ ০১৫১১১৩৭০৩৯ Sabolil Academy Professional Questions Bank

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Q-82. What are the duties of the Directors in relation to inspection of Books Account? ICMA- Apr‘ 10 Ans. The books of account and other books and papers of every company shall be open to inspection by any director during business hours. The branch office, if any, must keep and maintain their own books of account and must send an updated return to the registered or head office not later than 3 months. Such inspection may be made without giving any notice thereof. Duties of the Directors in relation to inspection of books of accounts are as follows: i) It is the duty of every director, officers and employee of the company to produce such books, furnish with statement, information or explanation within such time and place as required by the person making the inspection ii) Duty to give all assistance for the inspection to the Registrar. Q-83. What are the penalties for failure of the Directors in relation to inspection of Books of Account? ICMA- Apr‘ 10 Ans. The Managing Agent, Managing Director or Director or officers are entrusted with the take of maintaining proper books of account. For failure of inspection of the books of account, he or they shall be liable to a fine not exceeding Tk 500 or, 6 months imprisonment or both. If a defaulting director or officer is convicted, he shall be deemed to have vacated the office. He shall also be disqualified for holding such office in any company for a certain period from such date.

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Q-84. What are the formalities to be observed in transforming a public limited company form a private limited company? ICMA- Apr‘ 10 Ans. According to the companies Act 1994, the transformations of private limited company into public limited company are as follows: 1. Adoption of special resolution and alteration of articles: At first, a private limited company needs to be altered its articles of association by taking special resolution. The following items of articles of association of private limited company are to be changed: i) The right to transfer of share is limited. ii) The company cannot invite to sell its share or securities. iii) The total membership of the shareholder should not exceed fifty. The following item are to be replaced on exchange of the above items: i) The share of the company is transferable ii) The share or debenture of the company is issuable iii) Minimum numbers of members are seven and maximum numbers are limited by the number of shareholders. 2. Submission of prospectus: Submitting a new prospectus or a statement in licu of prospectus to the registrar within 30 days from the changing date of articles of association. 3. Enhancement of the no of directors: The number of directors of converted public limited company is to be increased at least three and the new the new schedule to be submitted to the registrar. 4. Rectification of name: If the word ‗private‘ exists at the end of the name of the previous private company, it should be deleted.

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5. Submission of documents: All the documents to be submitted to the registrar. After that the private limited company will be converted into a public limited company without the approval of court. Q-85. Define subsidiary company. ICMA- Apr‘ 10 Ans. A company which is controlled by the holding company is known as subsidiary company. Holding company is the company which can control the policies of another company through the ownership of its shares or through control over the composition of its Board of Directors. A subsidiary company holds less than 50% shares of that and has less than 50 voting power. Q-86. Outline the rules governing the issue of notice for a companyâ€&#x;s General Meeting. ICMA- Apr‘ 10 Ans. The written message which is served for inviting the members to attend the meeting on specific time, date, place and occasionally agenda is called a notice. The notice must contain the following contents: i) The date, time, place of holding the meeting must be clearly mentioned ii) It must be signed by the proper authority iii) The objects of the meeting should be mentioned iv) It must contain the agenda of the meeting v) It should contain the voting rights of the members whether by person or by proxy vi) Official pad and scale must be used in the notice The notice is to be circulated and published in the newspaper by the proper authority within the legal time.

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The rules regarding publishing in the newspaper are as follows: i) It must be published by the legal authority ii) It should be served to the legal persons within specified time and date iii) It should be duly signed by the legal authority at its concluding stage iv) Using appropriate media to send it and also following organizational rules Q-87. What are the pre-requisites of a valid meeting? ICMA- Apr‘10 Ans. A meeting or AGM without reference to the Board is invalid. To make a meeting valid, the Following pre-requisites should be maintained: 1. There should be a right convening authority, i.e., board of directors, directors, court, etc. who will call a meeting and a chairman must be selected for the meeting if any chairman is not selected carrier. 2. Notice must be properly issued to all the members and proper communication must be used and proper date, time, place must be mentioned in the notice. 3. The purpose of convening meeting must be legal. 4. The meeting must full fill a quorum 5. Authorized persons should present in the meeting. 6. The meeting must confined to agenda 7. The meeting must have voting, polling and adopting a resolution. 8. Decision of the meeting should be written in the minute‘s book. Q-88. Draft a notice for the forthcoming Annual general meeting of the and containing items that are normally included in an Annual general meeting for members approval. Point out which of the above items would be included in the Directors Report. ICMA- Apr‘ 10 Ans. অভাতেয ঩াফলরতক঱ন গুতরা পেখতে লবল঳ট করুনঃ issuu.com/sabolilpublication

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Draft notice for the forthcoming AGM: X & Y Limited 9, Motijheel C/A, Dhaka Date: August 20, 2016 Notice of Annual General Meeting All concerned of the company are hereby notified that the 20 th annual general meeting of X & Y Limited is going to be held on Tuesday, September 20, 2016 at 10.00 am in the head office of the company. You are specially requested to remain present in that meeting in time.

By orders of the Board M Company Secretary Agenda: 1.Reading out and approval of the director‘s report 2.Declaration of dividend 3.Filling-up the valet post of Director 4.Increasing the tenure of the company auditor 5.To approve the appointment of the independent directors Items that would be included in the Directors Report are pointed below: i) Name of the persons who were directors in the financial year. ii) The principal activities of the company. iii) Significant change in the company iv) Information relating to issuance of share, if any share is issued during the financial year v) A statement of each director Sabolil Academy Professional Questions Bank

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Q-89. When and how is special resolution passed by a company? ICMA- Apr‘ 10 Ans. Special resolution is passed by a company for the following cases: 1.To change the name of the company 2.To alter its articles 3.To reduce share capital 4.To remove director 5.To remove auditor before expiry of time 6.To made directors liability unclaimed 7.On court winding up 8.On voluntary winding up Special resolution is to be passed by a majority of not less than three fourth (i.c, 75%) of the members present and vote in person or by proxy. The revolution to be carried as a special resolution must be clearly spelled out in the notice and must be notified at least 21 clear days before the meeting. Q-90. What are the powers of the Registrar of Joint stock companies and Firms with respect to inspection of Books of Account? ICMA- Apr‘10 Ans. The powers of the Registrar of Joint stock companies and Firms with respect to inspection of Books of Account are as follows: 1. Power to serve written order upon the company and any of its directors or officers to furnish any information, explanation or document (if necessary) within a specified time. 2. Power to give penalty or fine not exceeding Tk 500 in case of any refusal or negligence of officers to furnish such information or explanation 3. Power to apply to the court for getting such information or explanation for the inspection. 4. Power to inspect and take the copies of additional information or explanation by the register as original document 5. Power to report to the government if document does not disclose a full and fair statement of affairs. Sabolil Academy Professional Questions Bank

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Q-91. In what circumstances a company calls for an EGM? ICMA- Dec‘ 09 Ans. Any meeting of the shareholders other than the statutory and annual general meeting is called the Extra-ordinary General meeting (EGM). This meeting of the shareholders is generally held to consider a particular matter of urgent important business which cannot be deferred till the holding of the next annual general meeting. Where it is necessary to pass a special or extra ordinary resolution, an extraordinary general meeting has to be called. Q-92. How can a general meeting be called? ICMA- Dec‘ 09 Ans. A meeting or AGM without reference to the Board is invalid. To make a meeting valid, the Following pre-requisites should be maintained: 1. There should be a right convening authority, i.e., board of directors, directors, court, etc. Who will call a meeting and a chairman must be selected for the meeting if any chairman is not selected carrier. 2. Notice must be properly issued to all the members and proper communication must be used and proper date, time, place must be mentioned in the notice. 3. The purpose of convening meeting must be legal. 4. The meeting must full fill a quorum 5. Authorized persons should present in the meeting. 6. The meeting must confined to agenda 7. The meeting must have voting, polling and adopting a resolution. 8. Decision of the meeting should be written in the minute‘s book. Sabolil Academy Professional Questions Bank

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Q-93. Suppose you have purchased shares based on a prospectus, which was eventually proved to be false and misleading. What remedies are available to you as per the companies Act 1994? ICMA-Dec‘09 Ans. The consequences and remedies for false, misleading or concealment of fact in the prospectus: 1. If there is any fraudulent misrepresentation in the prospectus, the aggrieved party can recover damages from the company. Fraud is proved when it is shown that a false statement has been made knowingly. 2. An aggrieved shareholder is entitled to apply for the removal of his name from the register of members. 3. Once the miss-statement in the prospectus is proved, the directors or promoters are liable to pay compensation and the aggrieved subscriber need not prove fraud to claim damage for miss-representation. 4. Concealment of certain items will render the following consequences: – persons concerned in issuing prospectus be punishable with 5000 taka – entitled to recover damages 5. The aggrieved shareholder may bring an action against the company. 6. Every person who is authorized to the issue of prospectus shall be punishable with imprisonment for a term which extends to 2 years or with fine, which may extends to Tk. 5000 or both. But a person shall not be liable if the offence is not proved. Q-94. How a company can be listed with and de-listed from stock exchange? ICMA- Dec‘ 09 Ans.

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Listing of a company: Application for listing shall be made by the applicant company in the prescribed from and will be accompanied by the fees, specified in the regulations. Following documents, papers are to be submitted to the stock Exchange for listing of any company: i. Application for listing in prescribed form as per Form-1 ii. Memorandum and Articles of Association iii. A copy of certificate of incorporation iv. A copy of Certificate of commencement of business v. Registration of the Board of Investment vi. Copies of material contract with suppliers, financial institutions vii. Copies of L/C for plant and machinery viii. Draft prospectus ix. Auditors certificate for the amount subscribed by the promoters. De-listing of a company: A listed company may be delisted or suspended for any of the following reasons: i. If its securities are quoted below 50% of face value for a continuous period of their calendar years. ii. Failed to declare dividend or bonus: - for 5 years form last dividend - for 5 years from commencement of business - for 5 years from the date of commercial operation iii. Failed to hold AGM for a continuous period of three years iv. Gone into liquidation v. Failed to pay listing fees or penalty for two years vi. Failed to comply any provision of the regulations. Q-95. What is a prospectus? When should a statement in lieu of prospectus be issued? ICMA-Dec‘ 09 Ans.

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According to the companies Act 1994, ―Document containing order of shares or debentures for sale is to be deemed as prospectus‖. Prospectus is an invitation, notice, circular or advertisement to the public to subscribe the share capital or debenture of a company. When a prospectus is not issued, a statement in lieu of prospectus is to be issued. When promoters of a public limited company procure their capital from private arrangement, a statement in lieu of prospectus is issued. When minimum subscription is not collected, the public limited company prepares a statement in lieu of prospectus. Q-96. Differentiate between a private and a public company. ICMA- Dec‘ 09 Ans. Differentiation between a private and a public company: Private company

Public company

1. According to the Companies Act 1994, private company means a company which by its articles limit the right to transfer of share (if any) and limit the number of its members excluding the persons who are in its employment 2. Minimum number of members are two and maximum number of members is fifty

1. According to the Companies Act 1994, public company means a company incorporated under this Act or under any law at any time in force before the commencement of this Act and which is not a private company 2. Minimum number of members are seven and maximum number of member is limited by the number of shareholders 3. Its share in not transferable 3. Its share is transferable 4. It cannot issue debenture 4. It can issue debenture 5. Its minimum number of director is 5. Its minimum number of director is 2. 3 6. It cannot publish prospectus 6. It can publish prospectus 7. It is not obligated to call statutory 7. It is obligated to call statutory meeting. meeting Sabolil Academy Professional Questions Bank

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Q-97. Who authorizes the financial statements of a company to be issued? ICMA- Aug‘ 09 Ans. The financial statements with auditor‘s report duly approved by the board of directors or shareholders as the case may be which is to be placed in AGM shall be published in prescribed manner. The financial statements will be authorized by the Managing Director or CEO and by three Directors of the company. Q-98. When a company has to conduct Annual General Meeting? What is the consequence of default in holding Annual general meeting? ICMA- Aug‘ 09 Ans. The first Annual General Meeting (AGM) must be held within 18 months from the date of its incorporation and thereafter at least once in every calendar year and not more than 15 months after holding of the last preceding AGM. For calling an AGM, a 14 days notice in writing is mandatory to serve to the members. However, the meeting may be called with a shorter notice, if the shareholders and members are entitled to vote and give consent to this effect. The period of notice cannot be reduced by the articles of association. The consequences of default in holding AGM: If default is made in holding an AGM in accordance with the provision, the company and every officer of the company is at responsible, shall be liable to a fine which may extend to Tk 10,000 and in case of a continuing default, with a further fine may be up to Tk 250 per day during which the default continues. Q-99. Discuss the issue of Protection of Minority interest, as envisaged in the companies Act, 1994 ICMA- Aug‘09 Ans. Sabolil Academy Professional Questions Bank

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The issue of protection of minority interest: 1. Any member or debenture holder of a company may either individually or jointly bring to the notice of the court by application thata) the affairs of the company are being conducted or the powers of the directors are being exercised in a manner prejudicial to one or more of its members or debenture holders; or b) the company is acting or is likely to act in a manner which differentiate or is likely to differentiate the interest of any member or debenture holder c) a resolution of the members, debenture holders or any class of them has been passed or is likely to be passed which is discriminates 2. The court shall on receipt of an application send a copy there of to the Board and fix a date for hearing the application 3. If after hearing, the court is of opinion that the interest of the applicant is likely to be affected for reasons specified in the application, it may make such order, includinga) to cancel or modify any resolution or transaction b) to amend any provision of the memorandum and articles of the company Q-100. The office of an alternate director is vacated as soon as the original director returns to Bangladesh, is it correct? Discuss the authority of alternate director in the light of companies Act- 1994. ICMA- Aug‘ 09 Ans. The office of an alternate director is vacated as soon as the original director recurs to Bangladesh- yes it is correct. An alternate director is appointed by somebody to act as his alternate if such arrangement is provided in the articles of association of the company or authorized by the company in general meeting. Sabolil Academy Professional Questions Bank

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According to the law, to appoint an alternate, the director is supposed to be: a) away from the meeting place b) away for at least the three months c) Such appointment should be approved by the board. The appointment of an alternate director will automatically terminated when the appointing director returns to the place where Board meeting normally takes place. Also on resignation, retirement or other reasons when the appointing director ceases to hold office, his alternate will vacate the office at once. Q-101. What are the qualifications and disqualifications of Directors under the companies Act, 1994? Is there any restriction as regards borrowing by the Directors? ICMA- Apr‘ 09 Ans. The qualification of Directors Directors must contain the following qualifications: 1. He must obtain qualification share 2. He must be of sound mind 3. He must be solvent 4. He must pay the call money if demanded to him 5. He must be a major 6. He must be a person of high morality 7. He must be a natural person, i.e., not an artificial person such as association, firm or any other juristic person. Apart from the above mentioned qualifications directors must contain some additional qualifications. Which are: i) A person must give a written consent to ace as a director which shall be signed and filed with the Registrar. ii) Directors must obtain qualification shares within a period of 60 days after his appointment.

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The disqualifications of directors: 1. Failure of obtaining qualification shares within two months from their appointment 2. Founding to be of unsound mind, 3. Failure to pay calls made on him within six months from the date of such calls being made. 4. Holding any office or secret profit without the sanction of the company in general meeting 5. Absence from three consecutive meetings of the directors without of absence from the Board of directors 6. Getting loan from the company by means of illegal was. 7. In case of penalty and frond. Loans to directors: Since directors are in-charge of management of the company. a question may arise as to whether directors can borrow money from the company. The companies Act 1994 section 103(1) prohibits any loan to any director of the company or to a firm of which such director is a partner or to a subsidiary private company of which such director is a member is punishable. However, it is not applicable to a banking company or to a non-subsidiary private company. Q-102. What do you mean by statutory meeting and statutory Report? ICMA- Apr‘ 09 Ans. Statutory meeting. A statutory meeting is not required for a private company. Every company limited by shares and every public company limited by guarantee and having a share capital shall, within a period of not less than 30 days, nor more than 180 days from the date at which the company is entitled to commence business, hold a general meeting with the members of the company, called the statutory meeting.

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Statutory report: A formal report prepared and submitted as required according to the provision of the Company Act 1994 is called statutory report, i.e., directors report, auditors report, etc. The Board of Directors shall prepare such report at least 21 days before the day on which the statutory meeting is to be held. To make the meeting effective, the shareholders with the progress and prospects of the company and shall forward the report to every member of the company. It contains: - total number of shares allotted whether fully or partially paid-up - Names, addresses and occupations of the directors, managers and secretary. - the details of arrears (if any) Q-103. What are the issues to be considered for taking dividend decisions? ICMA-Apr‘09 Ans. Dividend is the share of profit payable to the shareholders. It is a portion of the divisible profit of the company which is distributed among the members in proportion to the paid up value of their shares. The following issues or factors to be considered for taking dividend decisions: i) It is to be declared at the general meeting of the company by the directors ii) Dividend once declared must be paid and disbursed within 2 months from the date of declaration iii) No dividend shall exceed the amount recommended by the directors iv) No dividend shall be paid otherwise than out of profits of the year or any other undistributed profit of the company.

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References 1. Manuals of ICMAB 2. CIMA Study Text 3. Wikipedia 4. Thesis papers of different writers

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Collect our other publications

Knowledge Level: IE01- Principles of Accounting IE02- Principles of Business & Economics IE03- Business Communication Business Level: GE01- Fundamentals of Financial Accounting GE02- Fundamentals of Management Accounting GE03- Fundamentals of Business Mathematics GE04- Fundamentals of Business Economics GE05- Fundamentals of Ethics, Corporate Governance and Business Law Operational Level: R01- Legal Environment of Business E01- Enterprise Operations P01- Performance Operations F01- Financial Operations

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Fundamentals of Ethics, Corporate Governance and Business Law