EXAMINER S REPORT MIA QE SEPTEMBER 2018 PAPER: BUSINESS AND COMPANY LAW

Transcription

1 EXAMINER S REPORT MIA QE SEPTEMBER 2018 PAPER: BUSINESS AND COMPANY LAW 1(a) Candidates are tested on their knowledge on the sources of unwritten law concerning the doctrine of judicial precedent. Generally, most students are able to answer this question but with varying degree. Answers should be more precise with description of all the elements of a judicial precedent. 1(b) Candidates are tested on their knowledge on the law of contract, in particular the qualities of an acceptance in contract. Almost all students are able to answer this question. Answers should include statutory provisions. 1(c) This question deals on the extent of knowledge on the Nemo Dat rule. Most students display knowledge and understanding of this rule and its exceptions. Each exception should be accompanied by a statutory authority. 2(a) This question requires specific knowledge of statutory provisions on the creation of certain types of agency. Most students are able to explain the type of agency but lack the statutory or case authority. Emphasis on case law and statutory provisions. 2(b) This is a problem question on the creation of agency by necessity and a principal s legal obligation. Students show ability to identify the issue in question as well as solve the legal problem. Answers should be structured so as to show the progress of the problem solving process and arrival at the conclusion.

2 2(c) This question demands student s specific knowledge on agent s liability for breach of duty. Most students are able to answer this question but some tend to address the issue from a principal s perspective. Answers should respond to the requirement of the question. 3(a) This question tests the student s knowledge on partnership and manners of its dissolution. Most are able to answer this question. More emphasis on the statutory requirement. 3(b) This is a problem question relating to partners liability in the event of negligence by any one of them. Students address the issue well and are able to conclude with a correct solution. 3(c) This is a definitive question relating to Professional Negligence. Most are able to answer this question but some lack authority in their answer. More elaboration needed in explaining the meaning of the required answer as well as citation of case laws and statutory provisions. 4(a) give three (3) statutory exceptions and two (2) case law exceptions to explain the reasons for lifting the veil of incorporation. This question was the most well answered one by the candidates. 4(b)(i)(ii) (i) give the consequences of failure to register charges and (i) Candidates were expected to state that failure to register a registrable charge will result in the charge Some candidates merely mentioned that nonregistration would make a For part (i) Candidates should identified the issue of nonregistration of the registrable

3 part (ii) on the priority of charges. becoming void against the liquidator and any creditor of the company. However, the money secured thereby becomes immediately repayable. For part (ii), candidates were expected to identify the issues of the existence of a negative pledge clause and the effect of a clause giving a floating charge priority over an earlier floating charge and fixed charge. They were then expected to apply the rules to the given problem and advise on the order of priority of those charges. charge void and that the lender would lose his security. For part (ii) As for the priority between the other three charges, many candidates did not discuss the issue of the effect of the negative pledge clause. charge and that the fixed chargee would lose its priority and become an unsecured creditor. For part (ii) As for the priority between the other three charges, candidates should discuss the issue of the effect of the negative pledge clause, i.e. that it would only bind a subsequent charge who has knowledge of the restriction. This resulted in them not gaining more marks. 4(c) explain the term debenture in relation to company law. This question was very well answered. Candidates indicated sound knowledge of the term debenture. 5(a)(i)(ii) (i) discuss the issue on the validity of the transfer of shares and part (ii) on the disposition of a property when the company was in the midst of winding up. (i) and (ii) From the commencement of winding up, the company shall cease to carry on its business. However, the corporate powers of the company shall continue until the company is dissolved. The company's shareholders cannot transfer their shares in the company and disposed company s property without the Some candidates were not familiar with the law in this area. They merely stated either that the company could or could not do so without further explanation. This resulted in them not obtaining satisfactory marks. (i) Candidates should relate to the facts given from the question when explaining the laws involved. In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made

4 sanction of the liquidator. after the commencement of the winding up, shall be void. (ii) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall, unless the Court otherwise orders, be void. 5(b)(i)(ii) (i) write five (5) of the duties imposed on a receiver and receiver manager and part (ii)candidates are required to write who may be appointed a receiver and receiver manager (i)this question was reasonably well answered. However For part (ii), some candidates failed to answer this question totally. Others gave wrong interpretation of what the question required. Some candidates state who shall not be qualified to act as receiver and receiver manager instead. (ii) Candidates should write on who shall be qualified to act as receiver and receiver manager. Only approved liquidator is qualified to be appointed as receiver and receiver manager. Natural person cannot be appointed as receiver and receiver manager unless he is an approved liquidator. 5(c) explain what is Scheme of Some candidates did not answer well at all. Answers Candidates should state that under the Companies Act 2016, a

5 Arrangement. were either inaccurate or incomplete. scheme of arrangement includes a reorganisation of the share capital of a company by the consolidation of shares or by the division of shares into shares of different classes. 6(a)(i)(ii) (i) write on issue regarding payment of dividend by a holding company and part (ii) whether company can recover from the shareholder the excess of the dividend after distribution. (i)some candidates merely stated that it could not be distributed while others said that it could, without any further clarification. For part (ii) Some candidates merely stated either that the company could or could not do so without further explanation. This resulted in them not obtaining satisfactory marks. (i) Candidate should write that dividends can only be paid from the profits of the company declaring the dividend and not from the profits of its subsidiary. For part (ii) the company could recover the excess from the shareholders concerned. But it will not recover the excess from the shareholder if the shareholder has received the distribution in good faith. Candidates were also expected to state that in such situations the directors would be guilty of an offence and, in addition, they would be liable towards creditors of the company.

6 6(b)(i)(ii) (i) and (ii) Candidates are required to write on the type of resolution and period of notice required for the process of removal of directors in the company and Reduction of capital of the company. These questions were reasonably well answered. 6(c) write on the power of proxy at a meeting. This question was very well answered. 7(a)(i)(ii) (i) write on the duty of a director to avoid a conflict of duty (duty to disclose interest) and part (ii) the consequences of breaching the duty. Candidates displayed good understanding of what the questions required. They appeared ready for this question and were able to identify the issues and apply the law to the given problem. 7(b) give three (3) advantages and three (3) disadvantages of carrying on business through the medium of a company limited by shares. The question was generally well answered. 7(c) explain what is members meeting. Candidates were not knowledgeable in the law in this area. Some candidates General meetings are meetings of the members of the company. In the context of a public company,

7 were merely giving the types of meeting and types of notices to be given before conducting a meeting which were not relevant at all. general meetings may be classified into:1) Annual General Meeting (AGM) and extraordinary meeting (EGM). General Recommendation To Facilitators To Candidates Generally, student s capability of answering is better than in the past. Emphasise more on the importance of statutory provisions and case laws. Some emphasis on techniques in using case laws in answering problem question is required (practice). Emphasis on importance of authority in answering law papers (cases & statutory provisions). A thorough understanding of the subject matter can only be achieved by reading and discussing the issues at hand. This may bring about a better understanding of the subject matter and reduces incidences of answering questions based on memory alone. Authorities such as case laws and statutory provisions are vital (whenever required). Case reading and understanding techniques to utilise legal principles need to be improved. Understanding the question requirement and giving only the appropriate answer is important. Statutory provisions must be included in answers wherever specifically required.