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CIS INTERNATIONAL

QUALIFYING BOARD EXAM


May 2011
Corporate Secretaryship

Examiners Report

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GENERAL
This has undoubtedly been the worst sitting in some time. It is contended that the exam was not at all
difficult from a theory perspective, but that the students were unable to deal with the scenario based
questions and could not practically apply the theory. This is a serious concern, because as mentioned
in previous reports, in practice one will never be asked to merely restate theory; it is always about
applying ones knowledge to a particular problem / issue.

In addition, the other main concern remains that candidates are not able to identify the core issues and
succinctly provide a well thought through answer. The stressful exam conditions clearly play a role,
but such environment is not necessarily that different from the difficult and stressful environments in
which company secretaries often have to operate in many cases having to provide opinions on their
feet and having to be able to provide clear, but to the point views on the scenarios very similar to those
portrayed in the paper.

Students again in this sitting gave correct information, but which did not answer the questions at all
no marks are given in such instances. As you learn in Corporate Business Administration information
is useless if it is not to the point and if it does not address the actual need.

Candidates have generally fared better in terms of presenting answers in the requested format, but
there is still room for improvement. It is re-emphasised that the questions are asked in such formats
not only to give students a few discretionary marks if the basic skill can be displayed, but to entrench
the skill to write effectively thereby enabling the students to be more effective in practice.

As in previous exams, most candidates, although giving the correct answers, failed to provide sufficient
information to obtain high marks. As in previous years some students gave only a 1 page answer to a
20 mark question (if it had been 1 page of facts it could have been enough, but then often it was
irrelevant information the length/detail of the answer has to somehow correlate with the allocated
marks. Again, many students also spent too much time on non value-adding information they do
not have to write lengthy answers, as long as the critical aspects are noted. Often the shorter/succinct
answers received better marks as they not only covered the crux, but showed that the student could
ascertain what the real important issues were.

It seemed that a few candidates struggled to complete the paper this could be because of the
scenarios having been slightly longer than in the past and they most likely took longer to identify the
critical aspects to be addressed.

Handwriting was once again extremely poor. Students have to realise that where an examiner must
first try to decipher what has been said, it is very easy to misread / misinterpret an answer.

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM


May 2011

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Spelling was quite poor in many instances, which is a concern; because despite our dependence on
spell-check, company secretaries are often requested to write on flip charts etc and poor spelling
definitely does not assist with the elevation of the image of the profession. In cases where spelling
was very poor, it was also often indicative of poor writing in general, which is a serious concern for
company secretaries as writing, be it minutes, reports, opinions etc is a huge portion of our daily
responsibilities. Students, especially at board level, should make all endeavours to address such
deficiency as, improving their writing skills, will only stand them in good stead going forward.

Question 1
The average mark for this question was 27%. This is a serious concern as many of these questions
dealt with basic tasks of a company secretary. An inability to answer these questions is indicative of
students not having an in depth knowledge of the theory.

Question 1.1 students generally wrote everything and anything they could remember from King III
instead of clearly dealing with the specific guidelines iro the chairman of the boards participation in
other board committees. King III has to be studied in detail and not just superficially.

Question 1.2 similar to the above, students wrote all they could remember from the JSE listing
requirements or continuing obligations and did not limit their answers to the specific question asked.

Question 1.3 the annual return is one of the most basic concepts and has received significant air
time of late it is unacceptable that many students were unable to adequately answer this question.

Question 1.4 many students dwelled on the naming convention of private companies, minimum
number of directors etc, instead of focusing on the principles that are regarded as distinguishing
private companies from public companies etc.

Question 1.5 although students generally fared well in the comparison part of the question, many
failed to deal with the ability of a private company is able to list and what it would be required to do in
order to list.

Question 1.6 students generally did not know that the Corporate Laws Amendment Act had changed
the position in this respect.

Question 1.7 again, students referred to everything they knew about King II and King III instead of
answering the question as asked.

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM


May 2011

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Question 1.8.1 most candidates indicated that proxies must reach the company more than 48 hours
before the meeting, whereas the position is actually that the company is not permitted to provide for a
period greater than 48 hours before the meeting; thus it must be 48 hours or less this
misinterpretation could be indicative of superficial knowledge / not enough studying or difficulty in
understanding the concepts. A number of students failed to exclude the Saturday and Sunday in their
calculation.

Question 1.8.2 a very serious concern is that many students dont seem to know the difference
between a general meeting (shareholders) and a directors meeting many referred to the directors
having to sign the resolution in answering this question thus even if the process required was given
correctly, no marks could be allocated as clearly the candidate completely misunderstood the concept.
Students cannot expect to pass if they do not grasp these very basic concepts.

Question 1.8.3 very few students answered this question correctly.

Question 1.9 this question was very poorly answered. Again, same as question 1.6, it was clear that
students did not know the detail contained in the Corporate Laws Amendment Act, which had changed
the position in this regard. Some candidates were able to refer to the correct section of the Act dealing
with disposal of the whole or greater portion of the assets, but then were unable to determine that the
special resolution was not required due to the disposal being amongst wholly owned subsidiaries.
Again, either indicative of superficial knowledge / not enough studying or misunderstanding of
concepts.

Question 1.10 The answers provided by students were generally acceptable in this question.
Question 2
64% of students attempted this question.

Most candidates did not deal with the requirements where shares are issued not for cash, for which a
significant portion of the marks were allocated.

Many students dwelled on whether there were sufficient share capital and spent half of their answer
going through the general meeting process in order to increase the capital it seems like the notice
and general meeting process are the only details that many students know fairly well and they try and
include it in as many answers as possible. A mention of checking the capital and the requirements to
increase if not sufficient would have resulted in 2 marks, but no marks were allocated for the entire
general meeting process, as this had not been asked, whereas the other aspects were critical to the
specific process.

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM


May 2011

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With regard to question 2.2, many candidates answered too generically wrt duties and did not
adequately apply the principles to the specific scenario at hand. When quoting case law, students
need to provide the full proper name and details of the case to receive high marks for discussing
applicable case law.
Question 3
41% of students attempted this question.

Very few candidates knew the requirements with respect to delegations of authority and how directors
liability would be assessed in such instances.

With regard to question 3.2, it was clear that very few candidates know how to properly draft
resolutions tenses, wording etc were completely incorrect. Students used different terminology to
that provided in the question i.e. junior clerk instead of Senior Supply Chain Clerk if you drafted
resolutions, so incorrectly in practice you may thereby enable unauthorised individuals to sign
documents, it could have significant implications for the company. There is a serious lack of attention
to detail!
Question 4
43% of students attempted this question.

Question 4.1 was not badly answered most candidates were at least able to determine that a class
meeting was required, however with question 4.2, notices were very poorly drafted and did not
articulate the required resolutions, nor refer to the proxy requirements again, a basic company
secretarial task.
Question 5
81% of students attempted this question.

Very few candidates referred to the initial discussions that need to take place before the incorporation
process can commence. Many students seem to think that all public companies are listed companies.
Nothing in the question required anything wrt listing or indicated that the company would be listed, yet
students wasted much time dwelling on listing particulars, etc for which no marks were allocated.

A number of candidates also got the sequencing of events quite wrong. Question 5.2 was generally
fairly well answered.

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM


May 2011

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Question 6
47% of students attempted this question.

Quite a number of candidates could set out the basic requirements, but did not adequately apply it to
the actual scenario. About 40% of students were unable to even determine the applicable section and
requirements and just answered generically, which resulted in very low marks.

END OF REPORT

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM


May 2011

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