CIS PROFESSIONAL

QUALIFYING EXAM
May 2013
Corporate Secretaryship

Examiners Report

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GENERAL
The biggest problem was that students did not read the questions properly in order
to understand exactly what was being asked and often provided information not
requested, wasting time resulting in pages of information which did not answer the
question that had been asked.
Section A was generally a straight forward question and with study, students should
have been able to gain enough marks to come close to obtaining a pass mark. The
questions in Section B were of a practical nature and it became apparent that
application of the principles of corporate secretaryship needed a lot more
understanding.
It is very clear that some students had not studied/prepared for the examination.
The average pass mark was 34,9% and the number of students who actually
passed is abysmal.
It would appear that some students did not have a copy of the Companies Act with
them or did not know how use the Act. Many points could have been gained by a
reference to the Act.
The content of the paper allowed sufficient time for students to answer all questions
although some students seemed to be rushed towards the end.
Question 1
Question 1 was an easy question, and students who had worked and studied
scored well in this section which made a significant contribution to achieving a pass
mark. Poor scoring in this question was a clear indication that students had not
studied.
Question 1.1
In respect of questions 1.1.1. students seemed to grasp that a closed period was a
period when trading was prohibited and if this was mentioned, a point was allowed
for this. However, very few seem to understand the timing of closed periods.
In Question 1.1.2 reference was seldom made to the Security Services Act and
although there was a general idea of what insider trading was about, the form an
offence could take was not generally known.
The same applied in the case of market abuse in question 1.1.3.
In Question 1.4 time was wasted stating which companies were required to have a
social and ethics committee. However, the question, being an easy one on which to
score points, was generally well answered.
Questions 1.5 and 1.6 were generally poorly answered.

Corporate Secretaryship Examiners Report

May 2013

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Question 2
The majority of students did not address the issue of allowing divisional personnel
management to use the title of director without the person being subject to the
duties and obligations of person who is an actual director. They then went on to
quote legislation which disqualifies people from becoming directors, directors
rights, duties and responsibilities, etc. There was often referral to ex officio directors
and a point was awarded in this case especially when the person mentioned that
such person bore the responsibilities when occupying such a position.
The section on integrated reporting was a difficult one, with a wide ambit for reply.
Most students understood what had to be included in an integrated report but did
not understand that compiling an integrated report was not a tick box approach but
a way of reporting to give an honest, holistic, structured view of the company, its
operations and sustainability whilst still being a good corporate citizen. A flexible
approach was used in marking the papers but students generally did not do well in
this question.
Question 3
In respect of Q3.1, many of the students concentrated on the aspects about
booking venues and having the necessary equipment but did not mention the
fundamental of the question which was the preparation of agendas in consultation
with the chairman/CEO, the inclusion of resolutions, the preparation and timeous
sending of board packs, quorum requirements and documents which should be
taken to the meeting. There was also confusion with the holding of general
meetings of shareholders rather than preparation for a board meeting and many
students quoted what should have been done in respect of shareholders meetings
including quoting quorum requirements, the manner of delivery of notices, proxies,
ballot papers and electronic participation.
In addition, many students answered the question by quoting the Companies Act
definition of the duties of the company secretary completely ignoring the instruction
to guide the deputy with limited experience, in preparing for the meeting.
When answering Q3.2 students made no reference to the MoI and the Act in
respect of the appointment of alternates and most students did not mention that
alternates only had rights to attend the meeting in the absence of the principal
director. Very few students seldom mentioned that when the principals term of
office ended, the alternates position also ended or that the principal could revoke
the appointment. Time was wasted in simply quoting section 76(2) and not getting
to the crux of the question asked.

Corporate Secretaryship Examiners Report

May 2013

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Question 4
Most students chose this question and results varied in respect of the notice of
meeting (4.1). Better marks were scored in respect of the quorum (4.2), especially
in pointing out that because there were only three shareholders, all three needed to
be present to have the necessary quorum in place to conduct the meeting and
validly pass the resolution. Time was wasted on discussing the giving of short
notice to shareholders. Barron v Potter was only referred to twice.
In Question 4.3 students often quoted the Electronics Communication Act and not
the fact that the Companies Act allowed electronic communications provided the
MoI permitted the same. A fair amount of time was wasted on discussions of
electronic facilities and obtaining electronic details of shareholder. This question
was poorly answered.
Question 5
This question was the least chosen by students and the results were poor.
Question 6
Dominant shareholders and chairmen/CEOs is a situation that occurs very often
and this question, although complex, was topical to the challenges facing corporate
secretaries. Many students answered the question and the results were generally
poor. All quoted that the directors must act in the best interests of the company but
did not fully understand what that meant and did not refer to a director using
independent judgement in making a decision. Reference was made to section 76(3)
and time wasted quoting the balance of section 76. No reference was made to
Fisheries Development vs Jorgensen although reference was made to Robinson vs
Randfontein Estates on a number of occasions. The liability of directors not acting
in the best interests of the company was often mentioned.

END OF REPORT

Corporate Secretaryship Examiners Report

May 2013

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