Business Law – Home Assignment Chapter 20: Incorporation of Company

CHAPTER TWENTY
INCORPORATION OF COMPANY
QUESTIONS TO READ

LO 1: PROCESS OF REGISTRATION/INCORPORATION:

Q.1 Paband Limited is in the process of incorporation and has filed an application with the registrar’s office for registration of
its memorandum of association. However, the registrar has refused to register the memorandum.

Under the provisions of the Companies Act, 2017 state the possible reasons for such refusal. Also advise the options
available to Paband Limited in the above circumstances. (03 marks)
(ICAP, CAF 03 Level – Autumn 2015)

Q.2 Can professionals connected with the formation of a company be regarded as promoters? Comment. (03)
(ICAP, CAF 03 Level – Autumn 2004)

Q.3 M/s Polo Enterprises has been a well established partnership firm which submitted its documents for registration
as private limited company with the Registrar of Companies. The Registrar has refused to register the memorandum of
association.
You are required to explain to the management, the steps which they may take in such a situation. (02)
(ICAP, CAF 03 Level – Autumn 2006)

Q.4 What is a conclusive evidence of the fact that a company has been duly registered under the Companies Act, 2017?
(02)
(ICAP, CAF 03 Level – Spring 2006)

Q.5 Briefly describe the documents required to be filed with the Registrar for registration of a Private Limited Company.
(PIPFA, Summer 2015)

Q.6 Under the Companies Act 2017, describe the procedure for registering a private company (other than a single member
company).
(ACCA, June 2012)

LO 2:CLAUSES OF MEMORANDUM OF ASSOCIATION

Q.7 What is the effect of registration of memorandum and articles of a company? (03)
(ICAP, CAF 03 Level – Spring 2003)

Q.8 What is the legal position of pre-incorporation contracts? (03)

(ICAP, CAF 03 Level – Spring 2001)

Q.9 Under what conditions, the Companies Act, 2017 would override the memorandum of association of the company? (02)
(ICAP, CAF 03 Level – Spring 2007)

Q.10 The requirements for some clauses of Memorandum of Association are identical both in case of a company limited by
shares and a company not having a share capital. Describe the clauses identical in requirements for both types of
companies and those peculiar to the company limited by shares. (04)
(ICMA Pakistan, Summer 2014)

Q.11 As per Companies Act, 2017, specify the clauses of Memorandum of Association of company limited by shares. (03)

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 Business Law – Home Assignment Chapter 20: Incorporation of Company

(ICMA Pakistan, Fall 2017)

Q.12 Mr. Adil and Mr. Zaki has approached you for consultancy of incorporation of a company. As a corporate consultant, you
are required to advise them in the following scenarios in the light of the Companies (Incorporation) Regulations, 2017
(the Regulations):
(i) Documents required to be filed with application for incorporation under the Regulations. (04)
(ii) Explain the undertaking required to be filed along with Memorandum of Association under the Regulations. (02)

LO 3: NAME CLAUSE:

Q.13 Shafeeq Refrigerators (Pvt.) Limited is engaged in the trading of refrigerators. It is now planning to start the business of
air conditioners and therefore wants to change its name to Shafeeq Electronics (Pvt.) Limited. Describe the procedure that
the company will be required to follow. (04)
(ICAP, CAF 03 Level – Spring 2008)

Q.14 Describe the restrictions that have been mentioned in the Companies Act, 2017 regarding selection of names of
companies. (06)
(ICAP, CAF 03 Level – Spring 2012)

Q.15 A foreign company is in the process of selecting a name for its subsidiary which is being incorporated as a limited liability
company in Pakistan. You are required to inform them about the prohibitions of certain names, under the Companies Act,
2017. (03)
(ICAP, CAF 03 Level – Autumn 2008)

Q.16 Under the provisions of the Companies Act, 2017 a company, without prior approval of the Commission, cannot be
registered by a name which contains certain words or phrases suggesting certain attributes/affiliations. List those
attributes/affiliations. (04)
(ICAP, CAF 03 Level – Autumn 2014)

Q.17 On January 1, 2010 Star International Limited (SIL), a company incorporated in Italy, acquired majority shareholding in
Beta Industries Limited, a company listed on the Karachi Stock Exchange. SIL wants to change the name of Beta Industries
Limited to Star Industries Pakistan Limited, as it believes that on account of international reputation of Star International,
the local sales will improve substantially.
Describe the procedure that would have to be followed to change the name of the company. (04)
(ICAP, CAF 03 Level – Spring 2010)

Q.18 Write short notes on the following:

- Prohibition of certain names of company. (02)
(ICAP, CAF 03 Level – Autumn 1998)

Q.19 What are the provisions in selecting the name of company? (03)
(ICAP, CAF 03 Level – Spring 2001)

Q.20 What restrictions are laid down in the law relating to naming a new company? (04)
(ICAP, CAF 03 Level – Spring 2004)

Q.21 Specify the competent authorities who shall be required to grant their approval in the following situations:
(i) Change of name by a company.
(ICAP, CAF 03 Level – Autumn 2008)

Q.22 On January 1, 2010 Star International Limited (SIL), a company incorporated in Italy, acquired majority shareholding in
Beta Industries Limited, a company listed on the Karachi Stock Exchange.

SIL wants to change the name of Beta Industries Limited to Star Industries Pakistan Limited, as it believes that on account
of international reputation of Star International, the local sales will improve substantially.

Describe the conditions which the company would be required to comply with after the change of its name. (04)
(ICAP, CAF 03 Level – Spring 2010)

Q.23 When a company changes its name, what requirements are to be followed in respect of its old name? (03)

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 Business Law – Home Assignment Chapter 20: Incorporation of Company

(ICAP, CFAP 02 Level – Winter 1995)

Q.24 Cannon Industries Limited, a listed company, wishes to change its name to Reliance Foods Limited because the
management feels that the change in name would help in rebranding and rebuilding the image of the company and in
attracting more customers.
You are required to explain the requirements of the Companies Act 2017, which the company is required to comply with,
in this regard. Also describe the effect of such change on the rights and obligations of the company. (09)
(ICAP, CFAP 02 Level – Summer 2009)

Q.25 The Companies Act 2017, provides that a company shall not be registered by a name identical that of a company already
in existence, or so nearly resembling that names to be calculated to deceive. Is there any exception to this rule? (03)
(ICAP, CFAP 02 Level – Summer 1999)

Q.26 What is the procedure to be adopted to change the name of a Company? (04)
(ICAP, CFAP 02 Level – Winter 1993)

Q.27 A private limited company wants to raise further capital for expansion purpose by inviting general public to subscribe to
its shares. List the essential pre-requisites under the Companies Act 2017, that it must comply with, before it submits a
prospectus and listing application to the stock exchange. (08)
(ICAP, CFAP 02 Level – Winter 1996)

Q.28 A public limited company is in process of changing its name and has completed the required process till passing of
special resolution in the meeting of shareholders. Briefly mention the steps involved to complete rest of the process.
List down the documents required to be submitted with application to the registrar for seeking approval of the
Commission for the change of name. (03)
(ICMA Pakistan, February 2013)

Q.29 (i) A company which was established recently had inadvertently been registered by a name that is prohibited by the
Companies Act 2017. What remedy is available for such company under the Act? (04)
(ii) Assuming that the aforesaid company was not registered by a name in contravention of the Act, how
can it change its name if it so desired? (02)
(ICMA Pakistan, November 2010)

Q.30 One of your friends is considering to change the name of the private limited company he runs as his family concern, so
that new name better reflects the actual business. He is not familiar with the requirements of the Companies Act 2017,
and has requested you for guidance. Advise him about the following aspects:
(a) Names which are not allowed or deceptive. (03)
(b) Any prior arrangement to ascertain that the name chosen may be allowed by SECP. (02)
(c) Steps involved in changing the name. (05)
(d) The effects of change in the name of the company. (02)
(ICMA Pakistan, May 2007)

Q.31 The business of Zee Foods Limited was acquired by a new group and new group want to change the name of the company.
You have been engaged to advise Board of Directors for legal requirements in this regard. Make a brief for the Board’s
guidance. (03)
(PIPFA, Summer 2016)

LO 4: CHANGE IN PRINCIPAL LINE OF BUSINESS CLAUSE (OR OBJECT CLAUSE)

Q.32 The management of Real World (Pvt.) Limited and Fantasy World (Pvt.) Limited intend to enter into a joint venture
agreement under which they would implement a seaside holiday resort project. However, the Company Secretary has
informed that the Memorandum of Association of Fantasy World (Pvt.) Limited does not authorise the Company to enter
into a joint venture agreement.

Describe the procedure that would have to be followed by Fantasy World (Pvt.) Limited for making the necessary
amendments in its Memorandum of Association. (09)
(ICAP, CAF 03 Level – Autumn 2009)

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 Business Law – Home Assignment Chapter 20: Incorporation of Company

Q.33 You are Company Secretary of Car Ltd. The Company Manufactures Cars. A resolution has been passed for the Company to
manufacture aeroplanes, but none of the objects allow the same. Discuss the manner in which the same may be achieved
and the name of the company changed to Aeroplan Ltd., under the Companies Act 2017. (06)
(ICAP, CFAP 02 Level – Summer 1994)

Q.34 The members of XYZ (Private) Limited have resolved to make certain amendments in the object clause of its
memorandum of association to enable it to expand its scope of activities.
(a) Explain the procedure that the company will have to follow. (03)
(b) List the information which will be required to be submitted in the application to the concerned authority. (07)
(ICAP, CFAP 02 Level – Winter 2007)

LO 5: CHANGE IN PLACE CLAUSES:

Q.35 The registered office of Triplet Steel Industries Limited (TSIL), a listed company, is situated at Islamabad. The company
exports its product to some foreign countries for which all the materials are first transported to Karachi and then
exported to other countries. To avoid hassles of customs and excise and smooth shipping of its products, the Chief
Executive Officer (CEO) of TSIL has decided to shift their registered office from Islamabad to Karachi.
Required:
Briefly describe the procedure under the Companies Act 2017, to be followed by the company for change of registered
office of the company from Islamabad to Karachi.
(ICMA Pakistan, Summer 2017)

LO 6: ARTICLES OF ASSOCIATION:

Q.36 The board of directors of Shahid Manufacturing Company (Pvt.) Limited has recently decided to convert the company into
a public limited company (unlisted).
List and five essential changes that would be required to be made in the articles of the company, before filing the
necessary documents with the register. (05)
(ICAP, CAF 03 Level – Spring 2008)

LO 7: COMMENCEMENT OF BUSINESS:

Q.37 (a) Innovation Limited is a newly incorporated public limited company. Prior to the issuance of certificate of
commencement of business, the directors have entered into a long-term contract with a foreign company for the supply of
materials for use in production.

Under the provisions of the Companies Act, 2017 explain the following:
(i) status of the long-term contract under the above circumstances. (02)
(ii) requirements for obtaining the certificate of commencement of business. (05)
(ICAP, CAF 03 Level – Spring 2017)

Q.38 A private limited company wants to commence business after incorporation without getting certificate of commencement
of business. Comment. (04)
(ICAP, CAF 03 Level – Spring 2004)

Q.39 What are the requirements which need to be fulfilled by a public company for obtaining the Certificate of
Commencement of Business? (07)
(ICAP, CAF 03 Level – Autumn 2006)

Q.40 (a)Explain when can a public and private limited company commence business. (05)
(b)What are the implications for a public company for entering into contracts or exercising borrowing powers prior to
obtaining a commencement of business certificate? (03)
(ICAP, CFAP 02 Level – Winter 1995)

Q.41 What is the status of contracts entered by the company before acquiring certificate of commencement of business? (03)
(ICAP, CAF 03 Level – Spring 2005)

Q.42 What are requirements for commencing business by private and public limited companies? (03)

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 Business Law – Home Assignment Chapter 20: Incorporation of Company

(ICAP, CFAP 02 Level – Summer 1997)

Q.43 Rivets Manufacturing Co. (Pvt.) Ltd., (RMCL), a company with 100 per cent local equity, wants to convert itself into a
public limited company (unlisted under the Companies Act 2017.
(a) Briefly describe the essential changes that would be required to be made in its articles of association or
memorandum in connection with the above conversion. (06)
(b) Briefly describe the two key filing requirements that would need to be complied with in connection with the
conversion and within what period. (06)
(ICAP, CFAP 02 Level – Winter 1994)

Q.44 Dawood Limited is incorporated as a public limited company; the Registrar of the companies has issued a certificate of
incorporation. The Company has started its operations and made some contracts immediately after obtaining the
certificate on the basis of understanding that certificate is a conclusive evidence that requirements of the Companies Act,
2017 as to registration have been complied with and that the company is duly registered under the Act. You are recently
appointed as Company Secretary of Dawood Limited. You observed that the Company has not complied with some
mandatory requirements related to commencement of business by a public limited company as prescribed under the Act.
Required:
You are required to briefly answer the following to the board of directors (BODs):
(i) Under the Companies Act, 2017, what are the requirements/ conditions for commencement of business by a public
limited company? (05)
(iii) Under the Act, what is the status of contracts which the company made before the date at which it is entitled to
commence business? (02)
(ICMAP, Spring 2018)

LO 8: REGISTERED OFFICE:

Q.45 What is the necessity of registered office of a company? (02)

(ICAP, CAF 03 Level – Autumn 2004)

CASE STUDIES TO ATTEMPT IN WRITING

Q.1 Mr. Zouk is an employee in a brokerage house and he wants to prepare some reports on request of some potential
investors for a company named as “Arizona Grill Limited”. For the preparation of the report he requires Memorandum &
Articles of association of the company.
State whether he can obtain such copies of Memorandum & Articles of Association from “Arizona Grill Limited” and
explain why?
(ICAP’s Official Question Bank for CAF 03 – Q. # 91a)

Q.2 Save Foundry Limited (SFL) has recently obtained a certificate of incorporation from SECP and has applied for certificate
for the commencement of business. Meanwhile, SFL has entered into an agreement with Feroz Engineering Limited (FEL)
for the supply and installation of machinery at its factory. SFL has also signed an agreement with a commercial bank for a
short-term finance facility for advance payment to FEL.

In the light of the Companies Act, 2017 analyse above situation and comment on its legality and the implications of
entering into the above agreements. (05)
(ICAP, CFAP 02 Level, Summer 2015)

Q.3 Articles of association of JS Cement Limited, a listed company, includes a clause according to which, one member is
prohibited from casting his vote in general meeting.
Comment on the legality of the above clause. (02)
(ICAP, CAF 03 Level – Spring 2007)

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 Business Law – Home Assignment Chapter 20: Incorporation of Company

Q.4 Sedan Limited (SL), a company limited by guarantee having a share capital, has been incurring losses for the last three
years. Initially, SL had four directors (members) A, B, C and D. On 1 July 2012, C had transferred all his shares to D. On 1
March 2013 A, B and D decided to wind-up the company voluntarily.

Explain the liability of A, B, C and D. (05)

(ICAP, CAF 03 Level – Spring 2013)

Q.5 Subscribers of M/s. Dairy Products (Pvt) Limited submitted the documents to the Registrar of Company for registration,
but inadvertently the Company was registered as M/s. Diary Products (Pvt) Limited. Briefly explain the provisions for
rectification of name of a company under Section 11 of the Companies Act, 2017. (03)
(ICMA Pakistan, Summer 2018)

Q.6 XYZ Group is planning to shift the registered offices of three (3) of its companies ñ
(i) A Limited from Lahore to Islamabad,
(ii) B Limited from Hyderabad to Karachi and
(iii) C Limited from Peshawar to Multan.

They are interested to know whether it would be necessary to seek confirmation of the Commission at any stage of
the process of this shifting. What is the provision of law in this regard? Whether confirmation of the Commission
would be required or not in the given situations? Discuss. (05)
(ICMA Pakistan, February 2013)

Q.7 The directors of Afridi Cables Limited are facing difficulty in holding the board meetings due to the quorum requirements.
According to the company’s articles, quorum of the meeting shall be at least 7 directors present in person. They have now
decided to restrict the quorum at 5 directors.

Explain the procedures to be followed for alteration of the company’s articles in order to restrict the quorum at 5. (04)
(ICAP, CAF 03 Level – Autumn 2007)

Q.8 The Directors of Worldwide Motors Limited (WML) and its subsidiary Worldwide Autos (Private) Limited (WAPL) have
decided in their respective board meetings to shift their registered offices to Landmark Centre, G.T. Road, Lahore.

The present addresses of the registered offices are:

(a) Worldwide Motors Limited, 101, Hali Road, Lahore.
(b) Worldwide Autos (Private) Limited, 2nd Floor, Modern Avenue, Peshawar.

You are required to list the procedures to be followed by each company for shifting its registered office, as specified under
the provisions of the Companies Act, 2017. (10)
(ICAP, CAF 03 Level – Autumn 2012)

Q.9 Promoters of a company had engaged a corporate lawyer for the incorporation of a company, the terms of which were
agreed before the work on incorporation commenced. The promoters did not settle the lawyer’s fee. Explain whether the
lawyers can claim the fees from the company after its incorporation. (05)
(ICAP, CFAP 02 Level – Summer 1998)

Q.10 Mazboot Limited (ML) is a newly incorporated company. ML has issued a prospectus inviting offers from the general
public for subscription to its shares and is also intending to sign a musharika finance facility agreement with Top Bank
Limited.
However, Mr. Baqir, who is the legal advisor of the company, is against the signing of musharika finance facility
agreement.
In view of the provisions of the Companies Act, 2017 explain why ML should not sign the finance facility agreement. List
the condition(s), if any, which ML must comply before exercising its borrowing powers. Also state the consequences if ML
signs the musharika finance facility without fulfilling the above condition(s). (07)
(ICAP, CAF 03 Level – Autumn 2014)