Chartered Accountancy, Institute of Chartered Accountants of Pakistan (Scheme 2025) · Business Law Dynamics
ICAP CAF-4 Companies Act: incorporation and shares: practice questions with answers
6 free exam-style questions on Companies Act: incorporation and shares for ICAP CAF-4 Business Law Dynamics. Try each one, then open the answer to read the explanation. Fincora has 12 original questions on this syllabus area.
Question 1
On 4 May 2027 Zarqoon Polymers (Private) Limited moved its registered office from one building to another within Faisalabad. Under the Companies Act, 2017, within what period must the company give notice of the change to the registrar?
- A Within 30 days after the date of the change
- B Within 21 days after the date of the change
- C Within 15 days after the date of the change
- D Within 7 days after the date of the change
Show the answer
Answer: C. Section 21 of the Companies Act, 2017 deals with the registered office.
- s 21(1): the situation of the registered office is notified to the registrar within 30 days of incorporation.
- s 21(2): notice of any change in its situation is given within 15 days after the date of the change.
A move within the same city (here, within Faisalabad) needs no special resolution. The proviso to s 21(2) requires a special resolution only for a move from one city to another. Zarqoon must therefore notify the registrar by 19 May 2027.
Question 2
Under section 17 of the Companies Act, 2017, once the memorandum and articles of a company are registered, whom do they bind?
- A The members only, as a contract among themselves
- B The company and its directors only, as officers
- C The company and its members, as if each member had signed them
- D The company, its members and outsiders dealing with it
Show the answer
Answer: C. Section 17(1) of the Companies Act, 2017: the memorandum and articles, when registered, bind the company and the members thereof to the same extent as if they had been signed by each member and contained covenants on the part of each member to observe all their provisions.
They therefore operate as a contract between the company and each member (and among the members). They do not create contractual rights for outsiders, such as suppliers, lenders or a person named in the articles, in that outside capacity.
Question 3
Two joint families form a partnership to trade in rice for profit. The Bijarani family has 13 members, of whom 3 are minors, and the Jiskani family has 11 members, of whom 2 are minors. All adult members of both families are partners, and the minors share in the profits. The partnership is not registered as a company. Under section 9 of the Companies Act, 2017, which statement is correct?
- A It must register as a company, as it has 24 members, which is more than twenty
- B It need not register as a company, as it has 19 members if minors are excluded
- C It must register as a company, as the exception covers only a single joint family
- D It must register as a company, as a partnership of more than ten persons must register
Show the answer
Answer: B. Section 9 of the Companies Act, 2017: an association or partnership of more than twenty persons formed to carry on business for gain must be registered as a company; otherwise those responsible commit an offence and are personally liable for the liabilities of the business. Under s 9(3) the section does not apply to (among others) a joint family carrying on a joint family business, or a partnership of two or more joint families where the total number of members, excluding minors, does not exceed twenty.
Computation:
| Family | Members | Minors | Counted |
|---|---|---|---|
| Bijarani | 13 | 3 | 10 |
| Jiskani | 11 | 2 | 9 |
| Total | 24 | 5 | 19 |
19 does not exceed twenty, so the partnership need not register as a company.
Question 4
Tarbela Industries Limited, whose registered office is in Lahore, Punjab, wants to move its registered office to Karachi, Sindh. Which procedure does the Companies Act, 2017 require?
- A A board resolution and notice of the new office to the registrar within 15 days of the move
- B A special resolution, the Commission's confirmation, and filing within 30 days of the order
- C A special resolution and notice to the registrar within 15 days, with no confirmation needed
- D A special resolution and the registrar's written approval, as for a change of the company's name
Show the answer
Answer: B. Section 32 of the Companies Act, 2017: a company may, by special resolution, alter its memorandum to change the place of its registered office from one province (or the Islamabad Capital Territory) to another. Such an alteration takes effect only when confirmed by the Commission on a petition. A certified copy of the order is sent to the company and the registrar within 7 days, and the company files the altered memorandum with the registrar within 30 days of the order (the Commission may extend this).
Contrast section 21: a move within the same city needs only notice to the registrar within 15 days; a move from one city to another within a province needs a special resolution (proviso to s 21(2)) but no Commission confirmation.
Lahore (Punjab) to Karachi (Sindh) is an inter-province move, so the section 32 route applies.
Question 5
Shahzeb Effendi is an executive (not an independent) director of Gulberg Steels Limited. He holds 1,320,000 of the 8,800,000 voting shares of Hab Weaving Limited, and his wife holds a further 440,000 shares. He is not a director of Hab Weaving, and the two companies have no other link. Are the two companies 'associated companies' under section 2 of the Companies Act, 2017?
- A Yes, as his holding counted with his wife's shares is 20% of the voting power
- B No, as his own holding of 15% falls below the 20% voting-power test
- C No, as he would also need to be a director of Hab Weaving Limited
- D Yes, but only if Gulberg Steels also holds 10% of Hab Weaving's voting power
Show the answer
Answer: A. Section 2(1)(4) of the Companies Act, 2017 ('associated companies'): two companies are associated where a person who is a director of one, or holds or controls at least 20% of its voting power, is also a director of the other or holds or controls at least 20% of the voting power in it. Under the proviso, shares held by the person's spouse or minor children are treated as held by the person. Independent directorships are disregarded, but Shahzeb is an executive director.
Computation:
- Own holding: 1,320,000 / 8,800,000 = 15%
- With his wife's shares: (1,320,000 + 440,000) / 8,800,000 = 1,760,000 / 8,800,000 = 20%
He is a director of Gulberg Steels and controls 20% of Hab Weaving, so the companies are associated.
Question 6
Under section 62 of the Companies Act, 2017, a share certificate issued by a company, whether in physical or book-entry form, is:
- A conclusive evidence of title that the company cannot later dispute
- B prima facie evidence of the title of the member to the shares it specifies
- C evidence of title only after particulars are filed with the registrar
- D a negotiable instrument that passes title to the shares by delivery
Show the answer
Answer: B. Section 62 of the Companies Act, 2017: a certificate, issued in physical form signed as specified, or held in book-entry form, specifying the shares held by a member, is prima facie evidence of the title of the member to those shares.
'Prima facie' means the certificate is accepted as proof of title unless the contrary is shown. It is not conclusive, it needs no filing with the registrar to have this effect, and it does not transfer title by delivery.
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