MALAYSIAN INSTITUTE OF ACCOUNTANTS QUALIFYING EXAMINATION EXAMINER S REPORT (SEPTEMBER 2015) SUBJECT: BUSINESS AND COMPANY LAW

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1 MALAYSIAN INSTITUTE OF ACCOUNTANTS QUALIFYING EXAMINATION EXAMINER S REPORT (SEPTEMBER 2015) SUBJECT: BUSINESS AND COMPANY LAW Question Comments Recommendations 1. (a) Malaysian Legal System: Some candidates did not even attempt the question, while some who did displays lack of preparation. This is a pure factual subject area which requires specific knowledge. (b) Contract Law: The subject matter is structured and largely based on statutory provisions. Candidates who failed to answer this question may most probably have problems recalling the exact statutory provisions that relates to the issue they are discussing. However, the general grasp of the subject matter is quite satisfactory. (c) Sale of Goods: Most candidates are able to understand and answer questions fairly well. General observation; satisfactory. 1. Students should be reminded that preparation for a law exam requires thorough reading and understanding. 2. Students should be advised that full understanding of the statutory provisions as well as remembering the respective sections is very important in their answers. 2. (a) Agency: Candidates displays basic understanding of this subject with the exception of some candidates who missed the actual requirement of the question. (b) Agency: Answers in this area are quite satisfactory. (c) Agency Problem question: Most candidates are able to address this question fairly well while displaying good analytical mind in solving the issue in question. The shortcoming, if any, is in the lack of authority (statutory provisions or case laws) which is necessary. 1. There are instances of students confusing between Agency and Contracts, this should be addressed. 1

2 3. (a) Partnership (definition): Most candidates are able to answer this question perfectly. (b) Partnership: Answers are found to be incomplete or lack authority or lack citation of sections. Generally, candidates show a very basic idea of the situation but very few gave precise answers. (c) Partnership problem question: Many candidates display a very good command of the law in this area and are capable of solving the problem accordingly. (d) Negligence: This question is basically on the general rules and basic principles in tort. Candidates show a surface knowledge in this area but at the same time gives an indication that full understanding of the concept of negligence may be lacking. (e) Professional Negligence case based: Most students answer this question with a lot of enthusiasm and understanding. The fact that this case is concerning auditors and corporation may be a factor that the candidates feel most comfortable with. A lot of interest and depth of knowledge is displayed in their answers for this question. 1. On the subject of Professional Negligence, students should be encouraged to do more reading of case laws in order to expose them to real life situations involving torts. Question 4 Part (a) was a case study question pertaining to lifting the veil of incorporation and also touches on liability of present and past members when a company being wound up. In general, the overall understanding is quite pleasant. Indication of good understanding of legal concepts in general. Part (b) was a case study question on restriction(s) to transfer shares provided by an Article Of Association of a private company. Candidates generally were not able to give proper answers. The majority of answers did not display sufficient knowledge. It required candidates to display Candidates must understand the importance of citing statutory provisions and/or case laws to support their arguments or answers. Candidates 2

3 knowledge of section 15(1) of the Companies Act 1965, which state that a private company is one which by its memorandum or articles restrict the right to transfer shares. Part (c) was also a short case study question, which tested the candidates knowledge on the offence on fraudulent trading in the context of governance and ethical issues relating to business. Candidates generally were able to give proper answers. This question on company law contained three (3) parts. will be advised to discuss the law relevant to the issue and apply the law to the facts before drawing out a conclusion. Candidates would have been familiar with the offence of fraudulent trading as it is one of the circumstances in which the courts would lift the veil of incorporation to make those who are parties to such fraudulent trading personally liable for the debts and other liabilities. Question 5 Part (a)(i) (ii) and (iii) required candidates to have knowledge and ability on the law on company charges and the order of priority of such charges in the event of the company becomes insolvent. This question was reasonably well answered. Most of the candidates displayed sufficient knowledge in this area. Part (b) was a statement question on the appointment of receivers on new contracts of a company. The answers to this part were unsatisfactory. Part (c) is a statement question on restraining order made by creditor against a company. This line of questioning is aimed at testing the knowledge of candidates on the arrangement and reconstruction of a company as provided in the Companies Act Answers were too vague and brief. Most answers were not relevant to the question. Candidates who have difficulty in expressing their answers are advised to use shorter sentences and appropriate illustrations to make themselves clearer. Question 6 This was a study case question on company law, which contained two (2) parts, tested the candidates knowledge and application skills in relation to company meetings, resolutions and winding up of companies. Candidates must have a precise understanding of the facts, since facts determine the relevance of 3

4 Part (a) (i) (ii) and (iii) of this question required candidates (a)(i) to display knowledge of the time span within which a newly incorporated company must hold its first annual general meeting (AGM); (a)(ii)to identify the type of resolution required for an alteration of the articles of association as opposed to one for an increase of capital and (a)(iii) on notice of meeting. Majority of the candidates seemed to have no knowledge of the case law and statutory provisions in Companies Act, Part (b)(i) (ii) and (iii) These questions, tests the candidates knowledge on certain basic aspects of winding up of companies. The answers by the candidates clearly potrayed lack of understanding and knowledge on each topics independently. any legal points that will be made later. Candidates must always study across the syllabus to be fully prepared for the examination. Candidates must always try to understand the underlying concepts behind a given topic. Candidates are advised to focus their answers on tackling the particular issues involved, rather than attempting to reiterate everything they know on the general subject-matter of the question 4

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