1. Padma Shipping Ltd was registered in 2018 with an objects clause limited to carrying passengers and goods in ships between ports chosen by the company, together with matters incidental to that business. In 2026 its managing director, acting under a unanimous board resolution and with the written approval of every shareholder, signs a Tk 30m contract with Skyline Builders to construct a luxury hotel on land the company owns, intending to diversify. No change to the memorandum has been made. When the company later runs out of cash, Skyline Builders sues for the contract price. Which statement is correct?

A) The contract is outside the objects clause and is ultra vires, so it is void and cannot be ratified
B) The contract is valid because the unanimous approval of the board and every shareholder amounts to ratification of the managing director's act
C) The contract is voidable only, and it becomes binding if the company has accepted the benefit of any part of the work done by the builders
D) The contract is valid if building the hotel is conducive to the company's goodwill and the directors honestly believed it was in the company's interest

Correct: A complex Memorandum of association and ultra vires

Option A is correct. An act outside the objects in the memorandum is ultra vires and void, and even the unanimous consent of the members cannot validate it. The objects could have been altered first by the statutory procedure. Option B is wrong: ratification by members cannot cure an act the company has no capacity to perform. Option C is wrong: an ultra vires contract is void, not voidable, and acceptance of the benefit does not give it validity. Option D is wrong: good faith or goodwill is not the test of capacity. The question is whether the act falls within the objects.

2. Sattar Ltd is preparing its memorandum for registration as a company limited by shares. The promoters' solicitor has prepared a draft containing the company's name ending in 'Limited', a statement that its registered office will be situated in Dhaka, its objects, the share capital of Tk 2m divided into 20,000 shares of Tk 100, and a list of the persons who will serve as directors for the first three years. A partner of the solicitor reviews it and says that one item does not belong in the memorandum but must instead be in the articles or in the declaration of directors. Which of the following is the item that needs to be removed or relocated?

A) The statement that the registered office will be situated in Bangladesh, since the location is a matter for internal management
B) The names of the directors for the first three years
C) The statement that the liability of the members is limited, since this is a matter for the articles and not for the memorandum
D) The division of the share capital into shares of a fixed amount, since the capital structure is set by the directors after incorporation

Correct: B complex Memorandum of association and ultra vires

Option B is correct. The memorandum states the name, registered office in Bangladesh, objects, limited liability and share capital. Appointment of directors is an internal matter dealt with in the articles. Option A is wrong: the registered office in Bangladesh is a mandatory memorandum clause. Option C is wrong: limited liability must be stated in the memorandum of a company limited by shares. Option D is wrong: the capital clause and its division into shares of fixed amount are memorandum requirements.

3. The articles of Hira Ltd provide that the managing director, Mr Zahid, may borrow on behalf of the company up to Tk 5m only with a prior board resolution. In June, Mr Zahid signs a Tk 4m term-loan agreement with Ideal Bank on the company's behalf, representing that all internal approvals have been obtained. No board resolution exists. The bank's officer had read the articles and the memorandum, which are on the public file, saw that the limit was Tk 5m, and had no reason to doubt the managing director's statement. The company refuses to repay, arguing that the borrowing was unauthorised. Which doctrine most directly assists the bank?

A) Constructive notice, because the bank is deemed to know from the public file that no board resolution had been passed by the directors
B) The ultra vires doctrine, because the borrowing is outside the company's powers and the bank may rely on the board's inherent authority
C) The indoor management rule, since an outsider may assume internal formalities were complied with
D) Lifting the corporate veil, because the managing director controls the company and the loan benefited the controlling shareholders of the company

Correct: C difficult Indoor management and constructive notice

Option C is correct. Under the rule in Royal British Bank v Turquand, a person dealing in good faith with a company may assume that its internal procedures have been followed. Option A is wrong: constructive notice fixes an outsider with the contents of the public documents, not with internal acts such as board resolutions. Option B is wrong: the loan is within the company's capacity, and ultra vires would hurt the bank, not help it. Option D is wrong: lifting the veil concerns misuse of the corporate form and has no bearing on the apparent authority point.

4. The articles of Laila Ltd provide that any dispute between the company and a member arising out of the articles must be referred to arbitration. Aminul, a member since 2019, finds that the board has declared a final dividend payable to all members but has withheld his entitlement for no stated reason. He files a suit in the civil court for payment of the dividend. The company applies for the suit to be stayed in favour of arbitration, relying on the articles. Aminul argues that the articles are a document of the company's internal management that does not bind him. What is the position?

A) The articles have no contractual force between the company and a member, so Aminul is free to sue in the court notwithstanding the clause
B) The articles bind only the directors in their dealings with the company and never the members, so the arbitration clause is of no effect against Aminul
C) The articles bind outsiders such as suppliers and lenders to exactly the same extent as members, so the clause binds Aminul and also third parties
D) The articles bind both as a contract on the matter covered, so the arbitration clause can be enforced

Correct: D complex Articles of association

Option D is correct. The articles operate as a contract between the company and each member in respect of the member's rights as such, and a dividend entitlement is such a right. Option A is wrong: articles do have contractual force as between the company and its members. Option B is wrong: articles bind the members and the company, not only the directors. Option C is wrong: outsiders are not bound by the articles, which is a separate point from the effect on members.

5. Before the incorporation of Meghna Foods Ltd, its promoter, Mr Reza, signed a contract with Rafiq Mills for the purchase of flour worth Tk 2m, describing himself as acting 'for and on behalf of Meghna Foods Ltd, a company to be formed'. The company was incorporated six weeks later, accepted two deliveries of the flour and paid for the first, but the board never passed any resolution about the contract. After the market price fell, the company refuses to pay for the remainder, saying it never agreed. Rafiq Mills sues the company. Which statement reflects the usual position?

A) The company is not bound merely by taking the benefit of the contract made before it existed
B) The company is automatically bound on incorporation because it succeeds to the rights and liabilities of its promoters in all contracts
C) The company is bound if its members pass an ordinary resolution of ratification and confirm the contract at the first general meeting
D) The company is bound because the acceptance and payment for the first delivery is conclusive evidence of an express contract for all deliveries

Correct: A complex Promoters and pre-incorporation contracts

Option A is correct. A company cannot be bound by, and cannot ratify, a contract made on its behalf before it was formed (Kenner v Baxter). It is bound only by a fresh contract made after incorporation. Option B is wrong: a company does not automatically succeed to a promoter's contracts. Option C is wrong: a company cannot ratify a pre-incorporation contract since it did not exist when the contract was made. Option D is wrong: acceptance of benefit does not make the company a party unless there is clear evidence that it intended to make a fresh contract.

6. A prospectus issued by Jamuna Power Ltd, a public company, stated that the company 'has signed an off-take contract with the national grid for the whole output of its plant'. In fact only a non-binding letter of intent existed. Rafiq read the prospectus carefully, applied for 20,000 shares at Tk 100 each on the faith of that statement and was allotted them. Six months later the grid refused to sign any contract and the share price fell to Tk 40. The promoters say that investors are expected to verify statements for themselves. Which statement is correct about Rafiq's position?

A) He has no remedy at all because investors must verify every statement in a prospectus before they subscribe for any shares
B) He may seek rescission or damages for the misstatement, and persons who authorised the issue may be liable
C) He may claim only a refund of the application money from the company, and neither damages nor action against the promoters are available
D) He may claim only if he was a director of the company at the time the prospectus was issued, since only directors can sue on prospectus statements

Correct: B difficult Prospectus and minimum subscription

Option B is correct. A prospectus misstatement can give rise to civil remedies, and under s 146 those who authorised its issue are criminally liable unless they prove the statement was immaterial or they had reasonable grounds to believe it true. Option A is wrong: investors may rely on a prospectus, which carries statutory liability. Option C is wrong: remedies include damages and potentially action against those responsible, not only a refund. Option D is wrong: directorship is not a condition of a claim by a subscriber.

7. Eastern Cables Ltd offered shares to the public. Its prospectus stated a minimum subscription of Tk 20m, to cover the purchase of property, preliminary expenses and repayment of a bridging loan. The offer closed on 30 June with applications for Tk 18m, of which 5% was received in cash. The directors, anxious to start production, want to allot the shares so as to use the money, saying that the shortfall is only 10% and the shortfall will be covered by directors' loans. Which statement is correct?

A) Allotment may proceed because a shortfall of 10% or less is permitted if the directors lend money to the company to cover the difference
B) Allotment may proceed because the 5% cash payment has been received and the minimum subscription is only a guideline for the directors
C) No allotment may be made until the stated minimum is subscribed and 5% of it paid in cash
D) Allotment is barred only because the company has not yet received the certificate of commencement of business from the Registrar

Correct: C complex Prospectus and minimum subscription

Option C is correct. Under s 148(2), no allotment may be made unless the minimum amount stated in the prospectus is raised and at least 5% of that amount is paid in cash. The shortfall bars allotment. Option A is wrong: there is no tolerance for shortfall, and director loans do not count as subscriptions. Option B is wrong: the minimum subscription is mandatory, not a guideline. Option D is wrong: the barrier is the failure to raise the minimum, not the commencement certificate, which is a later stage.

8. Alpha Cement Ltd, a public company with a share capital, has issued a prospectus, received Tk 60m of application money (all banked in its current account at a local microfinance institution), and allotted the shares. Its directors have paid their application and allotment money. The company wishes to start trading and its secretary asks what is needed before it may commence business, and where the application money should have been kept. Which statement is correct?

A) No certificate is needed once shares are allotted, and the application money may be freely used from the date of receipt
B) Only a statement in lieu of prospectus is needed, and the application money may be held in any institution the directors choose
C) A certificate is needed but only from the court, and the application money must be returned to applicants on application
D) A commencement certificate is needed, and application money must stay in a scheduled bank until then

Correct: D complex Formation and commencement of business

Option D is correct. A public company with a share capital that issues a prospectus must obtain the commencement certificate, and money received from applicants must be deposited in a scheduled bank until then. Option A is wrong: a certificate of commencement is required for a public company issuing a prospectus. Option B is wrong: a statement in lieu applies where no prospectus is issued, and the deposit rule requires a scheduled bank. Option C is wrong: the certificate is issued by the Registrar, not by the court, and money is not returnable on application.

9. Ruma Ltd is a public company limited by shares with no prospectus issued, since all its shares were privately placed with 25 persons. Its directors want to commence trading. The secretary says that, as no prospectus was issued, the company can start trading the day after incorporation. A director replies that a different document must be filed before commencement. Which is the correct requirement?

A) A statement in lieu of prospectus and a declaration of directors' share payments must be filed
B) No documents are needed because the commencement certificate is required only for companies that have raised money from the public
C) A prospectus must still be issued, because every public company must invite the public to subscribe before it can start business
D) A resolution of the shareholders approving trading must be filed with the court, which will then issue a commencement order

Correct: A difficult Formation and commencement of business

Option A is correct. A public company with share capital that does not issue a prospectus may obtain the commencement certificate after filing a statement in lieu of prospectus and a declaration that directors' share payments have been made. Option B is wrong: a public company with share capital needs the certificate even without a prospectus. Option C is wrong: a company is not forced to issue a prospectus, and the statement in lieu replaces it. Option D is wrong: the process is through the Registrar and not by a court order.

10. A private company, Orbit Ltd, has 18 members and wishes to change its status. The members want to convert it into a public company so as to widen its shareholder base. They pass a special resolution altering the articles to remove the restrictions that make it a private company. The company secretary asks what must be done after the alteration. Which statement is correct?

A) Nothing further is required, because the company becomes public automatically from the date of the resolution without any filing
B) Within thirty days the company must file with the Registrar either a prospectus or a statement in lieu of prospectus
C) The company must obtain the Registrar's certificate of incorporation afresh because conversion creates a new company
D) The company must wait for six months and then hold a statutory meeting before it may describe itself as a public company

Correct: B complex Alteration of capital and conversion

Option B is correct. On conversion to a public company, the company ceases to be private and within thirty days of the alteration must file a prospectus or statement in lieu of prospectus (s 231). Option A is wrong: a filing is required within thirty days. Option C is wrong: conversion does not create a new company. Option D is wrong: there is no six-month waiting period before conversion takes effect.

11. A public company, Zenith Ltd, has 45 members and a secured loan of Tk 120m from a bank. Its members wish to convert the company into a private company to avoid public company obligations. The shares of the company are listed on a stock exchange. A director says that the members can do this by an ordinary resolution at the next annual general meeting. What is the correct position?

A) An ordinary resolution is sufficient because conversion to private status is a change that does not affect creditors of the company
B) A special resolution is sufficient and no creditor consent is needed because the bank is secured and therefore protected anyway
C) A special resolution is needed, the secured creditor's written consent must be obtained, and the shares must be de-listed
D) Conversion is not permitted at all once the shares of a public company have been listed, whatever the number of members

Correct: C complex Alteration of capital and conversion

Option C is correct. Under s 232 a public company with not more than fifty members may convert by special resolution, but secured creditors' written consent is required and listed shares must be de-listed. Option A is wrong: a special resolution, not an ordinary one, is required, and creditors' consent is a statutory condition. Option B is wrong: secured creditors' written consent is expressly required. Option D is wrong: conversion is permitted subject to the conditions, including de-listing.

12. Gazi Ltd's board wants to raise further capital by issuing 100,000 new Tk 10 shares within the limit of its authorised capital. A director suggests that the shares should be offered first to an outside investor who has already agreed to buy them at a premium. The company has 40 equity shareholders. The company secretary points out the requirements of the Companies Act 1994 on the issue of further shares by a public company. Which is the correct statement of the procedure?

A) The shares may be offered to the outside investor first provided the price is higher than the nominal value of the shares
B) The shares must be offered to the public for a period of at least thirty days before any existing member may be allotted any of them
C) The shares may be allotted to any person the directors choose, because new issues within authorised capital need no member offer
D) The shares must first be offered to existing equity shareholders in proportion, with at least fifteen days to accept

Correct: D difficult Alteration of capital and conversion

Option D is correct. Section 155 requires that further shares be offered to existing equity shareholders pro rata by a notice allowing not less than fifteen days, after which the directors may dispose of the unaccepted shares most beneficially. Option A is wrong: existing shareholders have pre-emption rights unless members decide otherwise. Option B is wrong: there is no requirement of a public offer for thirty days first. Option C is wrong: the directors' power to allot is limited by the pre-emptive offer rule.

13. A promoter, Mr Karim, bought a plot of land for Tk 5m and, before forming Skyline Ltd, arranged for the land to be sold to the company at Tk 8m, without disclosing his purchase price to the company's board or to the shareholders. After the company was formed, the other directors, who are independent, discover this and ask what remedy exists. Which statement is the best statement of the law?

A) As a fiduciary promoter, Mr Karim must account for the Tk 3m secret profit or the company may rescind
B) Mr Karim owes no duty to the company, because it was not in existence when he bought the land, so he may keep the profit
C) The company has no remedy because the sale was made by an independent contract at a price that the board of directors accepted
D) The company may claim only nominal damages because the promoter is not a director and therefore owes no legal duty

Correct: A complex Promoters and pre-incorporation contracts

Option A is correct. A promoter stands in a fiduciary position towards the company and must disclose any profit made on a sale to it. Failure to disclose entitles the company to rescission or to recover the secret profit (Erlanger v New Sombrero Phosphate). Option B is wrong: a promoter's fiduciary duty arises from his role in forming the company, regardless of when it was incorporated. Option C is wrong: the board that accepted the price was not told of the profit, so its acceptance was not informed. Option D is wrong: the remedy is rescission or recovery of the secret profit, not merely nominal damages.

14. Brightwave Ltd's memorandum contains an objects clause permitting it to manufacture and sell electrical appliances. Its members want to add a new object permitting it to import and sell solar panels, and the proposed alteration is not inconsistent with the Act. The managing director says it can be done by a board resolution. The company secretary says the members must act. What does the manual's approach on alteration of the objects and the articles require?

A) A board resolution is enough because the objects are matters for management and the members need not be consulted at all
B) The members must pass a special resolution, and the alteration must be filed with the Registrar as the Act requires
C) An ordinary resolution of the members is enough and no filing is required because the alteration is only an addition
D) The objects cannot be altered after incorporation under any circumstances, because the memorandum is a permanent record

Correct: B complex Memorandum of association and ultra vires

Option B is correct. The memorandum and articles can be altered only by the members, ordinarily by special resolution, within the limits of the Act, and with the required filing. Option A is wrong: alteration of the objects is a matter for the members and not the board. Option C is wrong: a special resolution is required, together with the filing. Option D is wrong: the Act permits alteration subject to prescribed conditions.

15. Sunrise Ltd is being formed as a public company limited by shares. Its promoters, Mr Alam and Ms Begum, have asked their solicitor which matters must appear in the memorandum of association. The solicitor has prepared a draft memorandum and a separate draft of articles for review by the promoters at a meeting held on 4 March at which a bank representative has also asked about the process for appointing directors and the voting rights of shareholders. Which matters must a company limited by shares state in its memorandum? (Select THREE.)

Multiple response
A) The rules for rotation and retirement of the directors
B) The procedure for appointing and removing the managing director
C) The name of the company ending with the word 'Limited'
D) A statement that the liability of the members is limited
E) A statement that the registered office will be situated in Bangladesh

Correct: C, D, E difficult Memorandum of association and ultra vires

Option A is wrong: rotation of directors is an articles matter. Option B is wrong: appointment and removal of the managing director is dealt with in the articles. Option C is correct: the name with 'Limited' is a memorandum requirement. Option D is correct: limited liability is a memorandum clause. Option E is correct: the registered office must be in Bangladesh and this is stated in the memorandum.

16. Moon Ltd's founder, Mr Aziz, is asked by the company's new accountant to summarise the legal character of the articles of association, because the board proposes changes to the way general meetings are called and an investor wants to enforce a right given in the articles. The accountant has noted that the company has adopted the model regulations in Schedule 1 with modifications. Which statements about articles of association are correct? (Select THREE.)

Multiple response
A) They are subordinate to the Companies Act and to the memorandum
B) They can be altered by special resolution subject to the Act and the memorandum
C) They can override the memorandum where the two conflict
D) They need not be registered by any company that is limited by shares
E) They regulate the internal management of the company and its members' rights as members

Correct: A, B, E complex Articles of association

Option A is correct: articles cannot contradict the Act or the memorandum. Option B is correct: alteration by special resolution is allowed within limits. Option C is wrong: the memorandum prevails in the event of a conflict. Option D is wrong: articles are filed on registration, with a company limited by shares adopting or modifying Schedule 1 regulations. Option E is correct: articles deal with the internal management.

17. A new public company, Pioneer Ltd, is being incorporated. The lawyer retained by its promoters lists for them the steps required to form it, which include preparing documents, registration, and commencement of business. The promoters ask which items are part of the process of formation of a public company with share capital. Which of the following are correct? (Select THREE.)

Multiple response
A) Obtaining a certificate of incorporation from the Registrar
B) Filing the memorandum and articles signed by the subscribers with the Registrar
C) Obtaining a licence from the High Court before the memorandum can be registered
D) Holding a statutory meeting within the period prescribed after entitlement to commence business
E) Allotting shares to directors without any statutory conditions as to minimum subscription

Correct: A, B, D complex Formation and commencement of business

Option A is correct: the certificate of incorporation confirms existence as a company. Option B is correct: registration documents are filed with the Registrar. Option C is wrong: no court licence is required for registration. Option D is correct: a public company with share capital holds a statutory meeting within one to six months. Option E is wrong: allotment is subject to the minimum subscription and other conditions.

18. A merchant, Mr Jahid, reads the prospectus of Delta Tech Ltd and wishes to know whether it complies with the Act. The prospectus states the minimum subscription, was delivered to the Registrar 40 days before issue, and carries the written consent of the auditors named in it. The merchant asks a lawyer to explain the rules on prospectuses. Which statements are correct? (Select THREE.)

Multiple response
A) It is an invitation to the public to subscribe for shares or debentures
B) A person who authorised the issue of a prospectus containing an untrue statement can be punished with imprisonment up to two years unless he proves the statement was immaterial or he had reasonable ground to believe it true
C) A prospectus need not state the interest of directors and promoters
D) A private company may issue a prospectus to the public provided it files the statement in lieu
E) A copy must be delivered to the Registrar before publication and the prospectus must not be issued more than ninety days after delivery

Correct: A, B, E difficult Prospectus and minimum subscription

Option A is correct: a prospectus is an invitation to the public. Option B is correct: s 146 imposes liability with the stated defences. Option C is wrong: the nature and extent of interests of directors and promoters must be stated. Option D is wrong: a private company cannot invite the public. Option E is correct: registration before publication and the 90 days rule are required.

19. Directors of Eastern Foods Ltd, a public company, are advised by their lawyer about issuing shares at a time when the company is also considering altering its share capital by various methods. The company's articles authorise alterations. The lawyer identifies the procedures and notices required under the Companies Act 1994. Which statements are correct? (Select THREE.)

Multiple response
A) A company may cancel shares that have not been subscribed or agreed to be subscribed, and so diminish its share capital
B) Cancellation of subscribed and fully paid shares can be done by ordinary resolution without any court
C) Where capital is increased beyond the registered capital, notice of increase must be filed with the Registrar within fifteen days of the resolution
D) Notice of consolidation, conversion or reconversion must be filed within fifteen days
E) A company can sub-divide its shares only with the consent of the Registrar and the court

Correct: A, C, D complex Alteration of capital and conversion

Option A is correct: cancelling unsubscribed shares is permitted under s 53(1)(e). Option B is wrong: cancelling subscribed shares is a reduction of capital requiring special resolution and court confirmation. Option C is correct: notice within 15 days is required. Option D is correct: the same fifteen-day rule applies, with a daily fine for default. Option E is wrong: sub-division is allowed if authorised by the articles and does not need court approval.

20. Ms Farida is a promoter of a new company, Crest Ltd. She enters into a contract with a printer for letterhead on 1 February in the name of 'Crest Ltd', which is incorporated on 20 February. The printer delivers on 25 February. Crest Ltd's board uses the letterhead but passes no resolution about the contract. The printer is unpaid and asks about its rights. Which statements are correct on the pre-incorporation contract rules in the manual? (Select THREE.)

Multiple response
A) The company is not bound merely because it used the letterhead after incorporation
B) The company was not in existence when the contract was made, so it cannot be bound by it
C) The company is bound because it accepted the benefit and ratified the contract by its conduct
D) Ms Farida has an automatic right to be reimbursed by the company for her preliminary expenses
E) The company cannot ratify the contract after incorporation

Correct: A, B, E complex Promoters and pre-incorporation contracts

Option A is correct: mere use of the benefit is not a fresh contract. Option B is correct: a non-existent company cannot be a party. Option C is wrong: conduct is not ratification and acceptance of benefit does not create liability. Option D is wrong: the promoter has no automatic right to recover expenses from the company. Option E is correct: ratification is impossible for a contract the company could not have made (Kenner v Baxter).

21. Skyline Pharma Ltd is a company limited by shares registered in 2015. Its memorandum states objects limited to the manufacture of pharmaceutical products. Its directors, in 2026, committed the company to a long-term property investment unrelated to its objects. A supplier of building materials, a bank which lent for the investment, and a minority shareholder have each asked a lawyer how the constitutional documents bear on their positions. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. An act outside the objects in the memorandum is void even if every member approves it.   Yes

2. A person dealing with a company is deemed to have read its memorandum and articles.   Yes

3. An outsider in good faith may assume that the company's internal requirements have been complied with.   Yes

4. The articles may be altered so as to defeat rights given by the Companies Act.   No

5. The articles bind the company and its members as if each member had signed them.   Yes

Correct: Y, Y, Y, N, Y difficult Memorandum of association and ultra vires

(1) Yes: Yes. An ultra vires act cannot be ratified. (2) Yes: Yes. This is the doctrine of constructive notice of the public documents. (3) Yes: Yes. This is the indoor management rule. (4) No: No. The articles are subordinate to the Act. (5) Yes: Yes. The articles operate as a contract between the company and its members.

22. Eagle Ltd, a company limited by shares, offered shares to the public with a minimum subscription of Tk 30m, which included preliminary expenses, the price of a factory site and repayment of a bank bridging loan. Applications of Tk 31m were received, with 6% of the minimum paid in cash. The company's counsel is reviewing the compliance of the issue with the Companies Act 1994. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Minimum subscription must be stated in the prospectus.   Yes

2. At least 5% of the minimum subscription must be paid in cash before allotment.   Yes

3. The minimum subscription may include preliminary expenses and commissions.   Yes

4. Allotment may proceed even if the minimum has not been raised if directors personally guarantee the shortfall.   No

5. A statutory meeting must be held within one month of the company becoming entitled to commence business.   No

Correct: Y, Y, Y, N, N complex Prospectus and minimum subscription

(1) Yes: Yes. The prospectus must state it. (2) Yes: Yes. Section 148(2). (3) Yes: Yes. The minimum is determined with regard to such items. (4) No: No. Guarantees do not substitute for subscriptions. (5) No: No. It must be held within not less than one month and not more than six months.

23. Hira Trading Ltd is a company whose members wish to make changes to its structure and documents. The managing director has given the board a list of proposals together with the legal basis for each, drawn from the Companies Act 1994, and the board wants to confirm which of them are correct. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. A private company with at least seven members can be converted into a public company by altering its articles.   Yes

2. A public company with not more than fifty members may be converted into a private company by special resolution.   Yes

3. A change of registered office must be notified to the Registrar within 28 days.   Yes

4. A company's name can be changed by the directors alone without any resolution.   No

5. A company's objects can be altered without any resolution of the members.   No

Correct: Y, Y, Y, N, N complex Alteration of capital and conversion

(1) Yes: Yes. Section 231, with filing of a prospectus or statement in lieu within thirty days. (2) Yes: Yes. Section 232, subject to creditor consent and de-listing. (3) Yes: Yes. Notice of the situation of the registered office or any change is filed within 28 days. (4) No: No. A resolution of the members is required. (5) No: No. A resolution of the members is required.

24. Tamanna Foods Ltd is incorporated on 3 January. The promoters ask their solicitor for the latest date by which the notice of situation of the registered office (Form VI) must be filed with the Registrar under section 77.

A) 31 January
B) 14 January, because the notice must be filed within fourteen days of the date on which the Registrar issues the certificate of incorporation to the company
C) 2 February, because the Act allows thirty days from incorporation for the filing of all the documents that follow the issue of the certificate
D) 4 March, because the notice need only be filed together with the first annual return that the company is required to make to the Registrar

Correct: A complex Registration and incorporation documents

Option A is correct. The notice of the situation of the registered office must be filed within 28 days of incorporation or of any change. Twenty-eight days after 3 January is 31 January. Option B is wrong: the period is 28 days. Option C is wrong: 30 days is the wrong period. Option D is wrong: the notice is not tied to the annual return.

25. Mr Kaiser, a chartered accountant, helped the promoters of Padma Plastics Ltd to prepare its memorandum and articles. He is not an advocate and is not named in the articles as a director, manager or secretary. The promoters ask him to sign the declaration of compliance (Form I) under section 25(2). Can he do so?

A) Yes, because any professional engaged in the formation of the company may make the declaration, and his professional qualification is sufficient for the purpose
B) No, as he is neither an advocate nor a named officer
C) Yes, but only if he swears the declaration before a magistrate and pays the stamp duty that is chargeable on an affidavit under the stamp law
D) No, because the declaration of compliance must be signed by every subscriber to the memorandum and cannot be signed by a person acting for them

Correct: B complex Registration and incorporation documents

Option B is correct. The declaration of compliance must be made by an advocate, attorney or pleader entitled to appear before the High Court who was engaged in the formation of the company, or by a person named in the articles as a director, manager or secretary. Option A is wrong: only the persons listed in s 25(2) may sign. Option C is wrong: the declaration need not be sworn or stamped as an affidavit. Option D is wrong: it is signed by a qualified person, not by every subscriber.