CAF-4-BLW-past Papers

Certificate in Accounting and Finance Stage Examination
The Institute of
11 September 2021
Chartered Accountants 3 hours – 100 marks of Pakistan Additional reading time – 15 minutes
Instructions to examinees: (i)

Answer all TEN questions. (ii)
Answer in black pen only.
(iii) Multiple Choice Questions must be answered in answer script only.
–
Q.1 Select the most appropriate answer from the options available for each of the following Multiple
Choice Questions (MCQs). Each MCQ carries ONE mark.
(i)
Kabeer, during his employment with Catfish Jewellers, stole a diamond set worth Rs.
1,000,000. Basheer, the watchman at the shop, came to know about this fact. However,
Basheer agreed not to disclose it to anyone when Kabeer offered to pay Rs. 100,000 to him.
This agreement is:
(a) void (b) valid

(c) voidable at the option of Kabeer (d) voidable at the option of Basheer
(ii)
Ali, Zaid and Haris issued a guarantee to Usman for repayment of a loan taken by Faraz. In the
event of Faraz’s default, they agreed to make payment to the extent of Rs. 22,500, Rs. 36,000
and Rs. 54,000 respectively. If Faraz commits default of Rs. 94,000 then Ali, Zaid and Haris will
be liable to pay:
(a) Rs. 18,800, Rs. 30,080 and Rs. 45,120 respectively

(b) Rs. 20,000, Rs. 20,000 and Rs. 54,000 respectively
(c) Rs. 22,500, Rs. 35,750 and Rs. 35,750 respectively
(d) Rs. 22,500, Rs. 36,000 and Rs. 35,500 respectively
(iii)
On 5 September 2021, Shakeel entered into a contract with Basim, representing Basim Tanners
(BT), for the supply of 1,000 kg of salt for BT’s leather tanning operations by 20 September 2021.
The contract does not specify the place of delivery. Shakeel has addresses of BT’s head office
and all 10 active tanning stations. Shakeel should:
(a) deliver 100 kg of salt to each of BT’s tanning stations

(b) wait for Basim to specify the place where he wants delivery
(c) deliver 1,000 kg of salt to BT’s head office
(d) ask Basim to confirm the place of delivery
(iv) Farah pledged her gold locket worth Rs. 350,000 with a goldsmith and borrowed a sum of Rs.
300,000 from him with a promise to repay it on 1 September 2021. Farah did not pay the
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amount on due date. Goldsmith who was in urgent need of money, sold the locket on 3
September 2021 at prevailing market price of Rs. 250,000.
Which of the following statements is true?
(a) Goldsmith had the right to sell the locket and now Farah has to pay the difference
of Rs. 50,000 in order to settle the debt
(b) Goldsmith had no right to sell the locket without Farah’s prior consent
(c) Goldsmith had no right to sell the locket without sending reasonable notice to
Farah, showing his intention to sell the locket
(d) Goldsmith had the right to sell the locket; however, he cannot claim the
difference of Rs. 50,000 from Farah
(v) On 1 September 2021, Rudderfish Electronics (RE) sent an e-mail to Clingfish Printers (CP)
offering to sell a printing machine for Rs. 100,000 with a condition that the offer must be
accepted by 10 September 2021. On 3 September 2021, CP replied to RE “Do you need full
payment upon delivery or would you accept payment over three months?” RE read the e-mail
but did not reply.
On 8 September 2021, RE sold the machine to Pearlfish Designers (PD).

Subsequently, on 9 September 2021, CP sent an e-mail to RE communicating its
acceptance to the offer with full payment upon delivery.
(a) Contract was executed on 3 September 2021 when CP first replied to RE

(b) There is no contract between RE and CP as the machine was sold on
8 September 2021
(c) Contract executed on 8 September 2021 with PD was voidable at the option of
CP
(d) Contract with CP was executed on 9 September 2021
(vi) A mistake of law:
(a) has same effect as mistake of fact if it relates to mistake of Pakistani law
(b) has same effect as mistake of fact if it relates to mistake of foreign law
(c) has same effect as mistake of fact whether it relates to mistake of Pakistani law
or foreign law
(d) is never treated as a mistake of fact
(vii) Mona asked Athar to act as her agent for the purpose of collecting rent from her shops on
monthly basis and mentioned that due to some financial difficulties, she did not offer any
remuneration. Athar collects monthly rent and deposits it into bank account on the same day
as per Mona’s instructions. However, with regard to August 2021 rent, he did not deposit it into
bank on the same day as he had to rush to attend his cousin’s funeral. While returning home
from funeral at night, he was robbed.
Can Mona recover the amount from Athar?
(a) No, since there is no consideration, there is no agency agreement

(b) No, because Athar is not receiving any remuneration as Mona’s agent
(c) Yes, because Athar did not follow Mona’s instructions
(d) Yes, because Mona always has the right to recover the amount from her agent
(viii) Which of the following statements regarding wagering agreements is NOT true?
(a) Wagering agreements are void

(b) Parties cannot file suit to recover money won under the wagering agreements
(c) Parties to a wagering agreement have no control on the happening of event
(d) Prize competitions involving games of skill are considered as wagering

agreements
(ix) While having dinner at a restaurant, Nadir found a gold coin under his chair which he took into
his custody. Salim, the restaurant owner, demanded Nadir to hand over the gold coin to him.
Which of the following statements is correct?
(a) Nadir should hand over the gold coin to Salim as he would be regarded as a bailee
being the restaurant owner
(b) Nadir should not hand over the gold coin to Salim as Nadir is the pledgee to the
owner of the gold coin
(c) Nadir can keep the gold coin with him as he has become the bailee to the owner
of the gold coin
(d) Nadir can keep the gold coin with him as he has become the agent to the
owner of the gold coin

(x) Which of the following statements is correct regarding continuing guarantee?
(a) A continuing guarantee may be revoked by the surety by sending notice to the
principal debtor
(b) Death of the surety always result in the revocation of continuing guarantee
(c) A continuing guarantee is revoked if the creditor promises to give time to the
principal debtor without surety’s knowledge
(d) In case of revocation of continuing guarantee, the surety is discharged from all
past and future liabilities
(xi) ‘Tort’ can be described as:
(a) restoration of benefit (b) violation of civil law

(c) violation of criminal law (d) judgment of a superior court
(xii) Kamran and Maria entered into a partnership to run a mobile shop. Kamran obtained a loan of Rs.
500,000 in the name of partnership for purchasing 20 mobiles for the shop’s inventory.
However, he used the loan proceeds to pay for his family’s vacation in Bhurban.
Subsequently, the partnership business went bankrupt. In this scenario:
(a) Kamran is severally liable for repayment of loan

(b) Kamran and Maria are jointly liable for repayment of loan
(c) Kamran and Maria are severally liable for repayment of loan
(d) Kamran and Maria are jointly and severally liable for repayment of loan
(xiii) A contract between partners of a firm determining the mutual rights and duties of the partners
may be varied by taking consent of:
(a) all partners of the firm whether express or implied

(b) all partners of the firm only through express agreement
(c) majority partners of the firm whether express or implied
(d) majority partners of the firm only through express agreement
(xiv) A bill of exchange payable in United Kingdom drawn in Bahawalpur on a person resident in
Peshawar shall be considered as:
(a) an inland instrument (b) a foreign instrument

(c) an invalid instrument (d) an illegal instrument
(xv) Nadeem draws a bill of exchange on Bilal which states “Bilal, pay Rs. 100,000 to Sarah’s
successors or order”. The bill of exchange drawn by Nadeem shall be considered to be:
(a) invalid because it does not mention the date by which payment must be made
(b) invalid because the parties indicated in the bill of exchange are not certain
(c) valid because it contains an order to pay
(d) valid since all the essential elements of a negotiable instrument are satisfied
(xvi) The promoters of Blue Whale Limited (BWL) got the certificate of incorporation dated 3
September 2021. They have decided that BWL shall never approach general public for raising
fund and have further decided to commence business from next month. BWL would be required
to file with the registrar:
(a) revised memorandum of association (b) revised articles of association

(c) prospectus (d) statement in lieu of prospectus
(xvii) The annual general meeting (AGM) of Trout Limited (TL) was held on
7 September 2021. Ali Kamal, one of TL’s shareholders, wants a certified copy of AGM
minutes for his record. On submission of his request to TL, he shall be entitled to receive
a certified copy of the minutes:
(a) within 7 days if he makes the request on 12 September 2021

(b) within 7 days if he makes the request on 21 September 2021
(c) within 15 days if he makes the request on 11 September 2021
(d) within 15 days if he makes the request on 15 September 2021 (xviii) Cod Limited (CL) is a
public unlisted company having its registered office and branch office in Karachi and Lahore
respectively. CL is in the process of finalising the location of its upcoming annual general meeting
(AGM).
In this regard, which of the following statements is true?

(a) CL’s AGM has to be held in Karachi

(b) CL’s AGM can be held anywhere in the province of Sindh only
(c) CL’s AGM can be held anywhere in the province of Sindh or Punjab only
(d) CL’s AGM can be held anywhere in Pakistan
(xix) Ahmed holds 50,000 shares in Jellyfish Limited (JL). JL operates six days in a week from Monday
to Saturday. Annual general meeting of JL is scheduled to be held on Monday i.e. 20 September
2021 at 11:00 a.m. in which Ahmed wants to appoint Naeem as proxy. In this regard, he must
have the proxy form delivered to JL by:
(a) Friday, 17 September 2021 at 11:00 a.m. (b) Saturday, 18 September 2021
at 11:00 a.m. (c) Sunday, 19 September 2021 at 11:00 a.m.
(d) Monday, 20 September 2021 at 11:00 a.m.
(xx) Zahid is planning to incorporate a company under the Companies Act, 2017 with the name and
style ‘Herring’, with his own capital. He shall be the sole member and director in the company.
In this regard, which of the following names is in compliance with the Companies Act, 2017?
(a) Herring (SMC) Limited (b) Herring (SMC-Private) Limited (c) Herring (Private) Limited (d) Herring
Limited
(xxi) Akram is the chief financial officer of Snapper House Limited (SHL). As part of its expansion
plan, SHL is in the process of acquiring an office building, owned by Najma who is Akram’s wife,
on rent in a commercial area. SHL asked Najma to provide terms and conditions of the rent
agreement for consideration and necessary approval.
Which of the following statements is correct?
(a) Akram will have to disclose his interest and obtain prior approval of SHL’s board before signing
the rent agreement
(b) SHL can sign the rent agreement and Akram will give an update to SHL’s board in the immediately
next board meeting
(c) SHL can sign rent agreement with prior approval of the chief executive (d) No approval is needed;
however, Akram cannot be involved in the transaction
(xxii) Nominal share capital means the:
(a) amount of share capital fixed by the memorandum or articles of association which must be paid
by the subscribers in order to commence business
(b) face value of the shares issued by the company
(c) maximum amount of share capital as authorised by the memorandum of association
(d) amount of share capital against which shares have been allotted by the company
(xxiii) Sole Fish Limited (SFL) was incorporated on 12 August 2021 as public unlisted company. SFL’s
year-end is 30 September. The management shall have to present SFL’s financial statements
before the company in annual general meeting, without taking extension, latest by:
(a) 12 August 2022 (b) 12 December 2022

(c) 30 December 2022 (d) 28 January 2023 (xxiv) A special
resolution which is passed by members in the annual general meeting and is required to be filed with
the registrar, has to be authenticated by:
(a) a director and chief financial officer

(b) a director or company secretary
(c) chief executive officer and a director
(d) chairman or chief financial officer
(xxv) A prospectus issued by a company can only include a statement claimed to have been made by
an expert if such person:
(a) has not been engaged or interested in the management of the company
(b) has not received any remuneration from the company in preceding three years
(c) is not a close relative of any of the company’s employees

(d) is a promoter of the company
(xxvi) Which of the following companies are required to maintain particulars relating to utilisation of
labour?
(a) Any company engaged in manufacturing or supplying

(b) Any company engaged in production or distribution
(c) Any company engaged in processing or mining
(d) Any company engaged in service or hospitality
(xxvii) Kingfish Limited (KL) holds 5 million shares in Moonfish Limited (ML) and wants to acquire
further 3 million shares in ML. The issued, subscribed and paid-up share capital of ML as at 9
September 2021 is 50 million shares. There is no common director on the boards of both
companies.
In this regard, which of the following statements is correct?
(a) KL needs to obtain approval of its members in general meeting before making
further investment in ML
(b) KL needs to obtain approval of its members in general meeting through special
resolution before making further investment in ML
(c) KL can make further investment in ML if board’s approval is in place
(d) KL does not require any approval before making further investment in ML
(xxviii) A company limited by guarantee means a company in which liability of members is limited, in
the event of its being wound up, by the:
(a) articles of association, to such amount as the members may respectively thereby
undertake to contribute to the liabilities of the company
(b) articles of association, to such amount as the members may respectively thereby
undertake to contribute to the assets of the company
(c) memorandum of association, to such amount as the members may respectively

thereby undertake to contribute to the liabilities of the company
(d) memorandum of association, to such amount as the members may respectively
thereby undertake to contribute to the assets of the company
(xxix) All the payment vouchers are required to be maintained by a company:
(a) for at least 10 years (b) for at least 15 years

(c) for at least 20 years (d) permanently
(xxx) When the chief executive officer of a public unlisted company is not present in Pakistan, then
the annual financial statements of such company shall be signed at least by:
(a) any two directors along with chief financial officer

(b) a director and chief financial officer
(c) any two directors
(d) chairman of the board or a director
–
Q.2 Briefly describe the process of legislation in case of a bill which has been passed by the
National Assembly but rejected by the Senate. (04)
Q.3 (a) Briefly explain five rules regarding performance of reciprocal promises under the
provisions of the Contract Act, 1872. (05)
(b) Effective 1 July 2019, Arowana Power Limited (APL) started purchasing fuel from Sauger Limited (SL).
Up to 31 May 2021, APL did not make any payment to SL due to which late payment
surcharge was invoiced to APL. APL refused to acknowledge the surcharge and asked for
its cancellation but SL never responded. APL stopped purchasing fuel from SL with effect
from 15 June 2021.
In July 2021, APL made two bulk payments equivalent to the cost of fuel purchased
from 1 July 2019 to 15 June 2021 but did not mention the invoices against which the
payments were to be adjusted.
In August 2021, APL came to know that SL had first adjusted the late payment surcharge and balance
amount had been adjusted against cost of fuel. APL demands that SL should adjust the
payments against cost of fuel only and not against the surcharge.
Under the provisions of the Contract Act, 1872 discuss the validity of APL’s demand
and adjustment made by SL. (04)
Q.4 (a) Akmal appointed a farmer Noman as his agent and authorised him to purchase
200 goats and 300 cows from his village and bring them to Hyderabad for sale in the
cattle market. Noman contacted Fahad, a local herdsman, for purchasing the animals.
Fahad informed Noman that he had 200 goats and 250 cows only. However, Fahad offered to sell 150 sheep
at a very low price in place of 50 cows. Noman agreed to the deal and bought 200 goats, 250 cows and 150
sheep on the premise that due to the lower prices, Akmal would earn huge profits on sale of sheep.
Subsequently, he brought all the animals to Hyderabad as required by Akmal.
Under the provisions of the Contract Act, 1872:
(i) discuss whether transaction entered into by Noman is binding on Akmal. (03)
(ii) what would be your conclusion in (i) above if Akmal sells the sheep immediately? (02)
(b) In June 2021, Haroon Publishers (HP) entered into a contract with Salima, an upcoming and promising
author, to publish her first novel. An advance of Rs. 100,000 was paid to Salima who
agreed to share the manuscript in October. HP promised to incur promotional expenses
of Rs. 300,000 in respect of the novel.
In August 2021, Salima suddenly gained popularity as her social media publications went viral. Seeing
an opportunity, HP immediately launched the advertising campaign for the promotion of
Salima’s upcoming novel and secured pre-orders of 50,000 copies of the novel. HP has
estimated to earn profit of Rs. 1,700,000 from the orders.
In September 2021, Salima contacted HP regretting that she will not be able to send
the manuscript and sent back the cheque of Rs. 100,000 received in advance.
Under the Contract Act, 1872 discuss the status of the contract and any possible
remedies available to HP. (05)
Q.5 (a) Under the provisions of the Partnership Act, 1932 list the circumstances in which
sharing of profits of a partnership business does not make a person partner in the firm. (04)
(b) Ibad, engaged in the fishing business, has a good relationship with Aslam, who is a seasoned and well
known banker. Ibad, representing Aslam as his partner, asked Mehmood for the supply of
a fishing trawler for expansion of his fleet of vessels. Mehmood, on the representation of
Ibad, sold the trawler to Ibad on credit.
Subsequently, Ibad defaulted in making payment and Mehmood filed a suit against
Aslam for the recovery of the amount.
Under the provisions of the Partnership Act, 1932 discuss whether Aslam would be
liable to pay the outstanding amount to Mehmood. (04)
Q.6 Bilal owes Rs. 900,000 towards Saad and undertakes to endorse a promissory note in his favour in
order to settle the debt.
Under the Negotiable Instruments Act, 1881 explain to Saad the essentials of a valid endorsement as he wants
to ensure that promissory note is properly endorsed. (04)
Q.7 The extraordinary general meetings of Dolphin Limited, a public company listed on Pakistan
Stock Exchange Limited and its subsidiary Sardines (Guarantee) Limited, a public unlisted company, have
been scheduled to be held on the same day i.e. 13 September 2021 at
9:00 a.m. and 2:00 p.m. respectively in Islamabad.
Under the provisions of the Companies Act, 2017 identify the quorum requirements for both
the companies in the above situation. (06)
Q.8 (a) Mackerel Limited (ML) is a listed company engaged in the business of fish farming.
As part of its expansion plan, ML’s board has decided to invest in poultry and dairy
businesses for which the principal line of business is required to be changed.
Under the provisions of the Companies Act, 2017 describe the prescribed procedure
for changing ML’s principal line of business. (03)
(b) The details of ML’s share capital as at 30 June 2021 are as follows:
Class of ordinary No. of shares Paid-up share capital

Voting rights
shares in million Rs. in million
Class A 50 500 1 vote per share
Class B 30 600 2 votes per share
Class C 20 600 3 votes per share
Saleem Hussain, one of ML’s shareholders, holding 50% shares in class A, has filed an application with
the company requesting for an increase in voting rights of class A
shares, without changing their face value, so that each share of class A would carry
2 votes.
Under the provisions of the Companies Act, 2017:
(i) advise ML’s management regarding Saleem Hussain’s eligibility to demand

increase in voting rights of class A shares and discuss the requisite approvals
required to be sought for getting such change approved. (04)
(ii) discuss the course of action required to be taken by ML on Saleem Hussain’s

application, assuming that his eligibility to demand increase in voting rights is
favourably established in (i) above. (05)
Q.9 Goldfish Limited (GL) is a public unlisted company with paid-up share capital of Rs. 200 million divided
into 20 million ordinary shares of Rs. 10 each.
Following directors were elected in GL’s annual general meeting held on 25 October 2020:
Name Votes casted in favour

Tariq Ali 42 million
Munim Ahmed 28 million
Areeb Khan 21 million
Siddique Ghani 14 million
Gia Ghouri 14 million
Rahim Zaheer 14 million
Fawad Zia 7 million
Zakir Hussain, an existing shareholder of GL, purchased additional 1.5 million shares in GL on 3
September 2021 due to which his shareholding percentage increased to 15%. Zakir
Hussain now demands to have a suitable position on GL’s board.
(a) discuss the validity of Zakir Hussain’s demand. Also list the grounds under which he
may not be elected on GL’s board. (04)
(b) Assuming that Zakir Hussain is eligible to be appointed on GL’s board, state the
procedure to be followed by GL for his appointment. (04)
Q.10 (a) Under the provisions of the Companies Act, 2017 state the restrictions imposed on a
company with regard to declaration of dividend. (05)
(b) Under the Securities Act, 2015 an issuer or offeror of the securities intending to
approach general public for raising funds shall have to submit a prospectus with the
Commission for its approval.
List any four exceptions to the above provision of the Securities Act, 2015. (04)
(THE END)
The Institute of 26 September 2020

Instructions to examinees: (i) Answer all ELEVEN questions. (ii) Answer using black pen
only.
Q.1 Select the most appropriate answer from the options available for each of the following
Multiple Choice Questions (MCQs). Each MCQ carries ONE mark.
(i) Tipu provided a loan to Wasi against the guarantees of Iqbal, Meher and Baqir. It was agreed that in
the event of Wasi’s default, Iqbal, Meher and Baqir would
contribute to the extent of Rs. 5,000, Rs. 8,000 and Rs. 12,000 respectively. Wasi has
defaulted to the extent of Rs. 15,000.
(a) All the three sureties are liable to pay Rs. 5,000 each
(b) Iqbal is liable for Rs. 3,000, Meher for Rs. 4,800 and Baqir for Rs. 7,200
(c) Iqbal is liable for Rs. 5,000, Meher for Rs. 8,000 and Baqir for Rs. 2,000
(d) Iqbal and Meher are liable for Rs. 1,500 each and Baqir is liable
for Rs. 12,000
(ii) The term ‘Quid pro quo’ means:
(a) something in return (b) something important (c) something of value (d) something relevant
(iii) To constitute a wager, which of the following elements should NOT be present
in the agreement?
(a) Uncertain event

(b) Each party must be in a win or lose situation
(c) Neither party should have any control over the event (d)
There should be a promise to pay money only
(iv) Ibrahim directs his attorney to acquire a piece of land in Hyderabad by employing an
estate agent for the purpose. Attorney appoints Bukhari, an estate agent, for the
acquisition of the land. Bukhari in this case is a:
(a) general agent (b) co-agent (c) sub-agent (d) pretended agent
(v) Saleem owns 20 acres of land in district Badin, part of which is woodland. He sells the land to
Malik Bashir with a covenant in the contract that he will not cut down the trees. Six months
later, Malik Bashir prepares to cut down the trees. What remedy can Saleem seek?
(a) Damages (b) Specific performance (c) Injunction (d) Rescission
(vi) The banker wrongfully dishonoured the cheque issued by Mir Atif, a renowned
trader, to one of his major suppliers. Mir Atif in this case is entitled to claim:
(a) special damages (b) liquidated damages

(c) nominal damages (d) exemplary damages
(vii) Which of the following is NOT considered to be a source of law in Pakistan?
(a) Legislation
(b) Sharia
(c) Precedent
(d) International treaties and conventions
(viii) Which of the following statements is correct under the Contract Act, 1872?
(a) Fraud means the suggestion, as a fact of that which is not true, by one who
believes it to be true
(b) A proposal is revoked by the death of the acceptor
(c) An agreement by Ali, who deals in oils, to sell hundred tons of oil to Vakeel is a
void agreement
(d) A pawnee may retain the goods pledged only for the payment of the debt
(ix) Paramount Furniture wrote a letter to Baber Naeem stating, “We have received
exquisite bedside tables which we will sell to you at a very favourable price.”
Which of the following statements with respect to the above is correct?
(a) The letter is an offer to sell

(b) The letter lacks the essential element of an offer
(c) The letter contains a valid offer which will terminate within a reasonable time
(d) An offer made by a letter must be accepted by a letter
(x) Akram, Minhas and Bali are partners, Bali is a sleeping partner. Bali retires without giving
public notice of his retirement.
Is Bali liable for subsequent debts incurred by Akram and
Minhas?
(a) Bali is liable only to the extent of his estate

(b) Bali is fully liable, as he did not give public notice of his retirement
(c) Bali is liable for the amount left after contribution from Akram and Minhas
(d) Bali is not liable as he was a sleeping partner
(xi) Sohail and Fida purchased a yacht, renovated it and sold it to Qasim for Rs. 10 million. They
shared the proceeds equally. Both Sohail and Fida are:
(a) co-owners (b) co-venturers

(c) partners (d) mutual agents
(xii) Under the provisions of the Partnership Act, 1932, which of the following statements is NOT
correct?
(a) The relation of partnership arises from contract and not from status
(b) Goodwill of the business is regarded as the property of the firm
(c) Nature of business can be changed with the consent of majority of the partners
(d) A dormant partner has a right to inspect and copy any of the books of the firm
(xiii) Which of the following may be regarded as a valid promissory note (duly signed) under the
provisions of the Negotiable Instruments Act, 1881?
(a) I promise to pay Zubair on demand Rs. 6,000 at my convenience

(b) I promise to pay Ali or order Rs. 6,000 with interest charged at quarterly rests
(c) I promise to pay you or your successors on demand Rs. 11,000

(d) I promise to pay Khalid or order Rs. 12,000 six days after Saad’s death (xiv)
While drawing a bill of exchange, a person whose name is given in addition to
the drawee to be resorted to when the requirement arises, is called:
(a) drawer
(b) acceptor
(c) drawee in case of need
(d) acceptor for honour
(xv) Under the provisions of the Negotiable Instruments Act, 1881, which of the following statements
is NOT correct?
(a) Where a cheque is crossed specially the banker on whom it is drawn shall not pay it to his
agent for collection
(b) It is a presumption of law that every holder of a cheque is a holder in due course
(c) Where a cheque contains the name of a banker without two parallel transverse lines, it is
a valid special crossing
(d) Where a generally crossed cheque bears across its face the addition of the words
‘account payee’, it shall cease to be negotiable
(xvi) Mega Stars Limited (MSL) shall be deemed to be the holding company of Little Stars
(Private) Limited (LSPL) if:
(a) MSL owns 50% shares of LSPL and by virtue of such investment, MSL has nominated three
directors out of six directors on board of LSPL
(b) MSL and one of its associated companies own 45% and 10% voting shares of
LSPL respectively
(c) MSL and one of its associated companies own 30% and 35% voting securities
of LSPL and by virtue of such investments, both companies have nominated two
directors each out of six directors on the board of LSPL
(d) MSL owns 5% voting shares in LSPL; however, LSPL’s other shareholders
having 60% voting shares have empowered MSL to appoint four directors out
of six directors of LSPL
(xvii) Which of the following information does NOT form part of ‘Certificate of incorporation’?
(a) The name and registration number of the company

(b) The date of commencement of business
(c) Whether it is a private or a public company
(d) Whether it is a limited or unlimited company
(xviii) A prospectus is required to be duly signed by:
(a) the chief executive and a director

(b) every person who is named therein as a director or proposed director
(c) the chief executive, a director and the chief financial officer
(d) every director including the chief executive
(xix) Candid Oils Limited has class A and class B ordinary shares of Rs. 10 each, carrying voting right of
one and two votes per share respectively. A special resolution was passed to bring the voting
rights of class B shareholders equal to class A shareholders. However, two shareholders of class B
are not satisfied with this resolution and intends to apply for its cancellation. They can do so if:
(a) they hold more than 10% shares of class B and apply to the Court
(b) they hold 10% or more shares of class B and apply to the Court
(c) they hold at least 10% shares of class B and apply to the Commission
(d) they hold at least 20% shares of class B and apply to the Commission
(xx) Minimum subscription is:
(a) the total authorised share capital of a company as stated in the prospectus
(b) the whole amount of the share capital other than that issued or agreed to be
issued as paid up otherwise than in cash, if no amount of minimum
subscription is so fixed
(c) the whole amount of the subscription received from applicants, if no amount of
minimum subscription is so fixed
(d) the amount to be generated from public for which prospectus is issued
(xxi) Toys & Toys Limited (TTL) resolved to shift its registered office from Gujranwala to Lahore i.e.
within the province of Punjab. For this purpose, TTL must:
(a) obtain consent of creditors who are entitled to object and obtain prior approval of
the Commission
(b) give notice of change to the Commission within a period of fifteen days after the
change
(c) obtain approval of the registrar prior to shifting of its registered office
(d) give notice of change in situation of the registered office to the registrar within a
period of fifteen days after the date of change
(xxii) Anas, Asadullah, Ameen and Arqam are founder partners of Fast Movers Forwarders (FMF).
In January 2020, all partners had purchased shares of Quality Tiles Limited (QTL), a listed
company. In June 2020, they contested the election of directors of QTL and got elected as
directors out of seven positions. Being majority directors of QTL, they cancelled the contract
of existing logistics service provider and awarded the contract to FMF.
Whether the aforesaid contract is valid?
(a) Yes, because it is approved by the majority of the directors and the board is fully
empowered to manage the affairs of the company
(b) No, the contract need to be approved by majority of such directors who are not
interested in the said contract
(c) No, the contract must be laid before the general meeting for approval
(d) No, the contract must be approved by the general meeting as well as by the
Commission
(xxiii) Abid is the chairman of the board of directors of Innovative Technologies Limited (ITL) and is
present in ITL’s 25th Annual General Meeting (AGM). However, due to difference of opinion
with ITL’s chief executive on few agenda items, Abid is unwilling to chair the AGM. In such a
situation:
(a) the chief executive shall have to preside the AGM as chairman
(b) the members present in the AGM shall choose one of the members to be the
chairman
(c) the member holding highest number of shares and present shall preside the AGM as
chairman
(d) one of the directors present may be elected to be the chairman of the said AGM
(xxiv) Casual vacancy on the board of directors of a listed company must be filled:
(a) by calling an extra ordinary general meeting within ninety days from the date of
such vacancy
(b) by the directors not later than ninety days from the date of such vacancy
(c) by the directors or the members in general meeting, as the case may be, in accordance
with the provisions contained in the articles of association
(d) by the members in the upcoming annual general meeting (xxv) Afridi, Bader,
Dawood and Iffat owns 45%, 25%, 10% and 5% shares respectively of Splendid Mills
Limited (SML), a public unlisted company. They were elected as SML’s director in the
last election of directors as unopposed. The board appointed Anas as the chief
executive of SML; however, due to Anas’s unsatisfactory performance, the board has
decided to remove him in the next board of directors meeting.
Anas will stand removed as chief executive if:

(a) directors having more than 50% shareholdings in SML’s share capital will vote
against him
(b) directors having more than 75% shareholdings in SML’s share capital will vote
against him
(c) any four directors will vote against him
(d) all the directors will vote against him
(xxvi) Under the provisions of the Companies Act, 2017, the composition of a company’s
board shall be deemed to be controlled by another company if that other company by
exercise of power exercisable by it at its discretion can:
(a) appoint all or a majority of the directors

(b) appoint or remove majority of the directors
(c) appoint or remove all or a majority of the directors
(d) appoint majority of the directors
(xxvii) Which of the following statements is correct regarding chairman of a listed company?
(a) Chairman must be from amongst the non-executive directors

(b) Chairman can only be removed by passing a special resolution
(c) Chairman must be from amongst the independent director
(d) Chairman is appointed by the shareholders within fourteen days from the date of
election of directors
(xxviii) Which of the following officers are mandatorily required to be appointed to manage
the affairs of a listed company under the provisions of the Companies Act, 2017?
(a) Chairman, chief executive, company secretary, sole purchase agent

(b) Chairman, chief executive, company secretary, share registrar
(c) Chairman, chief executive, company secretary, chief financial officer
(d) Chairman, chief executive, company secretary, chief financial officer, head of
audit
(xxix) Which of the following clauses is NOT covered in Table A of the First Schedule?
(a) Proceedings of directors

(b) Votes of members
(c) Instrument of proxy
(d) Annual return
(xxx) Any dividend payable in cash by a listed company may be paid:
(a) only through electronic mode directly into the bank account designated by the
entitled shareholders
(b) by cross cheques issued in the name of the entitled shareholders
(c) by dividend warrant at the registered address of entitled shareholders
(d) in any of the above manner at the discretion of the distributing company
Q.2 Briefly describe how an Ordinance is promulgated in Pakistan and what is the effect of
such
Ordinance. (04)
Q.3 (a) Under the provisions of the Contract Act, 1872 list any three circumstances in which
a
party whose consent was obtained by misrepresentation cannot rescind the contract. (03)
(b) Sarya Traders (ST) agreed to supply building materials to Khwaja Contractors (KC) on 10 September
2020 for the construction of a charitable hospital in District Malir.
However, on due date, ST failed to fulfil their obligation.
Under the provisions of the Contract Act, 1872 explain the rights available to KC
under the above situation. Assume time was the essence of the contract. (03)
(c) What would be your answer in (b) above if KC had to procure building material from
another supplier at a price higher than the price agreed with ST and also had to pay a
penalty of Rs. 50,000 to the owner of the hospital for construction delay? (03)
Q.4 (a) Under the provisions of the Contract Act, 1872 list the essentials of a valid acceptance. (04)
(b) Sulman’s son was missing. Mehmood, one of the bodyguards of Sulman, volunteered to find
Sulman’s son. Meanwhile, Sulman gave an advertisement in the newspaper announcing an award
of Rs. 25,000 to anyone who finds the missing boy. Mehmood found the boy and brought him
home. Sulman refused to pay the reward and
Mehmood filed a suit against him.
Under the provisions of the Contract Act, 1872 briefly describe whether Mehmood is
entitled to the reward. (02)
(c) Mohsin and Jaleel jointly borrowed a sum of Rs. 300,000 from Muslim and Munaf jointly. On due
date, Mohsin and Jaleel defaulted in making the payment. Munaf, without Muslim’s knowledge,
filed a suit against Mohsin and Jaleel for the recovery of the amount due.
Under the provisions of the Contract Act, 1872 briefly describe whether Munaf would
succeed in his case. (02)
Q.5 (a) Under the provisions of the Partnership Act, 1932 what are the general duties of a
partner which cannot be altered by an agreement amongst themselves? (03)
(b) Saeed, Mona and Burhan are engaged in a partnership business. On 26 March 2019, they admitted
Laila, on her seventeenth birthday, to the benefits of partnership. Laila is Mona’s niece. On
20 April 2020, Laila became aware of her admittance to the benefits of partnership. On
acquiring the knowledge, she immediately gave notice to
Saeed, Mona and Burhan that she intends to be their partner.
Under the provisions of the Partnership Act, 1932 discuss whether Laila would be regarded as a partner
in the firm with effect from the date of her notice. i.e.
20 April 2020. Also describe Laila’s liability with regard to firm’s debts once she
becomes a partner. (04)
Q.6 (a) Under the provisions of the Negotiable Instruments Act, 1881 what would be the
effect(s) of the words ‘Not negotiable’ on a cheque crossed generally? (03)
(b) Mujahid bought readymade garments worth Rs. 600,000 from Shoaib on credit. The amount is
payable on 25 December 2020. Mujahid wants to issue a negotiable instrument in
satisfaction of his debt to Shoaib without involving a third party for the payment.
Under the provisions of the Negotiable Instruments Act, 1881 identify the type of
negotiable instrument which Mujahid may issue to Shoaib in satisfaction of his debt.
Also prepare a draft of the said instrument. (04)
(You may assume necessary details for the preparation of the negotiable instrument)
Q.7 A group of persons intends to form a limited liability company, with the objective to provide research
related services to pharmaceutical companies. In this respect, one of the promoters proposed
‘Pharma Research Authority’ as a name of the proposed company which was liked by all the
promoters.
Under the provisions of the Companies Act, 2017 comment on the validity of the name proposed by the
promoters and suggest how they can overcome the deficiencies, if any, in it. (06)
Q.8 (a) The directors of Jhelum Limited (JL) intends to make a public offer of its securities
and are in the process of preparing the prospectus. They wish to include a statement made by an
expert in JL’s prospectus.
Under the provisions of the Securities Act, 2015 advise the directors about:
(i) the matters that must be considered before including the statement made by an
expert in JL’s prospectus. (02)
(ii) the conditions that must be complied with before issuing, circulating or
publishing JL’s prospectus containing the expert’s statement. (02)
(b) Explain the term ‘shelf registration’ in the context of a prospectus as defined in the
Securities Act, 2015. (02)
Q.9 On 26 September 2020, the board of directors of Duck Fertilizers Limited (DFL), a public unlisted company,
in its recent board meeting has approved a short term loan to Kitten Limited, one of the associated companies,
to meet its working capital requirement, for which shareholders’ approval is required. DFL’s annual general
meeting is scheduled to be held in March 2021.
(a) briefly discuss the options available to DFL for obtaining shareholders’ approval. (03)
(b) state the procedure(s) to be followed for obtaining the approval in each option
identified in (a) above. (Ignore procedures relating to voting) (06)
Q.10 Election of directors of Excellent Technologies Limited (ETL), a listed company, is scheduled to be
held on 15 October 2020. The board of directors has requested Mohsin, one of the leading
engineers, to contest the upcoming election as non-executive director for adding value to the
board.
Before responding to the offer of ETL’s board, Mohsin has sought your advice on the following concerns:
(i) Since he has no relationship with ETL either pecuniary or otherwise, can he contest
the election as non-executive director?
(ii) Would he be subjected to unforeseen liability that may arise due to adverse action of other
directors?
Under the provisions of the Companies Act, 2017, advise Mohsin with regard to the above
concerns. (06)
Q.11 (a) Naseer, a non-executive director of Oliver Travels Limited (OTL), while reviewing
details of investments made by OTL, has shown his concerns on the following shares that
are not held in the name of OTL:
(i) 500 shares in Pak Travels (Private) Limited (PTPL) are held in the name of
Rahim who is an employee of OTL. PTPL is a wholly owned subsidiary of
OTL. (02)
(ii) 5,000 shares of Tours & Tours (Private) Limited (TTPL) are held in the name of Sami,
who is a non-executive director in TTPL by virtue of OTL’s nomination.
OTL owns 30% voting shares in TTPL. (02)
Under the provisions of the Companies Act, 2017 briefly explain the possible reasons
for holding investment of OTL in the name of Rahim and Sami.
(b) Under the provisions of the Companies Act, 2017 briefly discuss:
(i) the time frame within which quarterly financial statements should be prepared
and the requirement, if any, for its review (02)
(ii) the filing requirement of the quarterly financial statements. (02)
(THE END)

Chartered Accountants 3 hours – 100 marks
of Pakistan Additional reading time – 15 minutes Business Law
Q.1 (a) Briefly describe the composition of Federal Shariat Court. (03)
(b) What do you understand by ‘Persuasive precedent’ and ‘Declaratory precedent’? (02)
Q.2 (a) Fauzia is working as a sales girl for a pottery store, owned by Mirza Baig, in a famous mall. Fauzia,
in the absence of Mirza Baig, often displays her own pottery items on the shelves and uses
her employer’s time, resources and facilities to sell her own items.
Recently, on a surprise visit to the store, Mirza Baig caught Fauzia selling her own items in the store. Upon
investigation, it was also revealed that on certain instances Fauzia had sold Mirza Baig’s
pottery wares at a higher rate than recommended and pocketed the difference.
Under the provisions of the Contract Act, 1872 identify the nature of contractual
relationship between Fauzia and Mirza Baig. Discuss the duties breached by Fauzia and the rights
available to Mirza Baig under the above circumstances. (05)
(b) Under the provisions of the Contract Act, 1872 define pledge. Also describe the
conditions in which a pledge made by a non-owner is considered to be a valid pledge. (05)
Q.3 Respond to the following scenarios, under the provisions of the Contract Act, 1872:
(a) Shoaib, aged 15, is the son of a billionaire businessman, Ijaz Munsif. Last month Shoaib drove his
father’s 2018 Model BMW to a vintage car exhibition arranged by Volkswagon Club of
Pakistan. At the exhibition he saw a vintage Mercedes-Benz and entered into a contract with
the seller for the purchase of the car.
The seller, knowing Ijaz Munsif’s status, delivered the car to Shoaib at his house. The seller requested for
payment for the car but Shoaib refused to pay. The seller is now requesting for full payment
by Ijaz Munsif. Discuss whether the seller would succeed in
recovering the payment from Shoaib or Ijaz Munsif. (05)
(b) Haroon was engaged to be married to Ghazala. Haroon wanted to establish his own business and
therefore he entered into a contract with Ghazala for providing him all her jewellery and
apartment by way of a gift and in return Haroon agreed to give her a small share in business
profit. After some time, Ghazala filed a suit against Haroon, requesting for setting aside the
gift deed as it was not made with her free will. Discuss
whether Ghazala would succeed in her contention. (04)
(c) Sultan bought electronic appliances worth Rs. 700,000 from Zameer on thirty days’
credit. At the time of purchase, Sultan knew that he was in insolvent circumstances.
Discuss the validity of the contract. (03)
(d) Majid and Soomro went to a money lender. Majid said to the money lender, ‘Let Soomro have a loan of Rs.
50,000, I ensure that you will be paid’. Identify and describe the type of contract and state Majid’s
responsibility in the contract. (03)
Q.4 (a) Under the provisions of the Partnership Act, 1932 state the mandatory duties of
partners which cannot be modified by an agreement amongst them. (03)
(b) Masoom, Rahul and Naila are partners in a trading firm. In 2016, they borrowed Rs. 500,000 from
Ishtiaq for purchasing a shop in Multan. The loan was agreed to be repaid in two years’ time.
However, due to financial crises the loan could not be
re-paid in time. For the purpose of settling the loan, Ishtiaq has offered Naila to admit his
seventeen-year-old son Muneer to the partnership business.
Under the provisions of the Partnership Act, 1932 discuss whether Muneer can be
admitted to the partnership business. State Muneer’s rights and liabilities if he is so
admitted. (04)
(c) Aftab, Rehan and Bali were partners in a law firm. The partnership deed, among other things,
provided that the profits or losses of the firm would be shared equally among the partners. The firm
continued its business for many years with Aftab receiving fifty percent share in the net profit and
Rehan and Bali each sharing twenty-five percent of the net profit. Rehan and Bali never objected to
this arrangement. Later on, partners developed some differences and Rehan and Bali filed a suit
against Aftab for the recovery of their share in profits on the basis of partnership deed.
Under the provisions of the Partnership Act, 1932 discuss whether Aftab would
succeed in defending the suit filed against him by Rehan and Bali. (03)
Q.5 (a) Respond to the following independent situations, under the provisions of the
Negotiable Instruments Act, 1881:
(i) Talat Mir, acting within the scope of his authority as an agent, draws a bill upon
his principal, Mirza Nadir. Discuss what kind of a negotiable instrument it may be
regarded. (03)
(ii) Samad drew a cheque which was payable to ‘Munaf or order’. Saleem after
forging Munaf’s endorsement on the cheque received payment from the banker.
Discuss whether the banker would be liable on the cheque to Samad. (02)
(b) Under the provisions of the Negotiable Instruments Act, 1881 briefly describe:
(i) When an acceptance is said to be qualified (03)

(ii) Payment in due course (02)
Q.6 (a) Under the provisions of the Companies Act, 2017 discuss how a person may become a
member of the company. (03)
(b) The Registrar, after registering the memorandum and articles of association, has issued the certificate
of incorporation to Shahbaz Limited, a company with an authorized share capital of Rs. 300
million.
Under the Companies Act, 2017 briefly describe the effects of such registration. (05)
Q.7 Respond to the following scenarios, under the provisions of the Companies Act, 2017:
(a) On 31 August 2019, Easy Life Limited (ELL) paid the last installment of its long-term
finance which was obtained from a commercial bank against the mortgage of factory building.
Briefly describe the duties of both ELL and the Registrar for the release of mortgage
after the payment. (04)
(b) Fancy Works Limited (FWL) is in process of finalizing the prerequisites of holding its
first Annual General Meeting (AGM) to be held on 31 October 2019.
(i) Advise FWL about the matters relating to proxies which must be included in the
notice of AGM. (02)
(ii) Arbaz Limited (AL) is a member of FWL. How would AL represent itself in the
AGM? (02)
(c) The Board of Directors of Hassam Textiles Limited (HTL) is not satisfied with the performance of its chief
executive officer (CEO) and wants to remove him from his office before the expiry of his term on 31 August
2020.
Briefly explain the options available to HTL for removal of CEO under the above
situation. (02)
Q.8 (a) Kalaam Limited (KL) is considering the following options to invest its excess funds:
(i) Acquire 8% shareholdings in Lighter Oil Limited (LOL) for Rs. 120 million.
LOL is a growing company and is expected to fetch higher returns in futures.
(ii) Grant a loan of Rs. 100 million to Monsoon (Private) Limited (MPL) for
launching a new product. The loan would carry interest at the rate prevailing in the market.
KL currently holds 25% of MPL’s paid-up capital.
Under the provisions of the Companies Act, 2017 specify the condition(s) which KL
must fulfill before opting for any of the above investment options. (07)
(b) Faraz Limited (FL) is considering to enter into a contract with Bari Limited (BL) for the construction of
its new manufacturing facility. The Board of Directors of FL has authorized Hasan Ali, an
executive director, to negotiate the final price with BL. Sara Ali, who is a chief executive in
BL, is the spouse of Hasan Ali.
In view of the provisions of the Companies Act, 2017 briefly explain the
responsibilities of Hasan Ali towards FL under the above circumstances. (05)
Q.9 Under the provisions of the Companies Act, 2017 briefly explain the exception(s) to the following general
rules:
(a) No public company shall give financial assistance to anyone whether directly or
indirectly for the purchase of its own shares. (03)
(b) No subsidiary company shall, either by itself or through its nominees, hold any shares
in its holding company. (02)
(c) Companies can commence the business only after obtaining certificate of
commencement of business from the registrar. (02)
Q.10 (a) Zeeshan Limited (ZL) has recently acquired the majority shareholdings in Ghaffar Limited (GL). ZL
has decided to replace the existing auditor of GL in the next annual general meeting and has
recommended to appoint Javed and Company, Chartered
Accountants, as GL’s auditor for the next year.
Under the provisions of the Companies Act, 2017 explain the procedure(s) to be followed and formalities
to be complied with for the appointment of Javed and Company as the auditor of GL. Also
explain the rights of the retiring auditor in this
regard. (09)
(b) Under the provisions of the Companies Act, 2017 explain the term ‘Independent
director’. Discuss the provisions relating to the payment of remuneration to any of the
directors for attending the board meeting and performing extra services. (04)
(THE END)

Q.1 Specify Pakistan’s system of government and identify Senate’s role in the legislation
process. (05)
Q.2 (a) Mughal and Dawood are trading in rice. Dawood entered into a contract with Mughal for the
purchase of 50 tons of rice. Dawood had private information of change in prices which would
have affected Mughal’s willingness to enter into the contract. When Mughal, through his
own resources, came to know about the prices, he accused Dawood of fraud and repudiated
the contract.
Under the provisions of the Contract Act, 1872 explain whether Mughal is justified in
repudiating the contract. (04)
(b) Under the provisions of the Contract Act, 1872:
(i) List any five circumstances in which the parties to the contract are not absolved
from the performance of their contractual obligations on the ground of
supervening impossibility. (05)
(ii) Briefly describe the conditions in which a pledge made by a mercantile agent is
considered to be a valid pledge. (03)
(c) Zubair agrees to construct a bungalow for Ubaid for Rs. 20 million on the condition
that payment will only be made after Muneer, an architect, certifies that the bungalow has
been constructed in accordance with the layout plan.
Under the provisions of the Contract Act, 1872 describe the nature and validity of the
above contract. (02)
Q.3 (a) In view of the provisions of the Negotiable Instruments Act, 1881 comment on the type and
validity of each of the following instruments signed by Rahul:
(i) Nauman please pay to Mahreen Rs. 100,000. (ii) Nauman, I shall be highly obliged if you
make it convenient to pay Rs. 100,000 to Mahreen.
(iii) I acknowledge myself to be indebted to Nauman in Rs. 100,000 to be paid on demand, for value
received.
(iv) I promise to pay Mahreen or order Rs. 100,000 six days after Nauman’s death. (04)
(b) Under the provisions of the Negotiable Instruments Act, 1881 discuss the effect(s) of
the words ‘Not negotiable’ on a cheque crossed specially. (03)
(c) Under the provisions of the Negotiable Instruments Act, 1881 calculate the maturity of the
instrument in each of the following cases:
(i) A bill of exchange dated 30 January 2018 is made payable at one month after date.
(ii) A promissory note dated 6 August 2018 is made payable 15 days after date.
(iii)A bill of exchange dated 30 August 2018 is made payable three months after
date. Assume the date on which the instrument is at maturity is Sunday. (03)
Q.4 (a) Mujeeb obtained a generator on lease for a period of six years from Munaf at an annual rent of
Rs. 120,000. Fareed executed a contract of guarantee in favour of Munaf guaranteeing due
payment of rent by Mujeeb. In the third year, Mujeeb defaulted in payment. Munaf sued
Fareed and got a decree. Fareed, thereafter, gave a notice to Munaf revoking his guarantee
for the remaining period of lease.
Under the provisions of the Contract Act, 1872 identify the nature of Fareed’s
guarantee and explain whether Fareed would be discharged under the above
circumstances. (04)
(b) On 3 September 2018 Saleem offered, by a letter, to sell his laptop to Ghazi for
Rs. 50,000. Ghazi received the letter on 5 September 2018.
On 6 September 2018 Ghazi posted the letter of acceptance to Saleem. The letter reached Saleem on 8
September 2018.
Saleem wrote a letter of revocation of his offer and posted it to Ghazi on 5 September 2018. The letter reached
Ghazi on 7 September 2018. Required:
Under the provisions of the Contract Act, 1872 briefly describe:
(i) When the communication of the offer and acceptance and the revocation of the
offer was completed as against Saleem and Ghazi under the above
circumstances. (2.5)
(ii) Whether a binding contract was created between Saleem and Ghazi. (2.5)
(c) On 1 July 2018 Basit agreed to buy 500 grams of silver from Taimure after two
months at a price of Rs. 65 per gram. On the due date the price of silver was
Rs. 62 per gram.
Under the provisions of the Contract Act, 1872 discuss the validity of the above contract if both Basit and
Taimure had an intention to settle the transaction by paying the difference between the
contract price and the market price without making any
delivery. (02)
Q.5 (a) Taqi, Saqib and Abrar are partners in a trading firm. By an agreement among themselves they
decided that no partner shall have the authority to buy or sell goods beyond the limit of Rs.
20,000 without the consent of other partners. Ignorant of this restriction, Wajid sold goods
worth Rs. 45,000 to Saqib who did not consult with the other partners.
In view of the provisions of the Partnership Act, 1932 explain whether the firm and
its partners are liable to Wajid under the above circumstances. (04)
(b) Bader and Yaseen established a distribution agency for supplying low cost medicines to hospitals.
Yaseen, by way of a verbal agreement, allowed the agency to use his ancestral land for the business
of the agency. Bader purchased a delivery van in his own name with partnership money. Bader
wants to repay the amount to the partnership and therefore a receivable has been recorded in the
partnership books.
Under the provisions of the Partnership Act, 1932 describe whether the above assets
would be considered to be the partnership property. (04)
(c) The sharing of profit is a prima facie evidence of partnership. Under the provisions of
the Partnership Act, 1932 list any four circumstances in which a non-partner could
benefit from the profits of a partnership. (02)
Q.6 (a) Under the provisions of the Companies Act, 2017 briefly describe the term ‘Special
resolution’. (04)
(b) Saga Limited (SL), a listed company, has two classes of ordinary shares i.e. Class A and Class B. In order
to attract foreign investors, the directors intend to issue a new class of ordinary shares i.e.
Class C, with no voting rights. Currently SL’s memorandum and articles of association do not
contain such class of shares.
Under the provisions of the Companies Act, 2017 briefly describe the steps which the
directors should take prior to issuance of Class C shares. (Procedure for issuance of
shares is not required) (06)
Q.7 (a) Under the provisions of the Companies Act, 2017 briefly describe the provisions
relating to granting of loan by a company for the purchase of its own shares. (05)
(b) The Directors of Solar Limited (SL), want to arrange finances for their factory expansion project and
have decided to issue 1,000,000 ordinary shares to general public. The directors want the
public subscription to commence not later than
7 October 2018. Mobeen, who is the company secretary, has proposed the following
schedule for the purpose:
(i) On 12 September 2018, a copy of the prospectus shall be submitted to the

Registrar Joint Stock Companies for approval.
(ii) For ease of access, the copies of the prospectus shall be available for members’ inspection
at SL’s main showroom. The prospectus shall remain open for inspection from 28 September
2018 till 4 October 2018 at a fee of Rs. 50.
(iii) The prospectus would be published in a popular fortnightly Urdu magazine on
30 September 2018.
(iv) Public subscription would commence on 5 October 2018.
Suggest appropriate revision in the above proposal to bring it in line with the
provisions of the Securities Act, 2015. (05)
Q.8 (a) The director of a company shall not take any part in the discussion of, or vote on, any contract or
arrangement entered into, or to be entered into, by or on behalf of the company, if he is in
any way, whether directly or indirectly, concerned or interested in such contract or
arrangement.
Under the provisions of the Companies Act, 2017 briefly describe the exceptions to
the above rule, if any. (03)
(b) On 8 September 2018, the directors of Ashanti Limited (AL), a listed company,
declared an interim dividend of Rs. 5 per share and announced book closure from
28 September 2018 to 3 October 2018, both days inclusive.
Under the provisions of the Companies Act, 2017 briefly describe when AL should
pay the above dividend. Also state any four circumstances in which AL may not be considered to
have committed an offence for non-payment of dividend. (07)
Q.9 (a) Joint Limited (JL) was incorporated as a public company on 1 February 2018 and was authorized by the
registrar to commence business from 1 April 2018. The board of directors is divided on the issue of holding first
general meeting of its members. Two directors are of the view that the meeting should be held on 30 September
2018 whereas majority of the directors want to hold it on 30 October 2018.
In the light of the provisions of the Companies Act, 2017:
(i) Explain whether you agree with the proposal of the majority of the directors or
the other two directors. (03)
(ii) What would be your opinion in (i) above if the directors want to hold first
annual general meeting on 25 September 2018? (01)
(b) Baalbek Limited is an unlisted public company and has eight directors. Its paid-up capital is Rs.
50,000,000 divided into ordinary shares of Rs. 500 each. The directors have decided to remove Aga
Kirmani from the board due to his dismal performance.
Aga Kirmani was elected unopposed on the board.
In the light of the provisions of the Companies Act, 2017 briefly describe how
Aga Kirmani can be removed from the board. (02)
(c) Faraya Limited (FL), an unlisted public company, is engaged in the business of manufacturing and
sale of plastic bottles in Lahore. FL is planning to appoint Gul Maher as the chief executive officer
(CEO) of the company. During an interview with Gul Maher, he disclosed to the board that his wife
Mona is running a corporate brokerage house in Lahore and that his son Sultan, who is a business
graduate, is engaged in the business of selling plastic bottles in Multan. Gul Maher also disclosed to
the board that he sometimes provides technical assistance to Sultan without any charge.
Under the provisions of the Companies Act, 2017 explain whether FL can appoint
Gul Maher as the CEO of the company. (04)
Q.10 Under the provisions of the Companies Act, 2017 analyse and comment on each of the following
independent situations:
(a) On 1 January 2017 Rahat and Company, Chartered Accountants (RC) appointed Rao Bashir as a
Director in assurance department, with a commitment to promote him as a partner in due course.
RC is the auditor of Clove Limited (CL). Prior to joining RC, Rao Bashir was a director in CL. He left his
job in 2016 but still holds
500,000 shares in CL. (03)
(b) Tarkwa (Pvt) Limited (TPL) has a paid-up capital of Rs. 2,800,000. It was a 90% owned subsidiary of
Niger Limited (NL). However, NL recently disposed of 70% of its holding in TPL to a partnership firm,
Abad Associates (AA). All the partners in AA are also the directors in NL. TPL is now planning to
appoint Mugabe, who is a member of the Institute of Cost and Management Accountants of
Pakistan, as its
auditor. Mugabe’s brother is also a partner in AA. (04)
(c) Dushanbe Limited (DL) intends to appoint Sonu and Company, Chartered Accountants, as its auditor.
DL has a paid up capital of Rs. 850 million which includes ordinary share capital of Rs. 180 million.
Anjum, the wife of a partner in Sonu and Company, is a director in Jabal Limited (JL). JL holds 30 million non-
voting preference shares and 3 million ordinary shares in DL. The par value of both the preference
and ordinary shares is Rs. 10 each. (03)
(THE END)
The Institute
of 6 March 2021
Instructions to examinees: (i) Answer all ELEVEN questions. (ii) Answer in black pen only.
Q.1 Select the most appropriate answer from the options available for each of the following
Multiple Choice Questions (MCQs). Each MCQ carries ONE mark.
(i) The Constitution of the Islamic Republic of Pakistan 1973 has five schedules.
Which of the following is NOT part of the schedules?
(a) Oaths of Office (b) Legislative Lists

(c) Amendment of Constitution (d) Election of President
(ii) On 27 February 2021, Bilal as owner of Bloodstone Sugar Mills (BSM) entered into a contract with
Amber Bakers to supply 1,000 kgs of sugar on 5 March 2021 at Rs. 70 per kg. On 3 March
2021, Government issued a notification directing sugar mills to sell all their output to
the Government at fixed rate of Rs. 75 per kg. On
the promised date of delivery, Bilal refused to honour the agreement. Can Amber
Bakers recover damages from BSM?
(a) Yes, because the contract was enforceable since it was made before the date
of notification
(b) No, because the contract became void on the date of notification
(c) Yes, because BSM earned a profit of Rs. 5 per kg at the expense of Amber
Bakers
(d) No, because the contract became voidable on the date of notification
(iii) Jalil is indebted to Kamran but due to financial crisis, he is not able to pay him. At Jalil’s request, Kamran
agreed to sell further goods to Jalil on very stringent terms. Subsequently, Jalil approaches the Court
demanding relief from contractual obligations on grounds of undue influence.
(a) Kamran will have to prove that he did not exercise any undue influence
(b) Jalil will have to prove that the contract was induced by undue influence (c)
Both Jalil and Kamran will have to prove the presence or absence of undue
influence respectively
(d) The contract entered into between Kamran and Jalil is void ab-initio
(iv) Saad agreed to pay Rs. 500,000 to Hafsa if she delivered a judgement in his favour in a suit.
Hafsa gives the judgement in Saad’s favour but he later refuses to pay any money. In this
situation, can Hafsa claim the amount?
(a) No, because the agreement was voidable at the option of Saad only
(b) Yes, because the agreement was valid and enforceable
(c) Yes, because the agreement was voidable at the option of Hafsa only
(d) No, because the agreement was void due to unlawful activity
(v) Asma requested her friend Bina to keep some valuable items in safe custody while
she was going on a one-week vacation abroad. This contract between Asma and
Bina is a:
(a) social contract (b) contract of pledge

(c) contract of bailment (d) quasi contract
(vi) Umair purchased vegetables for his family while visiting Fahad. However, he forgot to take them
from Fahad’s house and those vegetables were consumed by Fahad’s family. Fahad is now
bound to pay the price of those vegetables because of obligation created under:
(a) deemed contract (b) contract of indemnity

(c) quasi contract (d) contract of bailment
(vii) Which of the following would be classified as contingent contract?
(a) Insurance (b) Indemnity

(c) Wagering (d) Both (a) and (b)
(viii) Haris has two horses, one of the horse is purebred. He agrees to sell one horse to Abdullah who
gives his consent believing that he will receive a purebred horse whereas Haris thinks that he
would sell the other horse. What is the status of the contract between Haris and Abdullah?
(a) Void on account of unilateral mistake regarding material fact

(b) Voidable on account of unilateral mistake regarding material fact
(c) Void on account of bilateral mistake regarding material fact
(d) Voidable on account of bilateral mistake regarding material fact
(ix) Amir had offered both Behram and Ahmed to sell his piano at a discounted price of Rs. 25,000.
Behram responded immediately and refused to accept the offer. Amir who was in urgent need
of money, lowered the offered price to Rs. 15,000 which was finally accepted by Behram. Before
delivering the piano to Behram,
Amir received acceptance from Ahmed on his initially offered price. Therefore,
Amir has refused to deliver the piano to Behram.
Can Behram claim damages upon Amir’s refusal?
(a) No, because Amir refused the delivery to Behram due to inadequate
consideration
(b) No, because Amir had agreed to deliver piano to Behram under undue
influence
(c) Yes, because the contract was completed on acceptance of revised offer
price
(d) Yes, because Behram responded first to the Amir’s offer
(x) During the clearance sale at a famous clothing store, Sana selected a dress from the rack with
a price tag of Rs. 20,000 and brought it to the cash counter. Sana asked
the cashier to pack the dress and handed over her credit card for payment. Her act was
to be considered as:
(a) invitation of an offer (b) acceptance of an offer

(c) making an offer (d) making an agreement
(xi) A partnership firm is constituted for one year. After the expiry of one year, if the partners decide
to continue the partnership, then:
(a) the period is extended automatically for further one year

(b) the partnership becomes partnership at will
(c) the partnership becomes particular partnership
(d) the partnership becomes a joint venture (xii) In order to hold a person
liable as a partner on the basis of holding out principle, it must be established:
(a) that by word or conduct he represented himself to be a partner (b) that the other person acting
on faith of the given representation extended
credit to the firm
(c) either (a) or (b) i.e. any one condition must be fulfilled
(d) both (a) and (b) i.e. both conditions must be fulfilled
(xiii) Jamal is the financial controller of Emerald Stones & Co. where he is entitled to a monthly
remuneration of Rs. 500,000 as well as 20% of the profits, if the net annual profits of the firm
exceed Rs. 50 million. What is the status of Jamal in the partnership firm?
(a) A partner in the firm

(b) An employee of the firm
(c) Partner as well as employee of the firm
(d) An agent of the firm
(xiv) The authority of a banker to pay a cheque drawn on him by his customer is revoked by:
(a) notice of adjudication of the customer as an insolvent

(b) countermand of payment
(c) notice of the customer’s death
(d) all of the above
(xv) Promissory note is an instrument in writing containing an unconditional

________, to pay a certain sum of money.
(a) instruction (b) order (c) undertaking (d) demand
(xvi) Any change in principal line of business shall be reported by the company from the date of
change to:
(a) the Commission within thirty days

(b) both the Commission and the registrar within thirty days
(c) the registrar within thirty days
(d) both the Commission and the registrar within fifteen days
(xvii) Which of the following instruments is considered to be the prima facie evidence of the title of
a listed company’s shares?
(a) Share purchase agreement

(b) Share subscription application
(c) Share certificates issued in book-entry form
(d) All of the above
(xviii) Minutes of all general meetings of a company should be kept at the registered
office of the company in physical and electronic form for a period of:
(a) 10 years
(b) 10 years and permanently respectively
(c) 20 years
(d) 20 years and permanently respectively
(xix) With reference to the resolution passed by members through circulation, which of the following
statements is true?
(a) The resolution may be revoked if members holding 10% voting power withdraw their agreement
signified in writing
(b) The resolution may be revoked when the board of directors vote against the
resolution
(c) The resolution may be revoked where decision taken by members is not effected within 120 days
of passing the same
(d) The resolution cannot be revoked once signified by members in writing
(xx) Sunstone Limited is a public company with nine directors and a paid-up capital of Rs. 40 million
(face value of Rs. 100 each). Khurram and Asim were elected as directors in the recent elections
by securing 400,000 and 300,000 votes respectively. However, subsequently both of them
resigned.
Nasir was appointed to fill the casual vacancy created by Khurram while Asim’s position is still vacant.
Board is not satisfied with Nasir’s performance and wish to replace him with Saim. A
resolution has been moved in general meeting to remove Nasir from his position. Nasir
will be able to secure his position if number of votes casted against the resolution
equals to or exceeds:
(a) 450,000 (b) 400,000 (c) 350,000 (d) 300,000
(xxi) Which of the following business decisions requires approval of members in a general meeting?
(a) Approval of interim dividend

(b) Approval to invest excess funds in fixed term deposits
(c) Selling all the shares of subsidiary company to the highest bidder (d) Acquiring shares of another
company at seven times higher the book value per
share of that company
(xxii) Election of directors of Rhinestone Limited (RL) having share capital of Rs. 4 million (face value
of Rs. 10 each) was held on 5 March 2021 in which seven directors were elected. Yasir, Samia
and Noureen, the shareholders of RL are of the opinion that the elections were not held fairly
and material irregularities were
noted. They intend to apply to the Court for re-election. The shareholders will be
eligible to file their application if they hold atleast:
(a) 40,000 voting shares and submit application by 4 April

(b) 40,001 voting shares and submit application by 20 March
(c) 80,000 voting shares and submit application by 4 April
(d) 80,001 voting shares and submit application by 20 March
(xxiii) Approval of the shareholders at the general meeting is NOT required when shifting the
registered office of a company from:
(a) one city in a Province to another

(b) one place to another place within the same city
(c) one city to another in any part of Pakistan not forming part of a Province
(d) Islamabad to any city of Pakistan
(xxiv) Which of the following businesses proposed to be presented in the upcoming annual
general meeting of Neelam Limited shall be deemed as special business?
(a) Obtaining financial facility of Rs. 100 million

(b) Declaration of 300% dividend out of the current years’ profit
(c) Election of directors
(d) Approval of consolidated financial statements
(xxv) Which of the following is entitled to inspect the books of accounts?
(a) Directors at any time

(b) Shareholders having more than 10% shares at any time
(c) Directors during business hours
(d) Shareholders having more than 10% shares during business hours (xxvi) The annual
general meeting of Blue Amber Limited, a listed company having share capital of Rs. 500,000,000
of Rs. 10 each was scheduled to be held on 6 March 2021 at 8:30 AM for which the notice of the
meeting was sent on
12 February 2021. On the day of meeting at 9:00 AM, attendance of shareholders was as
follows:
Present in person 10 persons holding 10 million shares
Present through proxies 5 persons holding 2 million shares
Which of the
following actions should be taken by the chairman?
(a) Commence the meeting as per the agenda circulated

(b) Adjourn the meeting to be held on 13 March 2021
(c) Dissolve the meeting and circulate fresh notice of meeting
(d) Either (a) or (b)
(xxvii) Notice of extraordinary general meeting of the company, called by the directors on the
requisition of members, is required to be sent to:
(a) members, directors and the Commission

(b) directors, auditors and the Commission
(c) members, directors and auditors
(d) members, auditors and the Commission
(xxviii) A director of a public company shall ipso facto cease to hold office if he is absent from:
(a) three consecutive board meetings without leave of absence

(b) three consecutive general meetings without leave of absence
(c) all meetings held during the last three months
(d) three consecutive audit committee meetings
(xxix) In the case of listed company, statement of compliance is required to be signed by:
(a) the chairman and a director

(b) at least two directors
(c) the chairman and the chief executive
(d) the chief executive and a director
(xxx) Aquamarine (Pvt) Limited (APL) was incorporated on 1 January 2020 with an
authorized share capital of Rs. 500,000.
APL is required to accompany an affidavit with its annual financial statements confirming that the
financial statements:
(a) give a true and fair view of the company’s affairs

(b) have been approved by the Board
(c) are prepared in accordance with the requirements of the Companies
Act, 2017
(d) are free from material misstatements
Q.2 List down the main topics/areas covered under the following parts of the Constitution of the Islamic
Republic of Pakistan 1973:
(a) Part III - The Federation of Pakistan (02)

(b) Part VI - Finance, Property, Contracts and Suits (02)
Q.3 (a) Under the provisions of the Contract Act, 1872 briefly describe any six
circumstances when an agent shall be personally liable under a contract entered into
by him on behalf of his principal. (06)
(b) Maria purchased a diamond necklace of Rs. 700,000 from Emerald Jewellers (EJ) and issued a cheque
in favour of EJ fully knowing that she does not have enough funds to make the payment.
Consequently, the cheque was dishonoured because of insufficient funds in Maria’s bank
account. EJ demanded to return the necklace. However, before the said demand, Maria
had pledged the necklace with Ruby
Traders (RT) against an obligation of Rs. 800,000.
Under the provisions of the Contract Act, 1872 discuss the status of the agreement
between Maria and EJ. Also explain the validity of the pledge and discuss whether
EJ would be able to recover the necklace. (04)
Q.4 (a) On 4 March 2021, Aliya agreed to sell her ancestral jewels to Salma at a discounted price.
However, on the next day when Salma came to take the delivery, Aliya’s brother being
custodian of the jewels refused to honour the delivery on the premise that Aliya was
admitted to the mental hospital and, therefore, her earlier agreement to sell the jewels
was not valid.
Under the provisions of the Contract Act, 1872 discuss whether Aliya’s brother is
justified in refusing to deliver the jewels to Salma. (03)
(b) Salman agreed to supply cotton yarn to Rehan for the entire year, whenever requisitioned, at
prevailing wholesale prices. The contract also stipulated that in case of dispute, Salman
and Rehan would not seek settlement through the Court.
Under the provisions of the Contract Act, 1872 discuss the validity of the contract
and determine any remedy available to Rehan, in case of dispute with Salman. (03)
Q.5 (a) Malik, Asif and Sohail are partners in a firm carrying on dairy business and sharing the profit or
loss equally. Malik has recently started a poultry business in the same vicinity for which
he has applied for a loan from a bank. As a security of the loan, he offered the bank to
create charge over the book debts of the poultry business together with his interest in
the dairy business.
Under the provisions of the Partnership Act, 1932 describe the bank’s rights and
limitations in the dairy business. (04)
(b) Tahira, Farhana and Sadia are partners in a bridal boutique situated in the local market. Sadia also
owns a jewellery shop in the same market. The shop is managed by her brother, Wasi.
Tahira and Farhana were not aware of Sadia’s interest in the jewellery shop. Most of the
clients from the bridal boutique buy jewellery sets from Sadia’s shop. During the year,
Sadia earned a hefty profit of Rs. 10 million from the jewellery business.
Upon knowing the fact of Sadia’s interest in the jewellery shop, both Tahira and Farhana demanded
Sadia to share her profits equally with them.
Under the provisions of the Partnership Act, 1932 explain whether Tahira and Farhana are justified in
their demand. (04)
Q.6 (a) Under the provisions of the Negotiable Instruments Act, 1881 explain different types
of crossing of cheque along with their respective effects. (04)
(b) Under the provisions of the Negotiable Instruments Act, 1881 identify the type of each of the
following instruments and give reason(s) as to validity of each instrument.
(i) I promise to pay Zahid Rs. 350,000 and all the applicable interest amounts.
(ii) Pay Rs. 350,000 to Jafer along with interest of Rs. 3,500.
(iii) I hereby acknowledge that I have taken Rs. 350,000 from Abid and shall pay
the interest to him on the amount at agreed interest rate. (03)
Q.7 White Diamond Limited (WDL) was incorporated on 6 February 2021. All the subscribers to the
memorandum of WDL has paid the share money except Aijaz who has subscribed 4,000 shares
and is willing to make the payment before 10 March 2021.
WDL’s management intends to start the operations of the company immediately since minimum
subscription amount is not fixed in WDL’s memorandum and articles of association. Accordingly,
for the purpose of commencement of business, they intend to submit requisite documents with
the registrar. The management is confident that the registrar will accept and register all the
documents.
Under the Companies Act, 2017:
(a) determine Aijaz’s status in WDL and discuss implications, if any, towards himself as
well as WDL, if he makes the payment before 10 March 2021. (b) explain WDL’s duties if
all the subscription money is received on or before
1 March 2021. (08)
Q.8 (a) List any ten contents of the directors’ report of a public unlisted company as
prescribed under the Companies Act, 2017. (05)
(b) Annual general meeting of Opal Limited (OL), a listed company, for the year ended 31 December
2020 was held on 1 March 2021. All the presented agenda items were approved at the meeting
except for the adoption of annual financial statements.
In the light of the Companies Act, 2017 discuss the requirements OL must comply
with for filing its financial statements. (03)
Q.9 (a) In the 14th annual general meeting of Sapphire Limited, a special resolution has been
passed to increase the voting rights of shareholders of class A by 50%.
Faiza Ibrahim, a shareholder from class B, wants to get the said special resolution
cancelled.
Under the Companies Act, 2017 discuss how Faiza Ibrahim can challenge the special
resolution and ask for its cancellation. Also determine the grounds on which the
decision may be made in her favour. (04)
(b) In the general meeting of Red Coral Limited (RCL), while discussing one of the
agenda items, two of the members, Yasmeen and Yameen wants to demand poll.
Under the provisions of the Companies Act, 2017 advise the chairman whether they are
eligible to demand the poll. Also discuss the procedure to be followed for taking
the poll in the general meeting. (03)
Q.10 (a) On 31 December 2020, Ali was appointed as a chief executive of Pearl Limited (PL),
a listed company. In March 2021, he informed the board that on 15 February 2021, his
spouse was appointed as a director in a brokerage house.
Under the provisions of the Companies Act, 2017 evaluate the impact of the
appointment of Ali’s spouse on his position and on PL. (04)
(b) In February 2021, Silver Topaz Limited (STL) acquired 18% voting shares in Jade Limited (JL). After
acquisition, STL nominated one of its directors on JL’s board.
STL’s board is planning to acquire further 10% voting shares in JL in May 2021.
Under the Companies Act, 2017 discuss the condition(s) which STL must fulfil
before making any further acquisition of shares in JL. (04)
Q.11 Identify any four criteria on the basis of which a company formed under section 42 of the Companies Act,
2017 differs from any other limited liability company. (04)
(THE END)
The Institute of 9 March 2019

Q.1 (a) Briefly explain five rules regarding performance of reciprocal promises under the
provisions of Contract Act, 1872. (05)
(b) Respond to the following scenarios, under the provisions of Contract Act, 1872:
(i) On 11 February 2019, Isfandyar agreed to sell his house to Javed for Rs. 15 million. On 19 February
2019, Javed came to know that Isfandyar has finalized a deal for the same house with
Jenny. Discuss the option(s), if any,
available to Javed. (02)
(ii) Ahmed being interested in purchasing Adil’s DHA property sent him this letter on 01 March 2019, “I
have heard that you are selling your DHA property. I am very much interested in
purchasing it. Will you please consider selling the same to me? What is the highest
price you have been offered so far?” Adil replied, “The highest quote for the property
till now is Rs. 35 million.” Ahmed replied, “I agree to buy your DHA property for Rs. 36
million.” Subsequently, Adil received an offer from Hamid quoting Rs. 38 million for
the said property. What will be Adil’s liability towards Ahmed if
he wishes to make the sale to Hamid? (02)
(iii) Noman rented his house to Ahsan under a contract terminable on three months’ notice. Noman’s wife
without discussing with Noman, sent a termination notice to Ahsan. When Noman
came to know of the situation, he ratified the act of sending of notice to Ahsan. Discuss
whether the notice given by Noman’s wife is
valid. (02)
(iv) While attending a seminar, Khizar told a group of people on his table that he is the agent of Lucky.
Lucky smiled considering it a joke. Later, Moiz who was sitting on the table sold
security cameras and surveillance system to Khizar on credit believing him to be agent
of Lucky. Comment on whether a contract of
agency is established between Khizar and Lucky. (02)
Q.2 (a) Under the provisions of Negotiable Instruments Act, 1881 define ‘Holder in due
course’ and ‘Acceptor for honour’. (05)
(b) Umair drew a duly stamped promissory note favouring Vazir, intending to pay Rs. 500,000 against the
purchase of office equipment. No amount was mentioned on the instrument and Umair told
Vazir to fill it himself. The stamp affixed could cover amount up to Rs. 700,000.
Under the Negotiable Instruments Act, 1881:
(i) identify the nature of the instrument and describe when Umair’s liability will
arise on the instrument. (02)
(ii) specify Umair’s liability where Vazir filled in Rs. 600,000 on the promissory
note. (1.5)
(iii) specify Umair’s liability where Vazir filled in Rs. 600,000 on the promissory note
and transferred it to Waris for value. (1.5)
Q.3 (a) Yasmin stayed at Hotel Fragrance, during the exhibition of her famous jewellery brand. After she
left, the house-keeping staff found a precious branded ring from a drawer which was handed
over to the hotel manager. Meanwhile, Ahmed who was staying at the hotel, stole the ring
and escaped. Hotel manager tried to contact Yasmin but she had already proceeded on a
year long tour at an unknown destination.
Under the provisions of Contract Act, 1872 discuss what action(s) can be taken by the
hotel management in this scenario and what would be their rights when the ring is
recovered. (06)
(b) Salim gave a loan of Rs. 100,000 to Ahmed carrying a mark-up of 10% per annum. Amir and Rehan
agreed to act as Ahmed’s sureties. In the light of Contract Act, 1872 determine, along with reasons,
how much each surety would be liable (in Rupees) in the
following independent scenarios:
(i) Ahmed defaulted and Salim being aware of weak financial position of Rehan, asked Amir
and Rehan to pay 75% and 25% of the default respectively. (02)
(ii) Salim without discussing with Rehan released Amir from the suretyship. Ahmed
defaulted and Salim asked Rehan to pay the entire amount. (02)
(c) Under the Contract Act, 1872 state an agent’s responsibility in case he appoints a
sub-agent without having the principal’s authority. (02)
Q.4 (a) Respond to the following scenarios, under the provisions of Partnership Act, 1932:
(i) Tehram, Rahil and Zain are partners in TRZ Associates. Zain, after obtaining mutual
consent of all the partners, transferred his share of interest to Hatim. Hatim now
wants to discuss the future business strategy of the firm with Tehram and Rahil. In
this regard, he has asked the partners to provide him the firm’s cash flow forecast so
that he can determine firm’s growth potential for the next
five years. Comment on Hatim’s entitlement to do the same. (03)
(ii) Sahir and Sarim are lawyers who have entered into a partnership namely SS
Associates. Noreen approached SS Associates for a property dispute case. However,
after seeing Sarim’s capabilities, Noreen gave Rs. 250,000 to Sarim for investment in
stocks and bonds at his discretion on her behalf. Sarim hid the said fact from Sahir
and used the money to meet his personal needs. Subsequently, Noreen filed a suit
on the firm for the recovery of Rs. 250,000. Reason out the
validity of suit filed by Noreen. (02)
(iii) Faizan and Mehran are partners in a trading firm and have decided that no partner
shall have the right to buy or sell goods beyond the value of Rs. 100,000 without
consent of the other partner. Due to a sudden crisis in the market, prices of a product
started falling sharply. Faizan without consulting Mehran sold all the perishable stock
worth Rs. 950,000 in order to restrict the firm’s loss. Can
Mehran hold Faizan responsible for misconduct? (02)
(b) Define principle of ‘holding out’ under the Partnership Act, 1932 and state its
exception, if any. (03)
Q.5 List respective jurisdiction of the following:
(a) Three classes of Judicial Magistrates under the Magistrates Court; and (03)
(b) Three classes of Civil Judges under the Family Court. (02)
Q.6 (a) In the light of Companies Act, 2017 identify six circumstances under which a director
shall not be considered as an independent director. (06)
(b) Following is the composition of board of directors of Faisal Limited, a listed company:
Independent directors Khalid, Dawood, Rehmat

Non-executive directors Salman, Arif, Ashraf
Executive directors Fasih (CEO), Kashif (Director Finance)
Under the Companies Act, 2017 advise which of the above directors are eligible to be
appointed as Chairman of the board. Also state the time frame for his appointment,
duration of office and his responsibilities. (06)
Q.7 (a) List six types of charges which a company is mandatorily required to get registered
with the registrar under the Companies Act, 2017. Also state the effect of non-registration of a
charge created in favour of a company. (04) (b) Sepham Limited is in process of raising money through
issuance of shares and intends to issue a prospectus.
Advise the management as to who would be liable under the Securities Act, 2015 to
compensate the investors in case there is any deficiency in the prospectus and under
what circumstances this liability would arise. (04)
Q.8 Xiam Limited (XL) is due to conduct its first annual general meeting in March 2019. XL wants to propose
Rehan Hameed & Co., Chartered Accountants, as the auditors of the company for the next term,
in place of the existing auditors, Jamil Behram & Co., Chartered
Accountants.
Under the Companies Act, 2017:
(a) identify who has the right to propose auditors and state the conditions which are
required to be fulfilled before presenting any such proposal in the annual general meeting.
(05)
(b) what will be the term of the auditors appointed in the first annual general meeting? Briefly state the
situations under which the auditors may cease to hold office before
expiry of the above term. (03)
(c) what are the rights of Jamil Behram & Co., Chartered Accountants, where Rehan
Hameed & Co., Chartered Accountants, are proposed to be appointed as the auditors
in the annual general meeting? (03)
Q.9 (a) Masters Limited (ML) has made equity investment in Abbas Limited (AL). In the light
of Companies Act, 2017 state under what circumstances ML may classify AL as its
subsidiary. (04)
(b) Describe the provisions contained in the Companies Act, 2017 relating to ‘principal
line of business’ of a company. (05)
Q.10 (a) Zaigham Limited (ZL) having share capital of Rs. 100 million was incorporated on 01 January 2014
when its shares were issued at a face value of Rs. 10 each. ZL announced cash dividend of Rs.
10 million in its first year. Thereafter, the cash dividend kept on increasing by Rs. 2 million
each year till 31 December 2018.
In a recent board meeting, it was noted that 8% of the company’s shares and the related dividend has
remained unclaimed till 28 February 2019. Hence, the board advised the management to
take immediate steps to comply with the Companies Act, 2017.
Narrate the procedures that the management should follow in order to comply with the board’s advice.
Also determine the amount of company’s liability in respect of the above. Assume that
market value of the shares is Rs. 22 per share and dividends for each
year become due on 28 February of the next year. (06)
(b) Under the provisions of Companies Act, 2017 it is the responsibility of the board to prepare directors’
report for each financial year. The Act has further prescribed the minimum contents of such
report.
In the above context, list the matters which are required to be included in the business
review section of the directors’ report of a listed company. (04)
(THE END)
The Institute of 10 March 2018

Q.1 (a) Briefly describe how delegated legislation takes place and also describe how control is
exercised over delegated legislation. (04)
(b) What is the process of legislation in case of a money bill when National Assembly is
in session? (02)
(c) Under the provisions of the Contract Act, 1872 analyse the following situations and comment on the type
and validity of the contracts:
(i) Arif is the sole proprietor and deals in sale of product X. On 1 January 2018, Arif
entered into two months’ contract with Abbas for the promotion and sale of
product X on commission basis. On 4 February 2018, Arif died in a car accident.
Abbas came to know about it on 15 February 2018. However, Abbas
continued selling the product as per the contract. (03)
(ii) Pawan owed Rs. 5 million to Ghafoor but was unable to pay due to liquidity
constraints. However, Pawan owned a property and on 1 November 2017 he
authorised Ghafoor to collect rent of the property until he recovers his dues. On 1
March 2018 Pawan terminated the authority of Ghafoor to collect rent
although his dues were not fully satisfied. (04)
Q.2 (a) Saleem entered into a contract for the purchase of 5 vehicles from Phony (Pvt.) Limited (PL) which
were to be delivered in the month of February. Saleem also entered into another contract
for onward sale of these vehicles to Jabbar Limited (JL). However, PL refused to deliver the
vehicles as contracted. Saleem had to buy the vehicles from another supplier at an extra
cost of Rs. 2 million for supplying these to JL. Saleem also had to pay compensation of Rs.
0.6 million to JL due to delay in supply.
Under the provisions of the Contract Act, 1872 analyse the above situation and
comment whether Saleem is entitled to receive any compensation from PL. (04)
(b) Under the provisions of the Contract Act, 1872:
(i) describe co-agent (02)

(ii) briefly describe various types of quasi-contracts. (05)
Q.3 Under the provisions of the Contract Act, 1872 analyse and comment on the following situations:
(a) Abid has obtained a loan of Rs. 800,000 from Saqib. Loan was given on the surety of Munib, Hamid
and Suleman with maximum limits of Rs. 150,000, Rs. 250,000 and Rs. 400,000 respectively. Abid
repaid Rs. 200,000 and defaulted. Comment and
compute the amount payable by each surety. (03)
(b) Shafiq obtained a loan from Qasim on the surety of Anwar. Qasim also obtained a charge over
Shafiq’s car at the time of disbursement of loan. However, Anwar was unaware of this security.
Qasim gave up the charge over the car and Shafiq defaulted.
Comment on the position of Anwar. (03)
Q.4 (a) Gul, Raza and Sami are partners in GRS Garments. Raza discovered that a supplier MP offers
reasonable rates for consumables stores and put forth a resolution that MP should be
included in the firm’s list of suppliers. MP is owned by Gul and managed by his brother but
Gul did not disclose this fact. When Raza and Sami became aware of the fact, they asked
Gul to share with them the profits earned by MP on transactions with GRS.
Under the provisions of the Partnership Act, 1932 discuss whether Gul is bound to
share the profits as demanded by Raza and Sami. (2.5)
(b) In 2014, Majid and Ebad started a business of sale and repair of vehicles under the name of ME
Motors (MEM). Majid sold one of the vehicles which came for repair to Zahid for Rs.10 million. Zahid
on finding out that Majid did not have the legal title of the car sued MEM.
Under the provisions of the Partnership Act, 1932 discuss who would be liable for
damages in the above situation. (2.5)
(c) X has been carrying on textile business for the past few years. He has recently met Y who is an
expert in textile designing. X and Y have agreed that Y would advise X on various technical issues
and use his contacts for the benefit of the business. Y would be entitled to 35% of the profits of the
business. However, Y will not be required to bring any capital and will not take part in the day to
day affairs of the business.
Under the provisions of the Partnership Act, 1932 analyse the above situation and
advise whether partnership exists between X and Y. (05)
Q.5 Under the provisions of the Negotiable Instruments Act, 1881 briefly explain:
(a) the term endorsement. (03)

(b) any seven ways in which the maker of a negotiable instrument is discharged from
liability. (07)
Q.6 (a) Printing (Pvt.) Limited (PL) wants to change its name to Printing and Marketing (Pvt.) Limited.
Under the provisions of the Companies Act, 2017 describe the steps to be followed by
PL for changing its name and matters to be complied with after the change of name. (05)
(b) Under the provisions of the Companies Act, 2017 explain the term ‘body corporate
or corporation’. (04)
Q.7 (a) On 25 February 2018 Badar Limited (BL), in a move to list its shares on Pakistan Stock Exchange,
received approval from the Commission for the publication of prospectus.
Under the provisions of the Securities Act, 2015 advise BL with regard to the
publication of the prospectus in the newspaper and its placement on the company’s
website. (06)
(b) Under the provisions of the Companies Act, 2017 describe the circumstances in
which the registrar has the power to make entries of satisfaction and release of charge in the
register of mortgages and charges without intimation from the company. (03)
Q.8 (a) Under the provisions of the Companies Act, 2017 comment on each of the following independent
situations:
(i) Opticians Limited (OL), a listed company, plans to appoint Yameen as an independent director
of OL. Yameen was Head of Operations of Glasses Limited till December 2016. Glasses Limited
is a subsidiary of Opticians
Limited. (02)
(ii) Zafar was recently appointed as a Director of HP Limited, a listed company. In March 2018 the
board of directors came to know that Zafar had been
declared a defaulter by the High Court. (02)
(iii) Kalim is a director of Behaal Limited. On 1 October 2017 Kalim went abroad
on a personal trip and returned back on 15 February 2018. He was unable to
attend five board meetings which were held during this period. (02)
(b) Unique Limited is due to hold its first annual general meeting on 20 April 2018.
Under the provisions of the Companies Act, 2017 advise the directors with regard to the types of
businesses which would be deemed to be special business and also discuss additional
formalities which are required to be complied with in respect of
notice containing special business. (06)
Q.9 Under the provision of the Companies Act, 2017 briefly describe the following:
(a) the requirements of a private limited company for presenting its first financial
statements in the annual general meeting and whether the financial statements are
required to be audited. (05)
(b) the restrictions, if any, with regard to the declaration of final dividend by a company
listed on stock exchange. (05)
Q.10 (a) Under the provisions of the Companies Act, 2017 state the qualification of the
person(s) who may be appointed as external auditor of a company limited by shares. (05)
(b) Dildar & Co. (DC) has recently been appointed as the external auditor of Zee Limited (ZL). At the time
of appointment, Kashif who is the son of a partner of DC, was employed as Head of HR in
Sabir Limited (SL), which is ZL’s subsidiary. Kashif also owned 5% shares in SL. Within 30
days of DC’s appointment, Kashif left the job and gifted SL’s shares to his mother.
Under the provisions of the Companies Act, 2017 analyse and comment on the
above situation. (05)
(THE END)

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Certificate in Accounting and Finance Stage Examination

Instructions to examinees: (i)

(a) void (b) valid

(a) Rs. 18,800, Rs. 30,080 and Rs. 45,120 respectively

(a) deliver 100 kg of salt to each of BT’s tanning stations

Which of the following statements is true?

On 8 September 2021, RE sold the machine to Pearlfish Designers (PD).

Which of the following statements is true?

(a) Contract was executed on 3 September 2021 when CP first replied to RE

(vi) A mistake of law:

Can Mona recover the amount from Athar?

(a) No, since there is no consideration, there is no agency agreement

(a) Wagering agreements are void

(c) Parties to a wagering agreement have no control on the happening of event

(d) Prize competitions involving games of skill are considered as wagering

Which of the following statements is correct?

owner of the gold coin

(a) restoration of benefit (b) violation of civil law

(a) Kamran is severally liable for repayment of loan

(a) all partners of the firm whether express or implied

(a) an inland instrument (b) a foreign instrument

(a) revised memorandum of association (b) revised articles of association

(a) within 7 days if he makes the request on 12 September 2021

In this regard, which of the following statements is true?

(a) CL’s AGM has to be held in Karachi

Which of the following statements is correct?

(xxii) Nominal share capital means the:

(a) 12 August 2022 (b) 12 December 2022

(a) a director and chief financial officer

(c) is not a close relative of any of the company’s employees

(a) Any company engaged in manufacturing or supplying

In this regard, which of the following statements is correct?

(c) memorandum of association, to such amount as the members may respectively

(xxix) All the payment vouchers are required to be maintained by a company:

(a) for at least 10 years (b) for at least 15 years

(a) any two directors along with chief financial officer

Class of ordinary No. of shares Paid-up share capital

Under the provisions of the Companies Act, 2017:

(i) advise ML’s management regarding Saleem Hussain’s eligibility to demand

(ii) discuss the course of action required to be taken by ML on Saleem Hussain’s

Name Votes casted in favour

Under the provisions of the Companies Act, 2017:

Certificate in Accounting and Finance Stage Examination

The Institute of 26 September 2020

(ii) The term ‘Quid pro quo’ means:

(a) Uncertain event

(a) Damages (b) Specific performance (c) Injunction (d) Rescission

(a) special damages (b) liquidated damages

Which of the following statements with respect to the above is correct?

(a) The letter is an offer to sell

(d) An offer made by a letter must be accepted by a letter

(a) Bali is liable only to the extent of his estate

(d) Bali is not liable as he was a sleeping partner

(a) co-owners (b) co-venturers

(a) I promise to pay Zubair on demand Rs. 6,000 at my convenience

(c) I promise to pay you or your successors on demand Rs. 11,000

(a) The name and registration number of the company

(a) the chief executive and a director

Anas will stand removed as chief executive if:

(a) appoint all or a majority of the directors

(a) Chairman must be from amongst the non-executive directors

(a) Chairman, chief executive, company secretary, sole purchase agent

(a) Proceedings of directors