ICAP CA Corporate and Business Law Syllabus

Distinguish between partnership and co-ownership under the Partnership Act 1932.

Partnership arises from agreement, involves a business, mutual agency, profit-sharing, and a partner cannot transfer his interest freely. Co-ownership may arise by operation of law, need not involve business or profit-sharing, has no mutual agency, and a co-owner may transfer his share.

What are the implied duties of partners under the Partnership Act 1932?

To carry on business to greatest common advantage, to be just and faithful, to render true accounts and full information, to indemnify for fraud, to share losses, and not to make secret profits or compete with the firm.

What is the difference between dissolution of a firm and dissolution of partnership?

Dissolution of the firm is the complete breakup of relations among all partners and closure of the business. Dissolution of partnership is a change in relations (e.g. retirement/death of a partner) where the firm continues with the remaining partners (reconstitution).

State the modes of dissolution of a partnership firm under the Partnership Act 1932.

By agreement, compulsory dissolution (e.g. all but one becoming insolvent or business becoming unlawful), on happening of contingencies (expiry of term, completion of venture, death/insolvency of partner), by notice in a partnership at will, and by order of the court.

On dissolution, what is the order of distribution of assets under Section 48 of the Partnership Act 1932?

First pay third-party debts; then advances/loans by partners; then repay partners' capital; and finally distribute any surplus among partners in their profit-sharing ratio. Losses are paid first out of profits, then capital, then by partners individually.

What was the principal objective of replacing the Companies Ordinance 1984 with the Companies Act 2017 in Pakistan?

To modernise and consolidate company law, ease of doing business, strengthen corporate governance and disclosure, enable e-services/e-incorporation, protect minority shareholders, and align with international standards under SECP regulation.

How are companies classified by liability under the Companies Act 2017?

Company limited by shares (liability limited to unpaid amount on shares), company limited by guarantee (liability limited to the guaranteed amount on winding up), and unlimited company (no limit on members' liability).

Distinguish between a private company and a public company under the Companies Act 2017.

A private company restricts transfer of shares, limits members to 50 (excluding employees), and prohibits public subscription; minimum 1 member. A public company has no such restrictions, requires minimum 3 members, and can offer shares to the public.

What is a single member company (SMC) under the Companies Act 2017?

A private company with only one member (one director who is the sole shareholder). It must appoint a nominee director to manage the company in the event of the member's death, and the name must end with '(SMC-Private) Limited'.

What is the effect of a 'certificate of incorporation' under the Companies Act 2017?

It is conclusive evidence that the company is duly registered and that all requirements have been complied with. The company becomes a separate legal person with perpetual succession and capacity to sue and be sued in its own name.

What is the doctrine of separate legal entity, and which case established it?

A company is a legal person distinct from its members, with its own rights and liabilities; members are not personally liable for company debts. Established in Salomon v Salomon & Co Ltd (1897).

What is the Memorandum of Association and what are its key clauses under the Companies Act 2017?

The MoA is the company's charter defining its scope and relationship with outsiders. Key clauses: Name clause, Registered office/Situation clause, Objects (principal line of business), Liability clause, and Capital clause (plus subscription clause).

What is the difference between the Memorandum and the Articles of Association?

The Memorandum defines the company's constitution and powers and governs its relations with the outside world (supreme document). The Articles are internal rules/regulations for management and are subordinate to the Memorandum and the Act.

Explain the doctrine of 'ultra vires' in company law.

Acts beyond the powers and objects stated in the Memorandum are ultra vires and void; they cannot be ratified even by all shareholders. It protects shareholders and creditors by confining the company to its stated objects.

Explain the doctrine of 'constructive notice' and the doctrine of 'indoor management'.

Constructive notice: outsiders are deemed to know the contents of a company's public documents (MoA/AoA). Indoor management (Turquand's rule): outsiders dealing in good faith may assume internal procedures have been properly followed and need not verify them.

What is the difference between authorised, issued, subscribed and paid-up share capital?

Authorised (nominal): the maximum capital the company is permitted to issue per its MoA. Issued: the part offered to subscribers. Subscribed: the part taken up by members. Paid-up: the amount actually paid by shareholders on the subscribed shares.

What is the difference between preference shares and ordinary (equity) shares?

Preference shares carry a preferential right to a fixed dividend and to repayment of capital on winding up, usually with limited or no voting rights. Ordinary shares carry voting rights, variable dividends, and rank last in repayment of capital.

What is the 'right issue' (further issue of capital) requirement under Section 83 of the Companies Act 2017?

When a company increases capital by issuing further shares, they must first be offered to existing shareholders in proportion to their existing holdings (pre-emptive right), via a letter of right, before being offered to others.

How can share capital be altered under the Companies Act 2017?

A company limited by shares, if authorised by its articles, may by members' resolution: increase capital, consolidate and divide shares, sub-divide shares, convert shares into stock, and cancel unissued shares (diminution). Reduction of capital requires a special resolution and confirmation by the court/SECP.

What is a debenture and how does it differ from a share?

A debenture is a written acknowledgment of debt issued by a company, usually carrying a fixed rate of interest. A debenture holder is a creditor (not an owner), receives interest regardless of profits, has no voting rights, and ranks before shareholders in repayment.

Distinguish between a fixed charge and a floating charge.

A fixed charge is secured on specific, identifiable assets (e.g. land), restricting their disposal. A floating charge is on a class of fluctuating assets (e.g. stock-in-trade), allowing dealing in the ordinary course until it 'crystallises' (becomes fixed) on default or winding up.

What is the requirement to register a charge under the Companies Act 2017, and the effect of non-registration?

Particulars of a charge must be filed with the registrar (SECP) within 30 days of creation. If not registered, the charge is void against the liquidator and creditors, though the underlying debt remains payable and may become immediately repayable.

What are the methods of appointment of directors under the Companies Act 2017?

First directors named by subscribers; subsequent directors elected by members at a general meeting (election typically every 3 years), normally through the prescribed voting method; casual vacancies filled by the board; and certain nominee/independent directors as required.

What are the principal duties of directors under the Companies Act 2017?

To act in good faith for the company's benefit, exercise care, skill and diligence, act within powers, avoid conflicts of interest, not make secret profits, disclose interests in contracts, and act for proper purposes as fiduciaries.

How are directors removed and what disqualifies a person from being a director under the Companies Act 2017?

Removal: by members through a resolution before expiry of term. Disqualifications include being a minor, of unsound mind, an undischarged insolvent, convicted of an offence involving moral turpitude, a defaulter of loans/taxes, or lacking the prescribed shareholding qualification.

What is the difference between an ordinary resolution and a special resolution under the Companies Act 2017?

An ordinary resolution is passed by a simple majority (more than 50%) of members voting. A special resolution requires at least three-fourths (75%) majority of members voting, with not less than 21 days' notice specifying the intention to propose it as a special resolution.

What are the requirements for an Annual General Meeting (AGM) under the Companies Act 2017?

Every company (other than SMC) must hold an AGM within 16 months of incorporation for the first, and thereafter once each calendar year within 120 days of the financial year-end. Notice of at least 21 days is required. Listed companies have additional placement/electronic requirements.

What is the quorum for general meetings under the Companies Act 2017 (default rule)?

For a public listed company, members holding at least 25% of voting shares; for other public companies and private companies the articles/Act prescribe the number. SMC quorum is one member. If quorum is absent, the meeting is adjourned.

What is the role and qualification of a company secretary under the Companies Act 2017?

A listed/public company must appoint a qualified company secretary responsible for compliance, maintaining statutory records, convening meetings, filing returns with SECP, and advising the board on governance. Qualifications are prescribed (e.g. member of a recognised professional body or relevant experience).

Name the key statutory registers a company must maintain under the Companies Act 2017.

Register of members, register of directors and officers, register of mortgages and charges, register of debenture holders, register of directors' shareholdings, register of contracts in which directors are interested, and minute books of meetings.

What is the objective of the Code of Corporate Governance in Pakistan?

To improve transparency, accountability and protection of stakeholders by prescribing board composition (independent and non-executive directors), board committees (audit, HR), director training, related-party disclosures, and separation of the roles of Chairman and CEO.

What is the role of the audit committee under the Code of Corporate Governance?

To oversee financial reporting and internal controls, review financial statements before board approval, recommend appointment of external auditors, monitor internal audit, and ensure compliance - chaired by an independent/non-executive director.

What is the SECP and what is its regulatory role under the Pakistani corporate framework?

The Securities and Exchange Commission of Pakistan is the apex corporate and capital-market regulator. It administers the Companies Act 2017, regulates incorporation, securities markets, NBFCs, insurance and modarabas, enforces corporate governance, and protects investors.

What is the difference between members' voluntary winding up and creditors' voluntary winding up?

In members' voluntary winding up the company is solvent and directors make a declaration of solvency; members appoint the liquidator. In creditors' voluntary winding up the company is insolvent (no/failed solvency declaration), and creditors largely control the process and appointment of the liquidator.

What are the modes of winding up of a company under the Companies Act 2017?

Winding up by the court (compulsory), and voluntary winding up (members' voluntary or creditors' voluntary). The Act also provides for mediation/reconstruction and SECP-led processes in certain cases.

On what grounds may a company be wound up by the court under the Companies Act 2017?

Inability to pay its debts; passing a special resolution to wind up; acting against sovereignty/integrity/public order; conducting unlawful/fraudulent business; reduction of members below the statutory minimum; default in filing statutory returns; or where the court finds it just and equitable.

When is a company deemed 'unable to pay its debts' for winding up purposes?

When a creditor owed a sum exceeding the statutory threshold serves a demand and the company fails to pay within the prescribed period (e.g. three weeks); or a decree against the company is unsatisfied; or the court is satisfied the company cannot pay its liabilities.

What is the order of priority in distributing assets on winding up of a company?

Costs of winding up; secured creditors (per their charges); preferential payments (e.g. employee dues, taxes); unsecured creditors; and finally surplus to shareholders (preference shareholders before ordinary shareholders) according to their rights.