Self-Assessment Question (SAQ)-2.
9
Mr. Sakhawat is the one of the subscribers of the MOA, of the Lizword ltd, out
of the 7 subscribers but his name is not mentioned in the register of member
of the company at the time of declaring the dividend company. The company
had not paid the dividend after arguing that Mr Sakhawat is not the
registered shareholder of the company, explain as per provisions of the
companies act 1994.
Answer to SAQ 2.9
Subscribing the Memorandum of Association (MOA) of a company a person
give his consent to become a member of a company. Legally subscriber of
share become member of a company. So here company cannot deny the
dividend to Mr. Sakhawat on the ground that his name is not in the registrar
of member.
10. Under what circumstance share transfer may be
refused by a company? -Explain
Answer:
A company can refuse to transfer shares only for valid reasons. The main circumstances are:
1. Incomplete papers:
If the share transfer form is not properly filled, signed, or stamped.
2. Unpaid transfer fee:
When the required fee for share transfer is not paid.
3. Company’s lien:
If the shareholder owes money to the company, it can stop the transfer.
4. Restriction in Articles:
If the company’s Articles of Association do not allow transfer to certain people or need
prior approval.
5. Legal reasons:
If there is a court order or the transfer goes against the law.
16. Write short notes on the followings:
a) Return of Allotment
b) Shares and Warrants
c) Reserved Capital
d) Capital Reserve
e) Share Transfer
f) Share Transmission
g) Shareholder Registrar
Question 16: Write short notes on the following:
(Exam Ready Answer – Easy Words)
a) Return of Allotment:
When a company gives (allots) new shares to people, it must send a report to the Registrar of
Joint Stock Companies.
This report is called the Return of Allotment. It shows how many shares were given, to whom,
and at what price. It must be submitted within the fixed time after allotment.
b) Shares and Warrants:
Share: A share is a small unit of company ownership. The holder of a share is called a
shareholder.
Share Warrant: A share warrant is a certificate issued by a public company that proves
the ownership of shares and can be transferred easily by delivery.
c) Reserved Capital:
Reserved capital is that part of unissued share capital which a company keeps aside and cannot
issue except at the time of winding up.
It acts as a safety fund for creditors.
d) Capital Reserve:
Capital reserve is made from non-trading profits like sale of fixed assets or share premium.
It cannot be used for paying dividends but can be used to strengthen the company’s financial
position.
e) Share Transfer:
Share transfer means the voluntary transfer of ownership of shares from one person to another
through a transfer form.
After approval, the company records the new owner’s name in the register of members.
f) Share Transmission:
Share transmission occurs automatically when a shareholder dies, becomes bankrupt, or legally
incapable.
The shares are passed to the legal heir or representative without any transfer form.
g) Shareholder Register (Register of Members):
It is an official record that contains the names, addresses, and number of shares held by each
shareholder.
It helps the company identify all its shareholders.
17. In a company vacancy of a Director was caused by the death
of a Director 'A' after three months of his joining the company.
The Board of Directors, of the company, therefore appointed 'B' in
his place as Director, but did not seek approval of the company in
its General Meeting. Referring to the provisions of the Companies
Act 1994, examine the validity of 'B's appointment,
18. Karim, a Director of a company proceeds on leave for 8
months in England for personal reasons. Board of Directors at a
meeting appoints Rahim for a period of two months, as an
Alternate Director. Articles of Association of the company do not
confer upon the Board of Directors any such power to appoint
anyone as Alternate Director. Referring to the 72 provisions of the
Companies Act, examine the validity of the above appointment.
What shall be your answer in case the Board appoints Rahim for
the entire period of Karim's leave?
Question 17:
Answer (Easy and Short):
According to the Companies Act 1994, when a director dies, the
Board may fill the vacancy temporarily.
But that appointment must be approved at the next Annual
General Meeting (AGM).
Since ‘B’ was appointed but not approved in the AGM, his
appointment is not valid after that meeting.
Question 18:
Answer (Easy and Short):
Under the Companies Act 1994, an Alternate Director can be
appointed only if the Articles of Association allow it.
Here, the Articles do not give that power, so Rahim’s appointment
for 2 months is invalid.
Even if he was appointed for the full 8 months, it would still be
invalid.
Case study
Dividend 1. BOD of Director of Summit Pharmaceuticals Limited
declared 5.00% stock dividend. In AGM shareholder raised
question of the fact that during corona virus pandemic Company
has made hefty amount of profit as shown in Financial Statement.
As such they demand at least 10% cash dividend. Explain the
validity of shareholders’ demand of high dividend.
Answer: Though shareholders are the owner of the Company,
Board of Directors (BOD) are entrusted with the power of
managing the Company and as such BOD is sole authorized to fix
the amount of dividend examining the financial statements of the
company. BOD will decide the amount of dividend and members is
AGM will approve it but member cannot increase the amount of
dividend. Rather member can decrease amount of declared
dividend by the BOD.
Interactive Question 1:
Mrs. Ayesha Rahman has started his job at ABC textile Ltd. on
February 01 2020. She actually worked in 2020 for 198 days and
has taken leave for having an accident for 3 days. She went for
maternity leave on November 5 2020. Did she complete one year
of continuous service in 2020?
Interactive Question 2:
Mr. Ahasan worked in a company from January 1, 2018. He died on 15 the
January 2021 due to an accident while he was going to office. His monthly
wages were Tk. 25,000. His amount of gratuity is Tk. 40,000. Will Mr. Ahasan
be eligible to compensation due to death? What will be the amount of
compensation due to death?
Interactive Question 3:
Mr. A works in a RMG factory from January 1, 2018. The owner of the factory
is in the decision that few workers shall be retrenched on the ground of
redundancy and Mr. A is in the list. What is the right of Mr. A in this
circumstance?
Interactive Question 4
In a company a worker is found that he is involved in cash appropriation of
significant amount for the last couple of years. What courses of action can be
taken by the employer in this regard?
Interactive Question 5:
Mr. Alampintu is working at the Business Standard newspaper for the last two
years. As per calendar year in 2020, he worked for 300 days for that year.
What is the eligible number of annual leave for Mr. Alam Pintu?
Answer to Interactive Questions
Interactive Question 1:
Yes, Mrs. Ayesha Rahman has completed one year of continuous service in
2020. Her actual working days are 249 days (198+3+21 (Nov)+ 27 (Dec))
which is more than the required 240 days.
Interactive Question 2:
Yes, as Mr. Ahasan have completed more than two years of continuous
services. Mr. Ahasan will be entitled to the compensation due to death
equivalent to 45 days of wages as he died due to an accident while he was
going to office. The wages for 45 days will be Tk. 37,500 (25000/30*45). As
the gratuity amount is higher than the 45 days of wages, he will be entitled
to Tk. 40,000 as compensation to death and the amount will be in addition to
any other benefit to which the deceased worker would have been entitled to
had he retired from the service. 401
Interactive Question 3:
The owner of the factory can retrench workers on the ground of redundancy,
but workers have certain rights at the time of retrenchment. A worker who
has completed one year of continuous service shall be given one month’s
notice indicating the reasons for retrenchment, or the worker has been paid
in lieu of such notice, wages for the period of notice. So, Mr. A has the right
of either the once month notice or wages equivalent to one month or
gratuity for every completed year of service if any, whichever is higher.
Interactive Question 4:
The worker may be dismissed without prior notice or pay in lieu thereof as he
is convicted for any criminal offence i.e. fraud. Instead of being dismissed, in
consideration of any extenuating circumstances, the worker may be awarded
any of the following punishments, namely:
(a) removal;
(b) reduction to a lower post, grade or scale of paying for not exceeding one
year ;
(c) stoppage of promotion for a period not exceeding one year ;
(d) withholding of increment for a period not exceeding one year ;
(e)fine;
(f)suspension without wages and subsistence allowance for a period not
exceeding seven days;
(g) censure and warning.
Interactive Question 5:
In the case of a newspaper worker, annual leave is allowed one day for every
eleven days of work. For 300 working days, the eligible number of annual
leave is 27 days. So, Mr. Alam can be allowed maximum 27 days as annual
leave.