INDIVIDUAL ASSIGNMENT
INSTRUCTIONS : SECTION A IS COMPULSION BASED ON THE CASE STUDY
SECTION B: ANSWER ANY 2 (TWO) QUESTIONS
FORMAT : WORD
DUE DATE : MONDAY, 7 APRIL 2025 AT 1630 HOURS
SUBMISSION : THROUGH THE CLASS REP
SECTION A
(Compulsory)
CASE STUDY
Ken Bus Services (KBS) is a leading transport company in the transport industry and operates
four subsidiary companies. KBS was incorporated as a private limited company in 2001 and
went public in 2011 through a conversion. KBS has consistently performed well as reflected in
its reported latest financial statements. While the performance was good, it was necessary for
the board to create greater coherence within the organization through management control,
enhanced goal congruence ultimately leading to improved performance and efficiency.
As a leading passenger transport company, KBS has a fleet of 1000 vehicles providing service to
millions of passengers per year on more than 200 different routes throughout the country. KBS
core business lines include regular bus services, taxi services, car rental services and charter bus
services. The company plans to expand its taxi and non-taxi business through geographical
expansion and new business activities while continuing to invest in improving efficiency across
all business segments.
Following the Initial Public Offer (IPO), KBS approached WWV Consultants (WWV), a leading
secretarial and governance consultancy firm to support the company’s efforts to strengthen its
governance framework and policies. KBS targeted to go beyond just compliance with
regulations but align the company’s governance with international best practices and
standards.
The decision to engage WWV was a strategic move which was in line with KBS ‘s overall growth
strategy. KBS’s dramatic transformation from a modest family-owned business into listed
company to becoming one of the largest leading transport service-provider required a
significant reconfiguration of the company’s governance structure and practices.
The company wanted to set an example at the top that highlights the importance of good
governance. However, since many of the members of the Board of Directors (BOD) were
relatives, the leadership knew they needed to come up with a proper governance structure
articulating the roles and responsibilities of each governance body within the organization.
In terms of internal controls, KBS Internal Audit function needed improvements and dedicated
resources to monitor systematic corporate risk. Regarding treatment of shareholders the
company did not have policies to address conflict of interest, insider dealing and related party
transactions which was a problem with family members, some with no skills, were on the BOD
of KBS and affiliated companies. The founders of KBS understood that better governance would
bring added value and that value creation would come from better management of risks. By
spearheading a review of the governance structure, KBS showed its proactive stance and
foresight.
WWV conducted a secretarial and governance audit of KBS practices and developed a practical
action-oriented plan to help the company improve its governance structures and practices. In
collaboration with WWV, KBS developed a comprehensive manual which clearly outlines how
the company should be governed. A number of board practices were recommended to enhance
board effectiveness and steer the company forward. The company also committed itself to
address the issue of accountability and transparency on the part of the board and
management.
To improve the capacity of monitoring, the company strengthened its internal audit unit and
established a more formal risk management framework. With the transformation from a
privately held family business to a rapidly growing public company, restructuring was needed.
The founders had explored the development of a best practice family governance framework
including a family constitution to set the vision, values and policies regulating the family
business relationship and ensure continuity of KBS for generations to come.
The governance audit carried out by WWV identified challenges in a number of key governance
areas which had a negative impact on the board’s oversight role.
In their report WWV made recommendations on how to address these challenges, such as the
establishment of a “whistle blowing’’ policy in the organization to ensure accountability and
transparency on the part of the board and management.
QUESTION 1
(a) Discuss the governance challenges that could have been identified by WWV Consultants.
(10 marks)
(b) Propose ways in which the BOD could improve its governance and board practices in an
efforts to address the challenges you identified in question 1 (a) . (10
marks)
(c) Critically discuss whether the board had failed the shareholders and if so in what ways.
(5 marks)
(Total: 25 marks)
SECTION B
(Answer any TWO (2) questions from this section)
QUESTION 2
(a) “Quorum is necessary for general meetings “
REQUIRED:
Examine the above statement. (8
marks)
(b) You have just been appointed Company Secretary of Bak Limited which is listed on the
Stock Exchange. You have already identified problems that require your attention from
discussions with some of the directors and senior management. You have noted that
communication at board level is poor. Committees sometimes make decision without
referring the matter to the board and the board is not always aware of what the
committees have been discussing. Non-Executive Directors (NED) complain that they
know little about the business of the company because they have difficulty getting
information from the executive management team. One of the executive directors has
expressed an opinion to you that some NEDs may not be independent after all. The
executive directors have raised the matter in a private discussion with the Chairperson
but were told there was nothing to be concerned about.
REQUIRED:
Explain your responsibility as Company Secretary for the problems you have identified
and suggest way through which the board could address the issue you have noted at Bak
Limited. (12marks)
(Total: 20
marks)
QUESTION 3
(a) 20 people have subscribed to the Memorandum and Articles of Association to
incorporate a company limited by shares each taking one share. The Articles of
Association (AoA) of the company did not mention the first directors. The AoA of the
company has provision that the maximum number of directors will be 10, whereas all
the 20 are claiming and introducing themselves outside the company as the directors of
the company.
REQUIRED:
Critically discuss the legal status of directorship of the company and the actions the
company needs to take to bring down the number within the limits of the AoA. (8
marks)
(b) The Articles of Association is the constitution or contains rules and regulation that
govern the conduct of a company. The Article of Association of ABC (Pvt) Limited do not
provide for the holding of general meetings. Directors view general meetings as
destructive due to unnecessary questioning, politics by members and hassle associated
with voting.
REQUIRED:
Discuss your view point on the matter. (12 marks)
(Total: 20 marks)
QUESTION 4
(a) Examine the rules relating to dealings in shares by directors and management in a listed
company and indicate steps you would take to ensure compliance. (10 marks)
(b) Messrs Moyo and Bere hold between them 27% of the issued ordinary share capital of
XYZ Limited. On January 6, 2025 they deposited at the company’s registered office a
requisition for an EGM stating as its agenda the removal of the directors of the company
and the approval for the reduction of capital by $1 million which they believe is in
excess of the requirements of the company. At the meeting, an amendment was
proposed whereby the Financial Director (FD) was the only one to be removed from
office. This amendment was carried out with the Chairman exercising his casting vote.
The removal of the FD was subsequently voted on a poll which had been demanded by
Messrs Moyo and Bere. 57% of the votes were cast in favour of the FD’s removal
including 8% of the proxy votes which had been deposited at the company’s registered
office in favour of the Chairman. On the votes for a reduction of capital, 61% voted in
favour of the capital reduction. The company had adopted Table A as its Articles of
Association.
REQUIRED:
Critically discuss the validity of the above events (10
marks)
(Total: 20
marks)
GOOD LUCK