Question Tag: Shareholders

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MP – JUL 2020 – L2 – Q6 – Organizational Communication

Explanation of organizational communication and its importance to shareholders at an AGM, plus barriers and solutions.

Question

A. Communication is described as the heart of every organization. Explain organizational communication and its importance to shareholders of a rural bank during an Annual General Meeting session? [10 Marks]

B. List five (5) barriers to communication in an organization and suggest solutions to them? [10 Marks]

Answer

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Tags: Barriers, Communication, importance, Shareholders, Solutions
Level: Level 2

Topic: PROCESSES AND PRACTICE
Series: JULY 2020

TMFS – APRIL 2023 – L2 – Q1 – Methods of Corporate Equity Finance

Identify and explain four methods of corporate equity finance suitable for a company avoiding bank loans or credit.

Question

Assume you are the economic and financial consultant of the newly established Abrewa Ventures Ltd which was formed with the owners’ own resources. At its 3d General Meeting, the shareholders approved plans for the medium-term growth of the company but concerns were raised about how to finance it. Upon advice, the owners decided not to use bank loans or any form of credit for the anticipated growth. Identify and explain the four methods of corporate equity finance that would be appropriate to meet the funding needs of the company.

[20 Marks]

Answer

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Tags: Corporate Equity Finance, Funding Methods, Growth Financing, Non-Debt Finance, Shareholders
Level: Level 4

Topic: Financial markets in Ghana
Series: APR 2023

BCL – Nov 2024 – L1 – Q2a – Legal Implications Relating to Companies in Difficulty or in Crisis

Advise Naami on the procedure for private liquidation of Shama PLC.

Question

a) On 26 February 2024, Shama PLC, a public limited liability company trading on the Ghana Stock Exchange sent a notice to its shareholders inviting them to an Annual General Meeting (AGM) on 2 March 2024. The notice simply states that the ‘purpose is to transact the ordinary business’.

Naami is a shareholder of Shama PLC and is very disturbed about the vagueness of the notice. She is also not satisfied with the performance of the company and is seeking to requisition for a special resolution to liquidate the company.

Required:

Advise Naami on the procedure for private liquidation. (10 marks)

Answer

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Tags: Annual General Meeting, Private Liquidation, Shareholders, Special Resolution, Winding-up
Level: Level 1

Topic: Legal implications relating to companies in difficulty or in crisis
Series: Nov 2024

FM – Nov 2014 – L3 – SC – Q6b – Financing Decisions and Capital Markets

Examine reasons for conflict of interest between shareholders and bondholders.

Question

Discuss any FIVE reasons why conflict of interest may exist between shareholders and bondholders. (5 Marks)

Answer

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Tags: Bondholders, Conflict of Interest, Financing decisions, Governance, Risk Management, Shareholders
Level: Level 3

Topic: Financing Decisions and Capital Markets
Series: NOV 2014

FM – May 2024 – L3 – SC – Q7 – Mergers and Acquisitions

Discuss manager-shareholder conflicts with examples and reasons for synergy in mergers and acquisitions.

Question

(a) Discuss conflict of interest that may exist between managers and shareholders and give examples. (8 Marks)

(b) Explain why synergy might exist when one company merges with or takes over another company. (7 Marks)

Answer

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Tags: Conflict of Interest, Corporate finance, Managerial Agency, Mergers, Shareholders, Synergy
Level: Level 3

Topic: Mergers and acquisitions
Series: MAY 2024

FM – Nov 2023 – L1 – SC – Q6 – Corporate Governance and Financial Strategy

Explain conflicts of interest between shareholders and managers and assess the impact of lower interest rates on a typical company.

Question

a. State and explain examples of conflicts of interest that may exist between shareholders and managers. (9 Marks)

b. Explain the likely implications for a typical company of lower interest rates. (6 Marks)

Answer

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Tags: Agency Problem, Conflicts of Interest, Corporate Governance, Financial Implications, Interest rates, Managers, Shareholders
Level: Level 3

Topic: Corporate Governance and Financial Strategy
Series: NOV 2023

BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

Question

Agency costs are the costs that the shareholders incur when professional managers run their company. Which of the following is NOT part of agency costs?
A. Costs of auditing accounts of the company
B. Remuneration paid to managers of the company
C. Cash bonuses paid to managers for meeting specified targets
D. Costs incurred paying too much for the acquisition of a subsidiary
E. Award of free shares to management of the company

Answer

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Tags: Agency Costs, Management Compensation, Shareholders
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2020

BMF – Nov 2020 – L1 – SA – Q13 – Business and Organizational Structures and Choices

Identify the primary conflict of interest between stakeholders in a public company.

Question

The most significant conflict of interest between stakeholders in a public company is generally considered to be the conflict of interests between:
A. Shareholders and Government
B. Shareholders and Audit Committee
C. Shareholders and Executive Directors
D. Senior Executive Managers and Lenders
E. Government and Executive Directors

Answer

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Tags: Executive Directors, Shareholders, Stakeholder Conflicts
Level: Level 1

Topic: Business and Organizational Structures and Choices
Series: NOV 2020

BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

Question

Shareholders in large companies are usually investors seeking to earn a return on their investment in the form of dividends and a higher share price. Which of the following is NOT a matter that would be of interest to shareholders in an organisation?
A. A proposal to invest in a major project where the return is high
B. A proposed takeover bid for another company that offers better returns
C. Bonuses and shares
D. High dividend payments
E. Increasing profits and share price

Answer

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Tags: Corporate Actions, Dividends, Investments, Shareholders
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2020

BL – Nov 2011 – L1 – SA – Q7 – Company Law

Understanding what part of issued capital is paid up by shareholders.

Question

The part of issued capital which has been paid up by the shareholders is ………………………….

Answer

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Tags: Capital, Company Law, Issued Capital, Shareholders
Level: Level 1

Topic: Company Law
Series: NOV 2011

AFM – May 2019 – L3 – Q4a – Ethical issues in financial management

Discuss how ethical issues influence financial policies in relation to shareholders, suppliers, and customers.

Question

Ethical issues arise even when the objective is clear. Financial managers face trade-offs fraught with ethical issues. Thinking through the trade-offs and all the costs and benefits is important.

Required:
Suggest ways in which ethical issues would influence the firm’s financial policies in relation to the following:
i) Shareholders
ii) Suppliers
iii) Customers

Answer

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Tags: Corporate Governance, Customers, Ethics, Financial Policies, Shareholders, Suppliers
Level: Level 3

Topic: Ethical issues in financial management
Series: MAY 2019

AFM – May 2016 – L3 – Q5 – Corporate Reconstruction and Reorganisation, Business reorganization

Calculate the maximum possible loss of the company and allocate it between preference and ordinary shareholders.

Question

Additional Information:

The realizable values of the assets are as follows:
- Furniture & Fittings: GH¢27.0m
- Motor Vehicle: GH¢67.5m
- Land & Building: GH¢26.25m
- Stocks: GH¢10.95m
- Debtors: GH¢7.5m
The stated capital of the company is made up as follows:
- 2,000,000 ordinary shares of no par value: GH¢67.5m
- 500,000 15% cumulative preference shares of no par value: GH¢30.0m
The cost of winding up is estimated at GH¢21.3m.
The bank overdraft and 18% debentures are secured by a floating charge on the company’s assets.
The preference dividends and interest on debentures are two years in arrears. However, no provision has been made for these in the financial statement.
The ordinary shareholders have decided to inject GH¢60.0m in consideration for a new issue of equity shares if the capital reconstruction scheme is accepted.
Although it is the company’s policy to amortize intangible assets over five years, the Board of Directors has decided to maintain the Goodwill indefinitely in the books due to the persistent losses, in contravention of the company’s policy. Goodwill has been outstanding since 2009. The current financial state of the company negates the value and existence of the goodwill.
The preference shareholders have indicated their willingness to bear any deficit resulting from the reconstruction in proportion to their interest in the stated capital. In return, their stake would be converted into equity, and they would be permitted to make nominations to key management positions, including chairing the board for the first five years. If these proposals are accepted, the preference shareholders will contribute further equity of GH¢60.0m. They have also agreed to waive 50% of the arrears of dividend and convert the rest into equity.
Any arrears of preference dividends are to form a first charge upon any surplus on winding up.
The original ordinary shareholders have decided to waive any dividend due to them during the first two years in order to put the company on sound financial ground.
The company is expected to improve its cash flow position and commence dividend payments if the additional capital of GH¢120.0m is introduced.

Required:
a) Calculate the amount available if Crave Cottage Industry Limited is liquidated and its distribution.

(7 marks)
b) Calculate the maximum possible loss of Crave Cottage Industry Limited and its allocation to Preference Share Capital and Ordinary Share Capital. (6 marks)
c) Calculate the Bank/Cash balance of Crave Cottage Industry Limited after the reorganization. (2 marks)
d) Calculate the new stated capital for the company after the reorganization. (2 marks)
e) Prepare a Statement of Financial Position of Crave Cottage Industry Limited showing the position immediately after the scheme has been put in place.

(3 marks)

Answer

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Tags: Capital structure, Loss Allocation, Ordinary Shares, Preference shares, Shareholders
Level: Level 3

Topic: Business reorganisation, Corporate reconstruction and reorganisation
Series: MAY 2016

AFM – May 2016 – L3 – Q4d – Sources of finance and cost of capital

Calculate the theoretical ex-right price, value of rights, and analyze the effects of a rights issue on a shareholder's wealth.

Question

d) Agoro Limited has issued 75,000 equity shares of GH¢0.10 each. The current market price per share is GH¢24. The Company has decided to make a rights issue of one (1) new equity share at a price of GH¢16 for every four (4) shares held.

Required:
i) Calculate the theoretical ex-right price per share.

(2 marks)
ii) Calculate the theoretical value of the right. (1 mark)
iii) Mr. Crentsil currently holds 1,000 shares in Agoro Limited, show the effect of the rights issue on his wealth assuming he sells the entire right. (2 marks)
iv) Calculate the effect if Mr. Crentsil does not take any action and ignores the right issue. (1 mark)

Answer

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Tags: Equity Financing, Rights Issue, Shareholders, Theoretical Ex-Right Price
Level: Level 3

Topic: Sources of finance and cost of capital
Series: MAY 2016

TF – May 2018 – L3 – Q4b – Tax Planning

Advise on the relevance of the number of shareholders for tax planning purposes in a limited liability company.

Question

A proprietor of an enterprise intends converting his business into a limited liability company. He also intends to have shareholders made up of 5 members as against 6 members proposed by his wife in a discussion. He has approached you as a final level ICAG Tax student to advise him on the relevance of the number of shareholders in a limited liability company setting.

Required:
Advise for tax planning purposes, the relevance of numbers of shareholders.
(5 marks)

Answer

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Tags: Corporate Tax, Shareholders, Tax Planning
Level: Level 3

Topic: Tax planning
Series: MAY 2018

BCL – Nov 2020 – L1 – Q3d – Company Directors and Other Officers

Assess the validity of a director’s appointment and identify possible remedies.

Question

Asamoah is a board member of Darling Company Ltd, a limited liability company with 5% shareholding by the Ghana Government. Asamoah was appointed to the board three years ago by the Founder/Executive Chairman.
Kofi Mintah, the Founder/Executive Chairman, and majority shareholder of the company, in accordance with the regulations, shall appoint five of the nine-member board. Two of the board members represent workers groups and the other two come from other shareholders including the government. Asamoah consented in writing to his appointment but the Minister of Information just announced the revocation of Asamoah’s appointment to the board. Kofi Mintah called Asamoah to inform him that the government’s announcement was null and void and should be ignored.

Required:
i) Explain whether the Minister of Information was justified in nullifying the appointment of Asamoah. (6 marks)
ii) What TWO (2) remedies, if any, are available to Asamoah in the circumstance of the case? (4 marks)

Answer

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Tags: Appointment, Company Law, Directors, Remedies, Shareholders
Level: Level 1

Topic: Company directors and other officers
Series: NOV 2020

BCL – Nov 2020 – L1 – Q3a – Company Meetings and Resolutions

Identify processes required to vary the class rights of shareholders without court sanction.

Question

Identify TWO (2) processes required to vary the class rights of shareholders without the sanction of the Court. (4 marks)

Answer

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Tags: Class Rights, Company Law, Shareholders, Special Resolution
Level: Level 1

Topic: Company Meetings and Resolutions
Series: NOV 2020

BCL – Nov 2018 – L1 – Q3a – Company Law

State three items required in the register of members/shareholders of a company.

Question

State THREE (3) items that need to be in the register of members/shareholders of a company. (6 marks)

Answer

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Tags: Company Law, Corporate Governance, Register of Members, Shareholders
Level: Level 1

Topic: Contract Law
Series: NOV 2018

BCL – Nov 2017 – L1 – Q5c – Types of Capital and the Financing of Companies

Explain the key differences between debenture holders and shareholders.

Question

c) What differences exist between debenture holders and shareholders? (6 marks)

Answer

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Tags: Company Financing, Debenture Holders, Legal Definitions, Shareholders
Level: Level 1

Topic: Types of capital and the financing of companies
Series: NOV 2017

BMIS – March 2024 – L1 – Q2b – The business organisation and its stakeholders

Briefly discuss how shareholders, customers, suppliers, and the government may be rewarded for a company's good financial performance.

Question

Briefly discuss how the following external stakeholder groups may be rewarded for a company’s good financial performance.

i) Shareholders ii) Customers iii) Suppliers iv) Government (4 marks)

Answer

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Tags: Customers, Financial Performance, Government, Shareholders, Stakeholder rewards, Suppliers
Level: Level 1

Topic: The Business Organisation and its Stakeholders
Series: MAR 2024

FA – Nov 2016 – L1 – Q7 – Interpretation of financial statements (Financial Ratios)

Calculation of financial ratios and explanation of gearing implications for shareholders.

Question

a) State any FIVE users of accounting information and their information needs. (5 marks)

b) The following is a summary of the final accounts of Gade Ltd for the year ended 31st December 2015.

Statement of Profit or Loss for the year ended 31st December 2015

Required:
Calculate each of the following ratios (where appropriate calculations should be shown to two decimal places):
i) Sales to capital employed. (2 marks)
ii) Liquid (acid test) ratio. (1 mark)
iii) Interest cover. (2 marks)
iv) Dividend cover. (2 marks)
v) Gearing ratio. (2 marks)
vi) Earnings per share. (2 marks)
vii) Explain the implications of the level of gearing for the ordinary shareholders of Gade Ltd. (4 marks)

Answer

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Tags: Financial Analysis, Financial Ratios, Gearing, Ratio Calculations, Shareholders
Level: Level 1

Topic: Interpretation of financial statements (Financial Ratios)
Series: NOV 2016

Question Tag: Shareholders

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MP – JUL 2020 – L2 – Q6 – Organizational Communication

Explanation of organizational communication and its importance to shareholders at an AGM, plus barriers and solutions.

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TMFS – APRIL 2023 – L2 – Q1 – Methods of Corporate Equity Finance

Identify and explain four methods of corporate equity finance suitable for a company avoiding bank loans or credit.

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BCL – Nov 2024 – L1 – Q2a – Legal Implications Relating to Companies in Difficulty or in Crisis

Advise Naami on the procedure for private liquidation of Shama PLC.

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FM – Nov 2014 – L3 – SC – Q6b – Financing Decisions and Capital Markets

Examine reasons for conflict of interest between shareholders and bondholders.

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FM – May 2024 – L3 – SC – Q7 – Mergers and Acquisitions

Discuss manager-shareholder conflicts with examples and reasons for synergy in mergers and acquisitions.

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FM – Nov 2023 – L1 – SC – Q6 – Corporate Governance and Financial Strategy

Explain conflicts of interest between shareholders and managers and assess the impact of lower interest rates on a typical company.

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BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

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BMF – Nov 2020 – L1 – SA – Q13 – Business and Organizational Structures and Choices

Identify the primary conflict of interest between stakeholders in a public company.

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BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

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BL – Nov 2011 – L1 – SA – Q7 – Company Law

Understanding what part of issued capital is paid up by shareholders.

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AFM – May 2019 – L3 – Q4a – Ethical issues in financial management

Discuss how ethical issues influence financial policies in relation to shareholders, suppliers, and customers.

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AFM – May 2016 – L3 – Q5 – Corporate Reconstruction and Reorganisation, Business reorganization

Calculate the maximum possible loss of the company and allocate it between preference and ordinary shareholders.

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AFM – May 2016 – L3 – Q4d – Sources of finance and cost of capital

Calculate the theoretical ex-right price, value of rights, and analyze the effects of a rights issue on a shareholder's wealth.

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TF – May 2018 – L3 – Q4b – Tax Planning

Advise on the relevance of the number of shareholders for tax planning purposes in a limited liability company.

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BCL – Nov 2020 – L1 – Q3d – Company Directors and Other Officers

Assess the validity of a director’s appointment and identify possible remedies.

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BCL – Nov 2020 – L1 – Q3a – Company Meetings and Resolutions

Identify processes required to vary the class rights of shareholders without court sanction.

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BCL – Nov 2018 – L1 – Q3a – Company Law

State three items required in the register of members/shareholders of a company.

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BCL – Nov 2017 – L1 – Q5c – Types of Capital and the Financing of Companies

Explain the key differences between debenture holders and shareholders.

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BMIS – March 2024 – L1 – Q2b – The business organisation and its stakeholders

Briefly discuss how shareholders, customers, suppliers, and the government may be rewarded for a company's good financial performance.

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FA – Nov 2016 – L1 – Q7 – Interpretation of financial statements (Financial Ratios)

Calculation of financial ratios and explanation of gearing implications for shareholders.

You're reporting an error for "FA – Nov 2016 – L1 – Q7 – Interpretation of financial statements (Financial Ratios)"

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