Corporate Governance – Page 3

BCL – L1 – Q77 – Directors and Officers

Discuss ways directors are disqualified and removed from office.

Question

(a). Discuss the ways in which directors are disqualified and removed.

(b). With a decided case, explain what is meant by ‘Acts of the Company’.

(c). Distinguish between the types of meetings for limited liability companies.

Answer

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Tags: Corporate Governance, Directors, Disqualification, Fiduciary Duties, Removal
Level: Level 1

Topic: Directors and Officers

BCL – L1 – Q67 – Company directors and other officers

State limitations on directors' powers and ways a director’s appointment can be terminated under Companies Act 2019.

Question

In accordance with the Companies Act, 2019 (Act 992), the directors shall not, without the approval of an ordinary resolution of the company, exceed the powers conferred on them.

Required:

(a) State THREE (3) limitations on the powers of directors.

(b) Explain THREE (3) ways in which a director’s appointment can be terminated.

Answer

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Tags: Companies Act, Corporate Governance, Directors powers, Limitations, Termination
Level: Level 1

Topic: Company directors and other officers

BCL – L1 – Q66 – Governance and ethical issues relating to business

Explain governance issues and director disqualification factors in a case involving fraud at a company.

Question

In 2015, KWEKU LTD, which carries on the business of exporting cassava and mangoes from Ghana to Europe, opened an account with Zenith Bank at the Tema Branch. In 2016, the Finance Manager, who is the sole accounts officer of the company, forged the signature of the Managing Director (who was also the sole signatory to the bank account of the company) and made several withdrawals from the company to the tune of GH₵550,000. The bank in that same year requested that the Managing Director should, within two weeks of the letter, confirm the credit balance on the account, which at the time stood at GH₵2,200,000. The Managing Director, without any further checks, signed the document, thus confirming the credit balance presented by the bank. In 2017, the auditors raised queries on some of the fictitious withdrawals. The Chairman of the Board ordered the Human Resource Manager to dismiss both the Managing Director and the Finance Manager with immediate effect.

Required:

(a) Explain FOUR (4) issues in the case relating to governance and duties of directors. (10 marks)

(b) Explain THREE (3) factors that disqualify a person from being appointed as a director. (10 marks)

Answer

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Tags: Board authority, Corporate Governance, Directors duties, Disqualification, Fiduciary duty, Fraud, Termination
Level: Level 1

Topic: overnance and ethical issues relating to business

BCL – L1 – Q65 – Partnership dissolution

Explain reasons for refusing partnership registration, modes of winding up, asset application, and partner liability.

Question

SUNDRY ISSUES

(a) What may account for the Registrar refusing to register a partnership agreement?

(b) State three modes of winding up of a firm and indicate who can initiate each.

(d) State briefly the nature of a partner’s liability.

Answer

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Tags: Asset distribution, Business law, Corporate Governance, Ghana company law, Partnership agreement, Partnership dissolution, Partnership liabilities, Registrar refusal, Winding up
Level: Level 1

Topic: Alternative forms and constitutions of business organisations

BCL – L1 – Q64 – Partnership formation

Analyze issues in a partnership agreement and list items to verify for a valid partnership involving an employee and family members.

Question

KOFI

Kofi was employed as a senior wholesale manager by AB Limited, a limited liability company owned 100% by Mr. Adu. Kofi’s monthly salary is $30,000 and has been so for the last five years. To prevent Kofi from leaving the company, Mr. Adu went into agreement with him whereby AB Limited, Kofi and twenty family members of Mr. Adu formed a partnership. Kofi will get $40,000 as monthly salary and 10% of gross profit as bonus as and when Mr. Adu deem it fit. Kofi must give six months’ notice for resignation but could be fired without notice by Mr. Adu. Kofi has no role in management, control or in carrying out the partnership business. Kofi is happy with his new salary but thinks all is not right.

(a) What is not right?

(b) State five other items Kofi must verify in a partnership agreement.

Answer

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Tags: Business formation, Business law, Corporate Governance, Fiduciary duty, Ghana company law, Legal entity, Partnership agreement, Partnership dissolution, Partnership liabilities, Profit sharing
Level: Level 1

Topic: Alternative forms and constitutions of business organisations

BCL – L1 – Q63 – Pre-incorporation contracts

Advise on company registration refusal, corporate veil lifting, and pre-incorporation contract issues for a company formed in Ghana.

Question

LINA

(a) Under what circumstances will the Registrar refuse to register constitution of a Company?

(6 marks)

(b) Explain the circumstances under which the corporate veil could be lifted or pierced.

(c) Lina lives in the United Kingdom (UK) and asked her long-time friend, Esi to register a company for her in Ghana. Esi spent $10,000 on documentation, filling and processing, (with the issuance of receipts being Esi’s name) all covered with receipts in her name. Upon the request of Lina, Esi rented an office premises for one year at GH₵20,000 with the receipt in the name of the newly formed company. Lina just returned from UK to start operations. Lina discovered that the rental agent gave GH₵2,000 to Esi as inducement for the office deal. Lina appointed Esi as head of operations and refused to pay the registration expenses on the basis that Esi’s monthly salary as head of operations is more than GH₵10,000 and those expenses should be borne from the secret profits Esi had earlier enjoyed.

Required:

Based on your knowledge in pre-incorporation contracts, advise the parties.

Answer

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Tags: Business formation, Company registration, Corporate Governance, Corporate veil, Fiduciary duty, Ghana company law, Legal entity, Partnership liabilities, Pre-incorporation contracts, Secret profits
Level: Level 1

Topic: Alternative forms and constitutions of business organisations

SCS – L3 – Q41- Corporate Governance

Compare and contrast unitary and dual board structures in corporate governance.

Question

(a)

Ghanara’s model of corporate governance is based on the UK model, which is a single, or unitary board. The unitary board is made up of a mix of executive and non-executive directors. All directors have the right to participate in board decision making. Other countries operate dual board model (for example, Germany, which has a management board and a supervisory board) or even a three-board model, which operates in Japan. All participants in the single board have legal responsibility for management of the company and strategic performance.

Required:

Compare and contrast unitary board structure and dual board structure. (b)

The intensity of competition among rival firms within an industry will affect the profitability of the industry as a whole. Within the past decade, the Ghanaian telecommunication industry has witnessed intense competition, taking several forms. You are a strategic management consultant and have been invited as guest lecturer in one private university to discuss the intensity of competition among rival firms in the telecommunication industry.

Required:

Discuss FOUR factors that could be responsible for the intensity of competition among rival firms within the telecommunication industry in Ghana.

Answer

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Tags: Board Structures, Corporate Governance, Dual Board, Strategic management, Unitary Board
Level: Level 3

Topic: stakeholders and mission, Strategy

SCS – L3 – Q32 – Strategy implementation

Explain five common weaknesses of Boards of Directors at Zamu Enterprises.

Question

(a) Boards of Directors are expected to manage companies effectively. However, corporate boards sometimes fail to do so. Recent corporate scandals have highlighted key weaknesses of Board of Directors.

Required:

Explain FIVE common weaknesses of Board of Directors.

(b) Zamu Enterprises began as a small company which operated in the financial services sector of Zamora’s economy. Within the last ten years, the Board, which is chaired by the founder, Ms. Amina Zuri, has incrementally expanded into three more sectors of the economy, namely: telecommunications, logistics and real estate. Currently a conglomerate, Zamu Enterprises has four different companies in its portfolio and has its corporate head office located within the capital city, Zambara.
Required:
Explain the different levels of corporate strategy as it relates to Zamu Enterprises.

(c) Technology is one of the most powerful forces within the external business environment that has changed significantly how business is conducted especially within the 21st Century. For instance, information technology (IT), well exploited, can have significant impact on all the five forces of competition.

Required:

Identify FOUR effects of technological change on organization.

Answer

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Tags: Board Weaknesses, Corporate Governance, Oversight, Risk Management, Strategic management, Zamora
Level: Level 3

Topic: Strategy implementation

FR – L2 – Q55 – Financial Instruments

Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

Question

On 1 January Year 1 Jordana PLC has the following capital and reserves.

Equity	GH₵
Share capital (1 million ordinary shares)	1,200,000
Retained earnings	5,670,300
	6,870,300

During Year 1 the following transactions took place.

1 January: An issue of GH₵100,000 8% GH₵1 redeemable preference shares at a premium of 60%. Issue costs are GH₵2,237. Redemption is at 100% premium on 31 December Year 5. The effective rate of interest is 9.5%.
31 March: An issue of 300,000 ordinary shares at a price of GH₵1.30 per share. Issue costs, net of tax benefit, were GH₵20,000.
30 June: A 1 for 4 bonus issue of ordinary shares.
Profit for the year, before accounting for the above, was GH₵508,500. The dividends on the redeemable preference shares have been charged to retained earnings.

Required
Set out capital and reserves and liabilities resulting from the above on 31 December Year 1.

Answer

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Tags: Accounting Standards, Convertible Loan Notes, Corporate Governance, Deferred Tax, Equity, Financial instruments, Financial Statements, Liabilities, Preference Shares, Share Capital
Level: Level 2

Topic: Financial Reporting Standards and Their Applications

SCS – L3 – Q23 – Conflicts of interest and ethical conflict resolution

Discuss three justifications for separating the roles of board chairman and CEO at Kabwe Pharmaceuticals Ltd.

Question

Susan Kabwe completed a first degree in pharmacy programme abroad and returned to her native country Gambia with the hope of starting a pharmaceutical company. Gambia has been experiencing high graduate unemployment and Susan was very determined not to join the teaming unemployed youth in the country. Susan put together an excellent business plan and approached four other childhood friends who have also completed university to start Kabwe Pharmaceuticals Ltd for manufacturing of basic and essential drugs locally. After many months of hard work, the company finally commenced operations two years ago.

Susan Kabwe plays a dual role of the chief executive officer (CEO) and chairman of the Board of Directors, and the four other friends are all executive directors of the company. The board of the company is currently composed of five executive directors and two non-executive directors. The two non-executive directors are close friends of the executive directors without relevant work experience since they remained unemployed 3 years after completing university. There have been several board meetings held without the non-executive directors. This situation is largely due to a belief by the executive directors that non-executive directors are really not needed since they do not play any important role on the board. Susan and other executive directors participated in a seminar on corporate governance where the facilitator made the following statements on best practices of corporate governance:

“The roles of board chairman and chief executive officer should be held by two different individuals”

“The board chairman performs critical functions to ensure that the board functions effectively”

“The board should be composed of at least one-third of non-executive directors”

After the seminar the executive directors disagreed with some of the facilitator’s assertions. They claimed the statements are idealistic and not pragmatic. Susan Kabwe has approached you as a corporate governance expert to help provide clarity to the statements by the facilitator.

Required:

Discuss THREE justifications why the roles of the board chairman and chief executive officer should not be held by Susan Kabwe.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board roles, Chairman responsibilities, Corporate Governance, Ethics, Non-executive directors
Level: Level 3

Topic: Professional practice and codes of ethics

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BCL – L1 – Q77 – Directors and Officers

Discuss ways directors are disqualified and removed from office.

BCL – L1 – Q67 – Company directors and other officers

State limitations on directors' powers and ways a director’s appointment can be terminated under Companies Act 2019.

BCL – L1 – Q66 – Governance and ethical issues relating to business

Explain governance issues and director disqualification factors in a case involving fraud at a company.

BCL – L1 – Q65 – Partnership dissolution

Explain reasons for refusing partnership registration, modes of winding up, asset application, and partner liability.

BCL – L1 – Q64 – Partnership formation

Analyze issues in a partnership agreement and list items to verify for a valid partnership involving an employee and family members.

BCL – L1 – Q63 – Pre-incorporation contracts

Advise on company registration refusal, corporate veil lifting, and pre-incorporation contract issues for a company formed in Ghana.

SCS – L3 – Q41- Corporate Governance

Compare and contrast unitary and dual board structures in corporate governance.

SCS – L3 – Q32 – Strategy implementation

Explain five common weaknesses of Boards of Directors at Zamu Enterprises.

FR – L2 – Q55 – Financial Instruments

Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

SCS – L3 – Q23 – Conflicts of interest and ethical conflict resolution

Discuss three justifications for separating the roles of board chairman and CEO at Kabwe Pharmaceuticals Ltd.

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Discuss ways directors are disqualified and removed from office.

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State limitations on directors' powers and ways a director’s appointment can be terminated under Companies Act 2019.

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Explain governance issues and director disqualification factors in a case involving fraud at a company.

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Explain reasons for refusing partnership registration, modes of winding up, asset application, and partner liability.

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Analyze issues in a partnership agreement and list items to verify for a valid partnership involving an employee and family members.

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Advise on company registration refusal, corporate veil lifting, and pre-incorporation contract issues for a company formed in Ghana.

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Compare and contrast unitary and dual board structures in corporate governance.

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Explain five common weaknesses of Boards of Directors at Zamu Enterprises.

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Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

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Discuss three justifications for separating the roles of board chairman and CEO at Kabwe Pharmaceuticals Ltd.

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