1. Assessment Exemplar

Assessment Tasks

The table below summarises how each assessment exemplar task relates to coverage of the Outcomes detailed in the Unit specification. It also indicates the evidence, which should be retained for external moderation.

|Outcome |Suggested task |Suggested evidence to be retained |
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|1. |Each candidate should write a report that|A written report that can be used by Charles Prospect to|
| |can be used by Charles Prospect to |give the required presentation to the client |
| |deliver his presentation to Bean & Co. |It should clearly describe the personality of a company |
| |The report will be assessed for the |separate from its owners and board |
| |demonstrated knowledge of the legal |It should also describe the process by which a company |
| |formation of a company, forms of |can be formed and registered |
| |corporate body and procedures for company|The different forms of corporate body that can be formed|
| |formation. Case Study 1 provides |should be clearly described |
| |background information for this. | |
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| |Candidates should give written answers to|Answers should provide clear understanding of how a |
| |the three questions on company finance. |company’s financial arrangements can be understood |
|2. | |Shares |
| | |Raising finance |
| | |Restrictions and rules on a company when raising finance|
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| | |Answers should include the roles of directors and the |
| | |company secretary |
| |Candidates should give written answers to|The activities associated with company meetings should |
| |the four questions on the management and |be effectively covered, (AGMs and EGMs) |
| |administration of a company. |The various types of resolutions should be defined |
|3. | | |
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| | |A written report covering insolvency should provide an |
| | |overview on voluntary and compulsory liquidation, |
| | |administration |
| |Candidates should demonstrate their |It should also describe the role of a liquidator |
| |knowledge of insolvency as a follow up | |
| |presentation for the repot based on the | |
| |case study for outcome 1 Case Study | |
|4. | | |
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Conditions of Assessment

Outcome 1

Outcome 1 requires that a report of 800-1000 words be written under open-book conditions. (Around two hours should be allowed by candidates to write the report).

Time may be allocated for research, at the discretion of the Centre.

The report is based on a case study that should be shown to the candidates in advance.

To achieve this Outcome, candidates should achieve 70% of available marks.

Outcomes 2 & 3

Each of these Outcomes requires the candidate to answer a number of questions.

In Outcome 2 there are 3 questions. The questions aim to provide information to expand the scenario set in the case study and answers from Outcome 1. Each question carries equal marks. Answers will be extended responses. The assessment will be conducted as a single closed book examination which should take approximately 2 hours to complete.

In Outcome 3 there are 4 questions. The questions aim to provide information to expand the scenario set in the case study and answer to Outcome 1 and the answers to Outcome 2. Each question carries equal marks. Answers will be extended responses. The assessment will be conducted as a single closed book examination which should take approximately 2 hours to complete.

Each answer should be completed with a minimum of 150 words and a maximum of 200 words.

Candidates should be allowed two hours to complete these questions under closed-book conditions. Re-assessment is at the discretion of the Centre.

To achieve these Outcomes, candidates should achieve 70% of available marks.

Outcome 4

Requires that a report of 800-1000 words be written under open book conditions (around two hours should be allowed to write the report). The report for this outcome is the second of the two reports requested

Time may be allocated for research, at the discretion of the Centre.

Report should be completed in a minimum of 800 words and maximum of 1000 words.

To achieve this Outcome, candidates should achieve 70% of available marks.

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|Assessment Task |2 |

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|Outcome(s) Covered |2 |

Assessment Task Instructions

Outcome 2

You are required to demonstrate your knowledge of the capital and finance of a company.

Time allowed two hours. To be written under closed book controlled conditions.

Answer the following three questions:

1. Explain what shares are, and how ordinary shares differ from preference shares. Your answer should also include information on how and where they may be purchased.

2. Explain the various ways that a company can take out loans to raise capital. Pay particular attention to explaining how Debentures and Company Charges differ.

Your answer should clarify what the differences between secured and unsecured loans are.

3. Where may the rules that govern a company’s borrowing powers be found? Give an overview on the limitations that may be placed on the boards’ ability to raise capital.

Each answer should be completed with a minimum of 150 words and a maximum of 200 words.

To achieve this Outcome, candidates should attain 70% of the available marks.

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|Assessment Task |3 |

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|Outcome(s) Covered |3 |

Assessment Task Instructions

Outcome 3

You are required to demonstrate your knowledge of the management and administration of a company.

Time allowed two hours. To be written under closed-book controlled conditions.

Answer the following four questions.

1. Provide an outline of the duties of a director. Include in your answer details on how they are appointed, how their role as directors can be terminated and what their duties and powers entail.

2. Outline the qualifications necessary for a company secretary in a public company. Include in this how they are appointed and what their duties are. How does this compare for the company secretary of a private company?

3. Outline the purpose of AGMs and EGMs. How often are they held and what is their purpose?

4. Define the difference between a motion and a resolution during the procedure at a company meeting and explain the differences between ordinary, extraordinary and special resolutions.

Each answer should be completed with a minimum of 100 words and a maximum of 150 words.

To achieve this Outcome, candidates should attain 70% of the available marks.

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|Assessment Task |4 |

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|Outcome(s) Covered |4 |

Assessment Task Instructions

Outcome 4

You are required to demonstrate your knowledge of the ways in which insolvency may be dealt with.

To be written and generated under open-book conditions.

Following the presentation given by your boss using your report from Outcome 1, the client has asked your boss to provide answers to how a company that is insolvent may be dealt with.

Your boss asked you to produce this in the information (Case Study) and specifically requires you to define what constitutes insolvency in a company and how they will be dealt with. Pay particular attention to your explanation of Liquidation, (voluntary and compulsory), and Administration.

The report should be completed in a minimum of 800 words and maximum of 1000 words.

To achieve this Outcome, candidates should attain 70% of the available marks.

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|Assessment Task |2 |
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|Outcome(s) Covered |2 |

Suggested Solution and Making an Assessment Decision

1 The share is the interest of the shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders.

(s14 Companies Act 1985)

The main features of a share are:

• right to dividends declared on the shares • generally, right to vote at general meetings • on liquidation, right to receive assets dependent on class of shares • obligation to subscribe capital to nominal value of share • right to transfer (in accordance with articles of association)

Ordinary shares are governed by rules (above). Usually companies will only have this class of share, which is the equity of the company.

Preference shares give the holder entitlement to a preferential dividend. They may also give other rights such as preferential voting rights or repayment of capital in priority to other shares, or winding up.

Shares can be purchased through a bank or stockbroker. Increasingly, people buy shares online. (Shares in a private company can be bought via company secretary.

2 A company can raise money. On occasions, the managing director may have ability/authority to raise money for the company but, more usually, the board of directors authorise money issues. A company can take a loan and issues shares. Debentures (sometimes likened to a company mortgage) can be issued to raise loan capital.

Debentures and shares have similarities. They are both collectively termed securities and dealings on the Stock Exchange are carried out in the same way. However, a debenture holder is a creditor of the company (shareholder is a member).

A company can purchase its own debentures and issue them at a discount. Loans can be fixed – security for the loan fixed to a company asset, or floating.

3 The Articles of Association should be referred to when researching the rules governing a company’s borrowing power. Finance raising issues will be an item for a Company General meeting.

It is up to lenders to investigate, whether or not directors have the power to borrow. If directors are acting outwith their authority they will be said to be acting ‘ultra vires’ (ie outwith their powers). A loan made in this situation may not be recoverable.

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|Assessment Task |3 |
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|Outcome(s) Covered |3 |

Suggested Solution and Making an Assessment Decision

1) In company law, directors owe their duties to the providers of capital, ie shareholders. This is a traditional view with Section 309 of the Companies Act 1985 providing that:

• The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company’s employees in general as well as the interests of its members. • Accordingly, the duty imposed by this section on the directors of a company is owed by them to the company (and the company alone) and is enforceable in the same way as any other fiduciary duty owed to a company by its directors.

Directors have two main types of duty:

a) Professional – the Articles of Association requires that two directors are named. They are appointed by the voting rights of shareholders. They can be removed from the board of directors by an ordinary resolution in a general meeting. (This power to shareholders is usually subject to restrictions eg weighted voting provision and quorum provisions.)

Directors may also leave the company at the normal end of a contract, retirement, resignation and disqualification.

b) Fiduciary – the need for trust and acting in the best interests of the company.

2) Company Secretaries are the chief administrative officers of the company. A company secretary is appointed by those who form the company and details of the appointment must be submitted to the Registrar of Companies.

Duties include:

• preparation and keeping of minutes of board and general meetings • dealing with share transfers and issuing share and debenture certificates • payment of dividends • sending notices of meetings, copies of accounts etc • preparation of annual returns • preparation of returns required by government and other official bodies

There are no mandatory qualifications for a company secretary in a private company. There is a mandatory requirement in a public company. According to s286 of the Companies Act 1985 directors of public companies must take all reasonable steps to ensure that the secretary or each joint secretary of the company is a person with the requisite knowledge and experience and who:

• was a company secretary before • member of prescribed professional body • qualified in UK as a barrister or advocate • by virtue of another position held appears to be capable of discharging the functions of the secretary

3) In the AGM business would normally include election/retirement of directors, presentation of accounts, declaration of dividends, shareholders questions, pay and benefits for directors. The AGM is held annually. Failure to have an AGM may lead to lapse of directors appointments.

An EGM can be called by directors, members request, two or more members holding 10% of share capital, a court, resigning auditors or a public company where there is serious loss of capital. Most companies will try to avoid having an EGM, the preferred option being to let the business wait until the next AGM.

4) A motion is an issue. Decisions have to be made regarding a motion and, once made, become a resolution. Extraordinary resolutions are passed by a majority of at least 75% of those voting at and EGM. Notice of intention must have been given 14 days before meeting.

A special resolution is one passed by a majority of at least 75% of those voting and passed at a general meeting of which notice, of 21 days, has been given specifying the intention to propose the resolution. An ordinary resolution is not defined by an Act. It is simply one passed by a majority of these voting

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|Assessment Task |4 |
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|Outcome(s) Covered |4 |

Suggested Solution and Making an Assessment Decision

There are two types of ‘winding up’.

Compulsory winding up (Section 122(1) of the Insolvency Act 1986 sets out the grounds of compulsory winding up).

They include: • company has by special resolution resolved that the company would be wound up by the court • company is a public company which has registered but has not received a certificate to do business after one year (s 117 of the Companies Act) • members are reduced below two • company unable to pay debts

Voluntary liquidation starts in the following ways: • company resolves to be wound-up by special resolution • company resolves by extraordinary resolution to be wound-up on the basis that it cannot by reason of its liabilities continue in business • a fixed period has been settled for the duration of the company and the fixed period has now passed

Notice of any resolution is published, in appropriate newspaper, within 14 days (s85 (1) of the Insolvency Act 1986).

In a voluntary wind-up, the winding up commences on the date that the resolution is passed. A proposal for a voluntary arrangement may be made by a company’s directors, liquidator or administrator. Since 1985 it has been possible for the court on the application of a company, its directors or creditors to make an administration order in respect of a company where the company is unable to pay its debts. There then follows a period when no enforcement proceedings can be brought against the company and no hire purchase or leasing contract or reservation of title provision can be enforced against it.

At the end of administration, the company may be restored to full health, or there will be a good inventory of assets – this might not have happened on a winding-up or voluntary arrangement.

In short: In a liquidation situation a liquidator, who is specially qualified, takes power from directors and takes over the running of the company to convert assets into cash. There is a priority list when paying off company debts.

Administration is a process whereby an attempt is made to save the company by appointing an administrator. The court can appoint an administrator if a request is made by the directors, a creditor or the company itself.

|Unit Assessment: Candidate’s Assessment Record |
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|DE5H 35: Company Law: An Introduction |
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|Class | |Group | |
|Candidate Name | |Candidate ID | |
|Outcome 2 |
|Evidence Requirements |Record of Performance |
| |Satisfactory/ |Comments |
| |Unsatisfactory | |
|Assessment Task 2 | | |
|Question 1 | | |
|Define a share; asset in the company capital, share of profit or loss | | |
|(dividend), right to influence company with a vote. | | |
| Ordinary shares; all shares are ordinary unless defined otherwise, they share | | |
|profits equally, (win or lose), can attend meetings and vote on company matters| | |
|Preference shares; attract preferential treatment, fixed rate dividend, receive| | |
|their dividends first before ordinary shareholders. If company makes loss | | |
|payment of preference shares is a debt. | | |
|Shares in public company purchased on stock market. | | |
|Shares in private company purchased via company secretary. | | |
|Question 2 | | |
|COMPANY CAN RAISE MONEY BUT USUALLY NEEDS AUTHORITY OF BOARD OF DIRECTORS, | | |
|SOMETIMES MANAGING DIRECTOR HAS AUTHORITY TO BORROW ON HIS/HER OWN, NOT USUALLY| | |
|A SINGLE DIRECTOR. | | |
|DEBENTURES ARE LIKE A COMPANY MORTGAGE, LISTED WITH COMPANY REGISTER, BOUGHT | | |
|AND SOLD ON STOCK MARKET, CAN BUY INTO SHARE OR DEBENTURES ON STOCK MARKET, | | |
|HOLDERS ARE THEN CREDITORS OF COMPANY, INTEREST MUST BE PAID EVEN IF NO PROFIT.| | |
|COMPANY CHARGES (SECURITIES IN SCOTLAND), LIKE STRAIGHT FORWARD LOANS, | | |
|REGISTERED AT COMPANIES HOUSE | | |
|Fixed; where security for the loan is attached to a particular asset, lender | | |
|can claim this asset if the company defaults, company cannot use or deal with | | |
|asset without permission of lender. | | |
|Floating; is not attached to property unless invoked, no need for lenders | | |
|permission to use or deal with assets, used for ‘liquid’ assets. | | |
|Secured / unsecured loans; preferential rates of interest can sometimes be | | |
|obtained if a company asset is used as collateral against the loan. Defaulting | | |
|on the loan means the lender can sell the asset to pay off the debt. If an | | |
|asset is used the loan is ‘secured’ against it. Unsecured loans are not | | |
|protected this way. | | |
|Question 3 | | |
|The rules that govern how the company can raise finance can be found in the | | |
|Articles of association. | | |
|In addition, other powers to raise finance can be agreed at Company General | | |
|Meeting. | | |
|Lenders must ensure that the directors have the power to borrow otherwise the | | |
|loan may not be recoverable. | | |
|If directors act outwith their power and it is not recoverable, it becomes | | |
|known as ‘ultra vires’ | | |
|(Enter S or U in the box to indicate whether performance in the relevant aspect of the assessment is satisfactory or unsatisfactory. |
|The comment column can be used to highlight any re-assessment that may be needed.) |
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|Assessor’s signature: |Date: |

|Unit Assessment: Candidate’s Assessment Record |
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|DE5H 35: Company Law: An Introduction |
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|Class | |Group | |
|Candidate Name | |Candidate ID | |
|Outcome 3 |
|Evidence Requirements |Record of Performance |
| |Satisfactory/ |Comments |
| |Unsatisfactory | |
|Assessment Task 3 | | |
|Question 1 | | |
|Directors’ duties are of two types, fiduciary and professional | | |
|Fiduciary; underlines the position of trust and need to act in best interests | | |
|of company | | |
|Professional; must use care and skill and not act negligently in the duties of | | |
|a director | | |
|When company starts at least two directors will be named in the Articles of | | |
|Association | | |
|Thereafter, normal method of appointment for directors is by the voting rights | | |
|of the shareholders | | |
|The Companies Act 1985 contains details on how a director may be removed from | | |
|their position by voting | | |
|Other reasons for termination of a director’s contract include; normal end of | | |
|contract, retirement, resignation on their own part, disqualification. | | |
|Question 2 | | |
|Qualifications for Company Secy in a Public company include; previous | | |
|experience as a company secretary (three out of last five years), | | |
|lawyer/solicitor/advocate, member of specific professional institution, can | | |
|prove equivalent level of expertise | | |
|The company secretary is an employee of the company but can also be a director | | |
|(not allowed to be the only one) | | |
|The company secretary in a private company does not need to be qualified in | | |
|this way. | | |
|Question 3 | | |
|AGMS NORMALLY INCLUDE IN THEIR AGENDA; ELECTION/RETIREMENT OF DIRECTORS, | | |
|DECLARATION OF DIVIDENDS, PRESENTATION OF THE ACCOUNTS, SHAREHOLDERS ABILITY TO| | |
|QUESTION DIRECTORS, REPORT OF PAY AND BENEFITS TO DIRECTORS AND REQUEST FOR | | |
|SHAREHOLDERS APPROVAL | | |
|AGMs are normally held annually | | |
|EGMs are extraordinary meetings that can be convened by the directors if they | | |
|wish to discuss certain issues that can’t wait till the next AGM. Shareholders | | |
|who hold one-tenth or more votes can force the directors to hold an EGM | | |
|Question 4 | | |
|MOTIONS ARE THE ISSUES ON WHICH DECISIONS HAVE TO BE MADE. ONCE PASSED THEY | | |
|BECOME RESOLUTIONS. | | |
|Ordinary resolutions require 50% of the vote (most common resolution) | | |
|Extraordinary resolutions require 75% of the vote | | |
|Special resolutions also require 75% but 21 days notice of the resolution must | | |
|be given | | |
|(Enter S or U in the box to indicate whether performance in the relevant aspect of the assessment is satisfactory or unsatisfactory. |
|The comment column can be used to highlight any re-assessment that may be needed.) |
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|Assessor’s signature: |Date: |

|Unit Assessment: Candidate’s Assessment Record |
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|DH1E 04: Company Law: An Introduction |
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|Class | |Group | |
|Candidate Name | |Candidate ID | |
|Outcome 4 |
|Evidence Requirements |Record of Performance |
| |Satisfactory/ |Comments |
| |Unsatisfactory | |
|Assessment Task 4 | | |
|The report should outline the following areas and underline that: | | |
|Insolvency of a company is established when it cannot meet its debts and | | |
|liabilities because it has insufficient assets. | | |
|There are three main courses of action: Voluntary liquidation, Compulsory | | |
|liquidation, Administration | | |
|Voluntary: Ref Companies Act 1985 company can resolve that it cannot continue, | | |
|must pass a resolution, co secy posts notice in London Gazette | | |
|Compulsory: a court order forces company to wind up. Reasons given can be found| | |
|in the Insolvency Act 1986, include that the company has asked for this, it is | | |
|a public company and has not been issued with a trading certificate after 12 | | |
|months, has not started trading after 12 months of receiving certificate, | | |
|membership fallen below two, company unable to pay debts | | |
|Administration: is a process whereby an administrator is appointed to try and | | |
|save the company. They can be appointed by the court when asked by the | | |
|directors, a creditor or by the company itself | | |
|A liquidator who is specially qualified takes power from the directors and the | | |
|running of the company to convert the assets into cash. The liquidator then | | |
|pays the debts off using a defined set of priorities. | | |
|(Enter S or U in the box to indicate whether performance in the relevant aspect of the assessment is satisfactory or unsatisfactory. |
|The comment column can be used to highlight any re-assessment that may be needed.) |
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|Assessor’s signature: |Date: |

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|Unit Assessment: Class Checklist |
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|DE5H 35: Company Law: An Introduction |
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|Class | |Group | |
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| |Candidate |Candidate |Candidate |Outcomes |Overall Achievement* |
| |Surname |Forename |ID |1, 2, 3 and 4 | |
|1 | | | | |P F |
|2 | | | | |P F |
|3 | | | | |P F |
|4 | | | | |P F |
|5 | | | | |P F |
|6 | | | | |P F |
|7 | | | | |P F |
|8 | | | | |P F |
|9 | | | | |P F |
|10 | | | | |P F |
|11 | | | | |P F |
|12 | | | | |P F |
|13 | | | | |P F |
|14 | | | | |P F |
|15 | | | | |P F |
|16 | | | | |P F |
|17 | | | | |P F |
|18 | | | | |P F |
|19 | | | | |P F |
|20 | | | | |P F |
|21 | | | | |P F |
|22 | | | | |P F |
|23 | | | | |P F |
|24 | | | | |P F |
|25 | | | | |P F |

* Mark as appropriate