Corporate and

Business Law
(Zimbabwe)
Tuesday 2 June 2009

Time allowed
Reading and planning:
Writing:

15 minutes
3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor.

During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

Paper F4 (ZWE)

Fundamentals Level Skills Module

ALL TEN questions are compulsory and MUST be attempted

1

In relation to the Zimbabwean legal system, explain the rules and presumptions used by the courts in interpreting
statutes.
(10 marks)

In relation to the law of contract, explain the meaning and consequence of acceptance of an offer.
(10 marks)

In relation to the law of delict, discuss the following defences:

(a) contributory negligence;

(5 marks)

(b) volenti non fit injuria.

(5 marks)
(10 marks)

In relation to the law of agency, explain how a contract of agency is created.

(10 marks)

In relation to the law of partnership, explain the liability of partners in different types of partnership for
partnership debts.
(10 marks)

In relation to company law in Zimbabwe, explain the law relating to:

(a) the appointment of auditors;

(5 marks)

(b) the removal of auditors.

(5 marks)
(10 marks)

In relation to company law, explain the circumstances under which a company may be compulsorily wound up
by the court.
(10 marks)

Tinashe a medical doctor owns a residential stand in Mandara, Harare. He met his friend Sandra, whom he told that
he intended to sell his residential stand for $5,000,000. Sandra told Tinashe that she would be interested in buying
it but Tinashe did not say anything. During the week Sandra received an e-mail with Tinashes bank account details
and Sandra proceeded to deposit $5,000,000 into the account. She phoned Tinashe the following day requesting
that he effect a change of title and transfer the title deeds to the stand into her name. Tinashe did not reply to this.
He realised that he could have made more profit had he sold the stand in foreign currency and refused to change the
title deeds but instead insisted on repaying Sandra the money paid to him. He maintained that there was no contract
between them.
Required:
In relation to the law of contract, explain to Sandra whether she has any remedies available to her.
(10 marks)

Dickson and his wife Brenda Moyo own the entire share capital of Vanhukwavo (Pvt) Ltd, a company duly
incorporated and operating in Zimbabwe since 2000. The company manufactures childrens clothing both for the
domestic and export market. For the first six years since incorporation, the company was a huge success, but in the
last two years, its fortunes have nosedived because of the dire economic situation facing the country. The company
owes a lot of money to Machira (Pvt) Ltd, a supplier of yarn and other products used in the manufacture of clothing.
The supplier is threatening to seize a house and a prestigious car, which are owned by Dickson and Brenda Moyo in
their personal capacities. In order to manage a very bad financial situation, the company is now involved in smuggling
activities across the borders with Mozambique and Zambia. The authorities seek to make Dickson and Brenda
personally liable for the companys illegal activities.
Required:
In relation to company law, explain the likely attitude of the courts towards:
(a) the attempt by Machira (Pvt) Ltd to seize the personal assets of Dickson and Brenda Moyo;

(5 marks)

(b) the proposed personal liability of the directors for the companys illegal activities.

(5 marks)
(10 marks)

[P.T.O.

10 (a) Five friends Dennis, James, Kelvin, Peter and Sylvester, who are all qualified chemists, decide to launch a
pharmaceutical company called Ponesai Vanhu Ltd. The company has an authorised share capital of 1,000,000
shares divided into 1,000,000 shares of $1 each. Prior to the company launching a public share offer (IPO) for
purposes of raising some of the companys much needed capital the five promoters who are all directors of the
company issued a prospectus in accordance with the requirements of the Companies Act (Chapter 24:03).
The prospectus among many other statements makes the following declarations under the heading, The
Companys Trading Prospects
1.

That the company had already secured lines of credit from a reputable overseas bank for purposes of
securing state of the art plant and equipment for manufacturing drugs.

2.

That the company had secured export orders from customers in three neighbouring countries.

It turns out that discussions with the overseas bank and potential customers from the three neighbouring
countries are still on-going and are unlikely to be concluded satisfactorily any time soon. When this information
comes to light the companys shares, which had started trading at $1000 each are now worth only 20 cents.
Two shareholders, Innocent and Ndapusa decide to sue the companys five directors for misrepresentation.
Required:
In relation to company law, describe Innocent and Ndapusas prospects of success in their intended litigation
against the companys promoters.
(5 marks)
(b) Springvale (Pvt) Ltd is a private company duly incorporated and trading in terms of the laws of Zimbabwe. Its
registered office is in Harare, Zimbabwe. Mr Brown owns the entire issued share capital of the company which
specialises in the retail of stationery products. Mr Brown is the only director of the company and Mrs Brown, his
wife, is the company secretary and both of them are ordinarily resident in neighbouring South Africa. The
day-to-day management of the company has been left to Mr Fixit, a very experienced and reliable manager who
resides in Harare, Zimbabwe.
Required
In relation to company law, advise Mr and Mrs Brown on the legal position relating to the directorship and
the position of company secretary in relation to the provisions of the Companies Act (Chapter 24:03).
(5 marks)
(10 marks)

End of Question Paper