Examiners Report for Corporate Secretaryship: October 2009

GENERAL
As mentioned by many examiners before, it remains an issue that candidates are
not able to identify the core issues and succinctly provide a well thought through
answer. The stressful exam conditions clearly play a role, but such an
environment is not necessarily that different from the difficult and stressful
environments in which company secretaries often have to operate in many
cases having to provide opinions on their feet and having to be able to provide
clear, but to the point views on the scenarios very similar to those portrayed in
the paper.
Many students still do not present answers in the requested format. Company
secretaries are often requested to present opinions in a specific format and the
first impression of a memo / report / policy often contributes to the perceived
image of the quality of the work, as well as the quality / skills / expertise of the
individual. The questions are therefore asked in such a way not only to give
students marks for free, but to entrench the skill to enable the students to be
more effective in practice. The format marks are also really for free as it is very
easy to get the marks allocated purely for format in a few cases the format
marks would have meant the difference between a pass and a fail.
It might be easy to say as examiner, but I felt this was a very reasonable and
very practical paper. In at least 2 of the questions, the students could have
achieved a pass mark by purely referring to the act, which all had as a resource,
thus equating to almost an open book exam for a number of the questions at
least 50% of question 2 and 3, as well as 20-30% of questions 4 and 5.
The fact that the students were not able to even find the basic references in the
act, is a major concern, because it means that the students are unable to identify
how to find an answer to an unknown question: this is a basic requirement and
should not be an issue at board level.
Many questions specifically indicated that companies were not listed yet students
dwelled on JSE requirements this is an unnecessary waste of time and poses
the question of whether the student is merely writing everything he knows about
the subject in a hope to hit the bulls-eye somewhere in-between, instead of
answering the question. More disconcerting was that certain students referred to
(Pty) Ltd companies as listed and therefore referencing JSE requirements it is
a concern if students are not even able to distinguish different types of
companies and that Private companies are definitely NOT listed.
Some questions were extensive in nature and required succinct to the point
answers e.g. question 7: instead of students just naming the rules applicable to
JSE listed companies, they spent too much time listing various types of listing
requirements, instead of just naming the group of rules, thus resulting in some
students not being able to finish on time. Many students also spent too much
time on non value-adding information, again affecting their ability to answer all
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questions within the allocated time you do not have to write lengthy answers,
as long as the critical aspects are noted. Often the shorter/succinct answers
received better marks as it not only covered the crux, but showed that the
student could ascertain what the really important issues were.
Handwriting was very poor and one exam candidate script was completely
impossible to mark. As much as this cannot be used against students, it makes it
much easier to mark if the answers are easy to read and negates the risk of the
examiner having to try and decipher what the student intended to say compared
to actually easily discerning what had been answered.
Spelling was quite poor in many instances, which is a concern; because, despite
our dependence on spell-check, company secretaries are often requested to
write on flip charts etc and poor spelling definitely does not assist with the
elevation of the image of the profession. In cases where spelling was very poor,
it was also often indicative of poor writing in general, which is a serious concern
for company secretaries as writing, be it minutes, reports, opinions etc is a huge
portion of our daily responsibilities students, especially at board level, should
make every endeavour to address such deficiency as improving their writing
skills will only stand them in good stead going forward.
QUESTION 1
This was the second most popular question, equal to question 2.
This was a very straightforward and easy question which related to a habitual
company secretarial task.
The first important aspect is the fact that a director can resign at any point in time
and the resignation is not subject to the approval of the board, albeit that it is
noted and often resolved as accepted, such acceptance is not required for the
directorship to come to an end. Some students also referred to a director as an
employee and the employee relationship coming to and end either due to them
not understanding what a NED is (this is of serious concern) or not focusing
properly and thereby confusing issues.
Many students dealt with the removal of a director by the board this wasnt
mentioned anywhere in the question again indicating a lack of understanding of
the fact that a director can actually resign and being removed or retiring by
rotation are not the only options of exiting the board. Students that focused on
the removal wasted much of time on explaining the process and received no
marks for doing so.
Students further confused the resignation with retiring by rotation.
Most students completely ignored the reference to casual vacancy and only
focused on shareholders having the authority to appoint directors at a general /
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annual general meeting. If reference was made that the new appointee would
have to retire and be re-appointed, marks were given as it was clear that the
student understood the interim arrangement.
Many students indicated that the memorandum and articles would have to be
changed by special resolution to appoint a new director or that a special
resolution was required to appoint a new director even if the study material had
only been read once, I cannot imagine that such a ridiculous comment would be
made. One can only assume that students have not referenced the material at
all if they make such statements and then they cannot expect to pass a board
examination! This is also one of the most basic company secretarial tasks, if you
do not know how to appoint a director; you will never be able to perform as a
company secretary!
Many students confused the CM27 and CM29 again, very basic. CM27s are
only submitted to the company, whereas CM29s are submitted to CIPRO a
company secretary must know the deadlines by which these have to be
submitted.
The aspects appertaining to King II and induction were fairly well answered.
QUESTION 2
If students referenced the act they could easily have obtained 50% for this
question which was very straight forward.
One students answer was based on conversion from company to CC, instead of
the other way around, this is just poor reading or lack of attention.
Many students did not know some of the basic attributes of a cc, which affected
the marks they received for the benefits / disadvantages, which were incorrectly
stated. Many students purely gave a comparison between companies and ccs,
instead of providing benefits and disadvantages as specifically asked in the
question the two are not the same!
The opinions were generally unfounded and merely said, based on the benefits
and disadvantages stated, I suggest that, instead of really tying the opinion back
to the actual situation, i.e. referencing how a company would global expansion
versus cc constraints etc.
QUESTION 3
Again, if students referenced the act they could easily have obtained 50% for this
question. Despite the fact that company secretaries often depend on finance
departments in this regard, very few company secretaries are not involved in the
Annual Financial Statements (AFS) hence again a very practical and pertinent
question.
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The question was possibly less straight forward, as one would have had to sift
through quite a bit of information and decide what was pertinent and summarise
properly, but again, certain aspects, especially the King II section is quite straight
forward and students merely regurgitated information, rather than specialised
applying their knowledge.
With regard to CIPRO / legislated submissions - some students confused the
annual return with the AFS, but if explained properly, i.e. that the annual return
might be due for submission at the time of the year-end, an extra mark was
given.
Question 4
Least popular question and lowest average score.
Not necessarily a difficult question, but a more practical one, which might have
been difficult to answer for those students not in practice. Very few students
came up with all the options to address the issue.
Many students missed the fact that the 21 days available did not give 21 clear
days as required and therefore incorrectly slanted their answers toward being
efficient on that day by i.e. sending out notices electronically etc.
Many students also didnt start off with stating that 21 clear days were required
and due to it not being available other options would have to be explored it is
necessary in some questions to start off with the issue at hand and indicate that
you understand the problem.
Some students addressed the practicalities and the fact that only 7 shareholders
would make it easier to obtain signature for a written (round robin) resolution.
Section 4.2 was poorly answered and it was clear that many students applied
board meeting practice to AGM practice, which is not the correct approach. The
natural assumption is that many students have never been exposed to AGMs.
QUESTION 5
This was the most popular question.
Section 5.1 should have been easy to answer taking into consideration that a
similar type of question was asked in the May 2009 exam and an exact example
of what is contained in the memo is contained in the study material. ..
The quorum was specifically asked and poorly answered. Many students
ignored the reference to table B articles, which would have given them the
answer. Some of those that did make reference to table B, did not clarify
properly i.e. what the situation would be if only the subscribers to the
memorandum and articles were the current directors or if the additional 3
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directors (up to the set maximum of 5) had been appointed, what the scenario
would be. It seemed that some students were of the opinion that if the directors
were set at a maximum of 5, it meant that there were / would automatically be 5,
which is not necessarily the case; it merely means that they have decided not to
have more than 5.
Many students added arbitrary extra items for which marks were not awarded
there are specific basics that HAVE to be covered in order to obtain marks.
Most students merely wrote headings, which would only have warranted half
marks if any. An examiner must be able to ascertain whether you understand the
significance of an item placed on the agenda or at least know what is supposed
to happen under that item i.e. merely noting Quorum as an item, is not at all
indicative of your understanding. This is even more pertinent with the first board
meeting of a company as one would expect the agenda to be much more
detailed to truly guide the subscribers in their new roles and to ensure the setting
of a proper foundation for this new company.
Section 5.2 was generally poorly answered. Again a basic company secretarial
activity. Students incorrectly dwelled on AGM minutes.
Very few students referenced the requirements for format / typeset etc.
QUESTION 6
This question was more difficult in terms possibly of practical exposure and
experience, so it was marked fairly leniently.
Many students combined / confused actions / issues between 6.1 and 6.2,
despite the separate questions. Marks were awarded if a point was covered in
either (care was taken not to award double marks for the same item).
It was clear that a number of students had studied the memorandum of a prior
exam where a similar question was asked and gave exactly that answer, albeit
that it in some aspects did not perfectly tie up with this question, it at least
indicated that previous exams had been looked at.
QUESTION 7
In retrospect this question possibly attempted to ask too many aspects for a
checklist which lead to students writing lengthy answers where the examiner had
only intended a sentence in some instances. Again this question required
knowledge rather that application, which unlike some of the other questions lead
to students scoring fairly well notwithstanding the length of the question; the
average score being a pass.
END OF REPORT
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