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Cfu 200 Company Law Question Paper
Cfu 200 Company Law
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2011
UNIVERSITY EXAMINATIONS: 2011/2012
YEAR 2 EXAMINATION FOR THE BACHELOR OF COMMERCE
CFU 200 COMPANY LAW (SATURDAY)
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any other Two Questions
QUESTION ONE
a) Describe the categories of persons not qualified to be appointed as auditors of a company.
(5 marks)
b) with help of case law, explain the duties and liabilities of a promoter during the incorporation of a
company (10 marks)
c) On the statutory provisions on how the company’s memorandum may be altered to enable the
diversification of a company’s objectives to occur (6 marks)
d) Give a brief account of the nature of ordinary resolutions of company meetings and matters passed
therein (4 marks)
e) What re the consequences of winding up of a company? (5 marks)
QUESTION TWO
a) In Company law, the principle that the minority cannot challenge the decision made by the
majority is important to, among other reasons, assert the separate identity of the company.
Discuss the above statements with help of case law (10 marks)
b) Mr. X is acting as a promoter of a private limited company which wishes to register the name
‘Kenya Manufacturing Company International.’ Advice him on the proposed name and the
general restrictions on choice of a company’s name. (10 marks)
2
QUESTION THREE
a) ‘The High court has powers to wind up any company registered in Kenya on various grounds’.
Comment on the statement (10 marks)
b) ‘The Doctrine of Ultra Vires was a nuisance to the company and a trap to unwary third parties’
Explain the principles of the doctrine of ultra vires and the exceptions thereof (10 marks)
QUESTION FOUR
a) The articles of association of Bel Ltd , a private company formed to purchase and re-sell land
and homes empowered the directors to appoint one person from their body a managing director.
Babu, a director was never appointed a managing director but, to the knowledge of the Board of
Directors, he acted as the Managing Director. On behalf of the company, Babu Instructed
Ujenzi Ltd. a firm of architects to do certain repair works on a block of flats bought by Bel Ltd.
and intended to be re-sold. When presented with the bill from Ujenzi Ltd., Bel Ltd refused to
pay on the grounds that Babu had no authority to instruct Ujenzi Ltd. to effect the repairs. With
help of decided cases, advice Ujenzi Ltd (10 marks)
b) The duties of auditors depend upon the terms of the articles as well as the provisions of the
Companies Act. In light of the statements, explain the duty of auditors to the company and to
third parties (10 marks)
QUESTION FIVE
a) Linda was been induced to buy shares in a company on the faith of statement in the prospectus
which she has just discovered to be untrue. Explain the remedies available to her against the
Company and it’s directors (10 marks)
b) write short notes on;
i) mortgage on shares (6 marks)
ii) Statement in lieu of prospectus (4 marks)
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