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Buss 216:Business Law Ii Question Paper

Buss 216:Business Law Ii

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2010

FACULTY : BUSINESS AND MANAGEMENT STUDIES

DEPARTMENT : BUSINESS ADMINISTRATION

TIME : 2 HOURS

INSTRUCTIONS

Answer Question ONE and any Other TWO Questions

QUESTION 1

Janet and Jackson Onyango are forming a Limited Liability Company. They are seeking your legal advice on the issues listed below. Respond to the enquiries by Janet and Jackson Onyango on:

a) What are the Memorandum and Articles of Association and is there a difference between the two (5 marks) b) What details would you expect them to contain and what other information might you be able to give about these details? (15 marks)

c) Explain five circumstances under which the veil of incorporated may be lifted by the court (10marks)

QUESTION 2

a) Describe the various kinds of resolutions that may be passed at general meetings. State the difference between them and list matters that require such resolutions to be passed before they can have effect. (14 marks)

b) In order to frustrate a threatened take-over bid, the directors of Kesho Ltd. issue to themselves and their nominees sufficient ordinary shares for cash so as to give themselves control of a majority of the shares which give the right to vote at a general meeting.

Mwananchi, a minority shareholder who had hoped to benefit by selling to the bidder, is very annoyed by the action of the directors. Advise him as to his legal rights. (6marks)

QUESTION 3

a) Distinguish between a corporation sole and a corporation aggregate (4marks)

b) Tim and Tom wish to establish a business jointly. However, they are not sure whether to establish a limited liability company or an unlimited liability company; as they know little about these types of companies.

i) Explain to them the differences between a limited company and an unlimited company. (4 marks)

ii) State the provisions of the Companies Act regarding the re-registration of unlimited company as limited. (6 marks)

c) Outline the documents that are normally kept at the registered office of a company (6 marks)

QUESTION 4

‘’The capital of may no doubt be diminished by the expenditure upon and reasonably incidental to all the objects specified. A part of it may be lost in carrying on the business operations authorized. Of this, all persons trusting the company are aware and take the risk. But creditors have the right to rely and were intended by the legislature to have the right to rely on the capital remaining undistributed by any expenditure outside these limits or by the return of nay of it to the shareholders”.

Per Lord Herchell L.J. in Trevor v Whitworth (1837) 12 App. Cap 409 at 415.

i) Discuss this statement outlining the circumstances and conditions under which companies may reduce their capital. (14marks)

ii) What are legal duties of a promoter with regard to her responsibility where she sells her own property to the company she is promoting. (6marks)

Question 5

Advise the directors of Tangaza Company on the following issues:

(a) The provisions of the Companies Act that relate to the calling of the annual general meeting and duties of the chairman during such a meeting. (10marks)

(b) When a company is compelled to call an extra ordinary general meeting. (5marks)

(c) The procedure to be followed to remove a director from office. (5marks)

Buss 216:Business Law Ii Question Paper

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