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Bmgt 323 Question Paper
Bmgt 323
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2008
INSTRUCTIONS:
Answer question ONE and ANY other THREE questions
Marks may be lost for illegibility
1. a) Leo Incorporated a company and had himself appointed the managing director and
the chief pilot of the company. Leo was killed in an air crash, while working for the
company that he had incorporated. His wife sued the company claiming
compensation. Can she succeed? Give reasons for your answer. (5 marks)
b) Lull agreed to sell his two acres of a land in Nakuru to John at a price of Kshs.
800,000/=. After receiving Kshs. 400,000/= as part payment from John, Lull changed
his mind and to avoid the specific performance of the contract, he formed a company
with his son and sold the same land to the newly formed company. Advice John of
his rights against Lull and the newly formed company. (5 marks)
c) The promoters of a company, before its incorporation, entered into an agreement with
Xeo to purchase a plot of land on behalf of the company at a cost of Kshs.
1,000,000/=. After incorporation the company refused to buy the land from Xeo.
Xeo sued the promoters and the company for breach of contract. Decide dispute.
(5 marks)
d) A shareholder of a company alleged that its directors were guilty of buying their own
land for the company’s use and paying themselves a price greater than its value. The
act of the directors resulted in a loss to the company. The shareholder decided to take
an action for the damage against the directors. The shareholders in a general meeting
by majority resolved not to take any action against the directors were not responsible
for the loss which had been incurred. Can he succeed? (5 marks)
e) A promoter signed a circular inviting subscription for shares in a company which
stated that about one-third of the capital had already been subscribed in the United
States of America but not in cash. The promoter, however, believed honestly that the
statement was true. Poppy subscribed on the faith of the circular and the company
became insolvent after three months. Poppy sued the promoter for fraud. Decide.
(5 marks)
2. Write notes on the following:
a) The legal position of promoter of a company (3 marks)
b) Lifting of the corporate veil by statute (6 marks)
c) Compulsory winding up of the company (6 marks)
3. a) What is meant by ‘Doctrine of Ultra Vires’? (3 marks)
b) Explain when the Memorandum of Association can be altered (8 marks)
c) Explain how shares are classified (4 marks)
4. a) Distinguish between a share and a stock. (8 marks)
b) Discuss the rules relating to the payment of dividends. (7 marks)
5. a) Explain the following characteristics of a company.
i) Common Seal (2 marks)
ii) Limited liability (4 marks)
b) State the principle of Majority Rule and explain the advantages of the rule
(9 marks)
6. Write notes on the following;
a) Salomon vs Salomon Co. Ltd (8 marks)
b) Duties of Directors (7 marks)
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