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Company Law 2009/2010 Academic Year Question Paper
Company Law 2009/2010 Academic Year
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2010
COURSE CODE: BMGT: 323
COURSE TITLE: COMPANY LAW
STREAM: Y3S2
DAY: THURSDAY
TIME: 2:00 – 4:00 P.M.
DATE: 18/03/2010
INSTRUCTIONS
1. Answer question ONE (1) and ANY OTHER THREE (3) question
2. BE PRECISE AND CLEAR IN YOUR ANSWER
3. TIME: 2 HOURS
QUESTION 1
a) The members of Mkokoteni Company Limited have come to you indicating that their
articles of association seem not to be meaningful to them and are keen to change them.
Advise them on six instances when this can be done. (3 Marks)
b) Johnson, a frustrated man, was heard by James, telling his wife: “madam, I do not care
whichever way I start this business. I am not interested in going to see that person whom
you call the registrar nor should I take any steps as the Company’s Act requires. Any
form of business can do for as long as I make profit.” Do you agree with him? Justify
your answer. (10 Marks)
c) Our courts are very ready and quick to respect the principle in Salomon vs. Salomon and
Company Limited (1897). However, they will not hesitate to go against it if it becomes
necessary. Justify the above statement, giving five instances when the latter is possible (
12 marks)
QUESTION 2
a) Distinguish between a chartered company and a registered one (7 marks)
b) The promoters of a public company are being sought by police over some errors in a
prospectus, and they have been sued (also) by persons who relied on the said prospectus
over the said errors. They come to you for advice. Propose to and discuss with them
possible ways of defending themselves. (8 marks)
QUESTION 3
(a) Some twenty-five Kabarak University Students want to register their newly formed company
which they have named “Kuleta Machafuko Kwa Nchi Ya Kenya Company Limited.” Advise
them on the proposed name and the requirements thereof in the Companies’ registry. (6 marks)
(b) Discuss any three effects of an ultra vires transaction in company law. (6 marks)
(c) Briefly discuss any three types of preference shares you may find in a
company. (3 marks)
QUESTION 4
a) In a company, it is possible to find members who are not shareholders and at the same time
shareholders who are not members. Explain (6 marks)
b) The promoters of Madiaba Company (which is in the process of incorporation) agree to buy a
tractor from General Motors Co. Ltd. After incorporation the shareholders in a general
meeting discover that they cannot use the tractor since the objects of the company do not
permit farming as one of the activities it was formed to undertake. They thus resolve not to
complete its purchase. What phrase do you ascribe to this type of transaction in company law
and why? Has General Motors Co. Ltd any course of action against the company? How about
the promoters? Explain your answer clearly. (9 Marks)
QUESTION 5
a) On Sunday the 7th of February 2010, three of the directors/members (being the only ones) of
Ugandese-Rwandese Oil Transport Company (UROTCO) were transporting jet fuel from
Mombasa depot to Kigali in Rwanda. On reaching Sachangwani Centre near Salgaa Market
in Nakuru District of Rift Valley Province their motor vehicle, registration number KUU
200, trailer ZB 9999 collided with another lorry going in the opposite direction and two of
them died on the spot. The survivor was hospitalized at PGH Nakuru for four days and was
discharged. He soon thereafter recovered. Required: advise the survivor of this tragedy on the
position of UROTCO in law. At the same time advise him on the possibilities of him
carrying on business in the company’s name well into the month of September 2010. (6
marks)
b) What are the grounds of disqualifying a person from being a company director? (5 Marks)
c) Discuss the fiduciary position of a promoter. 5 Marks
QUESTION 6.
a) Explain when the court may compulsorily wind up a company (12 marks)
b) Write short notes on
i. Capital Reserve (1 mark)
ii. Reserve Capital (1 mark)
iii. Allotment of shares (1 mark)
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