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Buss 216: Business Law Ii Question Paper
Buss 216: Business Law Ii
Course:Business Law Ii
Institution: Kenya Methodist University question papers
Exam Year:2008
KENYA METHODIST UNIVERSITY
END OF SECOND TRIMESTER 2008 EXAMINATIONS
FACULTY : BUSINESS AND MANAGEMENT STUDIES
DEPARTEMENT : BUSINESS ADMINISTRATION
COURSE CODE : BUSS 216
COURSE TITLE : BUSINESS LAW II
TIME : 2 HOURS
INSTRUCTIONS:
• Answer three questions from Section A and Two questions from Section B
SECTION A
Question 1
a) What members meetings are held by registered companies? (4marks)
b) Name and define the different kinds of resolution which may be passed by such companies in general meetings. In the case of each kind of resolution, give one example of business for which such a resolution is necessary. (6marks)
Question 2
Company secretary is a mere clerk, an employee of a company (anonymous). Critically explain the statement in relation to modern day company secretary in a large public company limited by shares. (10marks)
Question 3
Write detailed notes on the following:
a) Floating charge and fixed charge
b) Debenture and share
c) Ordinary and preference shares
d) Nominal capital and paid-up capital (10marks)
Question 4
Define the following terms:
a) Debenture and debenture stock
b) Registrable charges
c) Promoter’s position in respect of pre-incorporation contracts
d) Grounds for compulsory winding-up by court order. (10marks)
SECTION B
Question 5
Poxymoxy Limited is a registered company empowered by its memorandum and articles of association to carry on the business of importing and exporting motor vehicles. The directors of the company sign an agreement with Daisy, who is a Khat trader in Meru for the supply of miraa to the company for export to Iraq. Daisy supplies Khat worth Ksh.50,000 on the strength of the agreement. She receives a cheque signed by tow of the directors for Ksh.25,000 in part payment. In a letter signed by one of the two directors, Daisy is promised that the balance will be paid later. The balance is never paid and she now wants to sue Proxymoxy Limited for it.
a) Explain the doctrine of ultra vires. (5marks)
b) Discuss the principle of substratum in companies. (5marks)
c) Discuss the position each of the following with regard to liability for the unpaid balance of the piece of the khat:-
i) Poxymoxy limited and
ii) Daisy (10marks)
Question 6
a) Dinar Bank Limited has by a resolution passed by the members in a General Meeting approved a rights issue proposed by the Directors to raise capital for its expansion programme. The resolution provides that every shareholder will be entitled to be allotted an additional one share for every share held.
Define prospectus and discuss whether a prospectus is required for the rights issue.
(5marks)
b) What is the golden rule in framing the prospectus, and outline liability for mis-statement and non-disclosure in prospectuses. (11marks)
c) Distinguish a private and public company. (9marks)
Question 7
Foss vs. Harbottle is all about company control affairs. Discuss the rule in this landmark case, and point out the advantages of the rule and any exception to the rule.
(20marks)
Question 8
a) Elaborate on the position of directors in a company. (10marks)
b) The articles of association of company X provide that where the office of director becomes vacant by reason of death, resignation, disqualification or removal during the period of office, the board of directors may fill the casual vacancy but that such director of the company is entitled to two months notice before his contract is terminated by the board of directors. Mungai who was appointed by the board to fill a casual vacancy occasioned by the death of Pieter. Soon after his appointment, the prevailing opinion among the members of the board of directors was that he has a penchant for making decisions which expose the company to unnecessary financial risk. The board of directors therefore decided to ‘relieve (him) of his responsibilities as an executive director of company X with immediate effect.’
Required:
i) Discuss the duties of Mungai in his position as executive director in the circumstances of the case. (5marks)
ii) Mungai wants the company to pay him in lieu of notice or other wise to retain him until the required notice period elapses; can he? Discuss with the aid of a decided case. (5marks)
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