Company Law Question Paper

Company Law

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING PROGRAMME
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BBA 401: COMPANY LAW

DATE: Friday 14th August, 2009
TIME: 11.00 a.m. – 1.00 p.m.

INSTRUCTIONS
Answer Question 1 and any other TWO.

1.
A)
Write short notes on;
i)
Chartered companies
ii)
Registered companies
iii)
Statutory companies [6 marks]
B)
Citing various cases, critically examine the concept of veil of incorporation and its effects. [14 marks]
C)
Give an outline of the rights of shareholders under the Companies Act.m [10 marks]

2.
a)
In the year 2005, A & B incorporated a company AB Ltd. The Articles of Association of AB Co. Ltd. Included the following clauses;
i)
A & B shall always be the directors of AB C. and shall not be removed except for misconduct.
ii)
In electing the company secretary A & B shall exercise two votes each for every share held; subsequently A & B Co. Ltd floated its shares to Eddie, Dan and Frank. Frank has come to you for advice on the legality of the above provisions in the Articles. Advice him. [12 marks]
b) Distinguish between Memorandum of Association & Articles of Association. [8 marks]

3.
In the year 2005, Mr. X incorporated a company X Ltd. Prior to the incorporation, he did enter into the following agreements.
i)
He entered into a lease agreement with Z.
ii)
He agreed on behalf of the company to pay XY for drafting the memorandum and Articles of Association.
iii)
After the formation of the company, transferred to the company his motor vehicle for ksh.500,000 (the vehicle would have fetched Ksh.250,000 in the market). Subsequently the company was acquired by other shareholders ABC.
a)
Z and the advocate have sued the company for money owed. The new directors of the company would want to rescind the ncontract for the sale of the motor vehicle. Advice the parties. [12 marks]
b)
Critically analyse the fiduciary duties of a promoter.[8 marks]

4.
The general rule is that persons outside the company are entitled to assume that
any internal procedure required for purposes of validating an action of the
company has been complied with. Discuss citing relevant case. [10 marks]

Critically examine the ground for winding up of a company under Sec 219 of the
Company’s act. [10 marks]

5.
Identify and critically comment on the fiduciary and company law duties owed by directors to the company. [20 marks]

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