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Law Ii Question Paper

Law Ii

Course:Cpa Part Ii

Institution: Star College Of Management Studies question papers

Exam Year:2006

LAW II

5 June 2006.
Answer any five questions.

QUESTION ONE

The law requires that certain statutory must be kept in the registered offices of the company.

Explain the contents and matters relating to inspection of the following statutory books:

a. Register of members (5mks)

b. Register of directors and secretaries (5mks)

c. Register of directors' interests (5mks)

d. Register of charges (5mks)

QUESTION TWO

Discuss the ways in which the traditional role of an auditor has been affected by recent demands by regulatory authorities and shareholders. (20mks)

QUESTION THREE

a. Explain the preliminaries incidental to promotion of a company. (8mks)

b. Explain the ways in which promoters can be remunerated (6mks)

c. Outline the reasons that may lead to suspension of promoters by a company. (6mks)

QUESTION FOUR

In pursuit of good corporate governance practices by directors, enumerate the best practices relating to directors which would promote and protect the shareholders rights (20mks)

QUESTION FIVE

Abel and Boaz have been carrying out business as a partnership. They have both been employed on full time basis in the business and have shared profits and losses equally. Abel wishes to bring his son David into the business and Boaz accepts the proposal.

They wish to convert their partnership into a private limited company, ABD Company Ltd., in which Abel and Boaz will each hold 40% of the shares and David will hold 20%. All the three shareholders will be directors of the new private company.

a. Advise the three shareholders of ABD Company Ltd. on the documents which they are required to submit to the registrar of companies for approval in connection with the formation of the private company (8mks)

b. After ABD Company Ltd. was formed, there arose a disagreement between Boaz and David regarding the day-to-day management of the business. Abel and David decided to remove Boaz from the board of directors.

Explain the procedure that Abel and David should follow to effect the removal of Boaz as a director of the company (6mks)

c. Discuss whether Boaz has grounds for petitioning for the compulsory winding up for the company (6mks)

QUESTION SIX

Explain to a new holder of a central depository account the circumstances in which a central depository securities account may be suspended (20mks)

QUESTION SEVEN

a. With regard to investor protection, explain the meaning of inside information (8mks)

b. In relation to allotment of shares in a company, discuss the legal position in each of the following situations:

i. Sarah applied for 4,000 shares in a public company known as ABC Ltd. She was allotted only 2,000 shares. She intends to sue the company.

Advise Sarah. (6mks)

ii. Meshack was recently appointed an accountant of Economy Departmental Store, a public limited company. The company intends to issue shares to the public. Meshack seeks your advice on whether there are any restrictions imposed by the Companies Act upon allotment of such shares.

Advise Meshack. (6mks)

QUESTION EIGHT

a. Enumerate the sequence of events to be followed by a shareholder who intends to transfer his shares to another person. (12mks)

b. Mwinzi, a holder of shares in Hewa Airways Company Limited deposited his share certificate with a broker, Otieno. Otieno forged Mwinzi's signature on the share certificate and transfered the shares to Kuria. When the share certificate and the transfer document were presented to the company for registration, the secretary wrote to Mwinzi advising him of the transfer. Mwinzi did not reply to his letter and Kuria was registered as the new shareholder. Kuria then transferred the shares to Wafula who was registered as the shareholder and a new certificate was issued.

Explain the effect of the forgery. (8mks)

Law Ii Question Paper

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