(a)
-Pesa Limited cannot raise funds to purchase Anna?s shares as if in contrary to the rule in?
- Trevor V. Whitworth.
- The rule in Trevor V. Whitworth is emphatic that a company must not purchase its shares or finance their purchase. However, there are certain circumstances in which a company may purchase its share e.g. redemption of redeemable preference shares.
- Pesa Limited is free to redeem redeemable debentures out of reserves or the share premium account. The debenture must be redeemed in accordance with its provisions.
(b)
It is unlawful for a company to finance the purchase or subscription of its shares. In this case, the lending of money to Charles is unlawful and the purported guarantee by Pesa Ltd is unlawful as well. This case does not fall within the exceptions prescribed by the provisions prescribed by the proviso to section 56 of the Act in which a company may finance the purchase of its shares.
marto answered the question on February 6, 2019 at 10:47
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Martha is engaged in the promotion of a company. She seeks your advice on several matters relating to the promotion of a company. You are...
(Solved)
Martha is engaged in the promotion of a company. She seeks your advice on several matters relating to the promotion of a company. You are required to advise her on the following matters:
(a) The restrictions upon the choice of a corporate name with which a promoter must
comply.
(b) The legal duties of a promoter with regard to her responsibility where she sells her
own property to the company she is promoting.
(c) The promoter's right to payment for her services by the company after
incorporation.
Date posted:
February 6, 2019
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Answers (1)
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Section 213 of the Companies Act qualifies the liability of past and present members as contributors. Explain these qualifications as provided for in the...
(Solved)
Section 213 of the Companies Act qualifies the liability of past and present members as contributors. Explain these qualifications as provided for in the Companies Act.
Date posted:
February 6, 2019
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Answers (1)
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Enumerate the circumstances under which the court may order the winding up of a company on a just and equitable ground.
(Solved)
Enumerate the circumstances under which the court may order the winding up of a company on a just and equitable ground.
Date posted:
February 6, 2019
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Answers (1)
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Rush, Fast and Speed are directors of Modern Technology Company Ltd. The company was formed with the main object of computer training. However, due to...
(Solved)
Rush, Fast and Speed are directors of Modern Technology Company Ltd. The company was formed with the main object of computer training. However, due to the power rationing, the company business has fallen below the expected productivity and is threatened with closure. In order to keep afloat, the three directors approached Money Bank Ltd for an overdraft of Sh. 2 million to establish an off-licence bar and restaurant within the city centre. The credit manager asked the company to provide its copy of the memorandum of association and the company complied. Modern Technology was then given the overdraft. However, it has run into financial difficulties and is unable to repay the loan.
Can the bank successfully sue for recovery of the loan?
Date posted:
February 6, 2019
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Answers (1)
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Explain the circumstances under which directors of a company will be held personally liable to acts committed on behalf of the company.
(Solved)
Explain the circumstances under which directors of a company will be held personally liable to acts committed on behalf of the company.
Date posted:
February 6, 2019
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Answers (1)
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(i)What is a special notice?
(ii) Give the circumstances under which a special notice would be required with respect to company meetings.
(Solved)
(i)What is a special notice?
(ii) Give the circumstances under which a special notice would be required with respect to company meetings.
Date posted:
February 6, 2019
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Answers (1)
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State the Rule in Sharp-vs-Dawes and explain the exceptions to this rule?
(Solved)
State the Rule in Sharp-vs-Dawes and explain the exceptions to this rule?
Date posted:
February 6, 2019
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Answers (1)
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Identify the different types of meetings that may be held by police limited companies.
(Solved)
Identify the different types of meetings that may be held by police limited companies
Date posted:
February 6, 2019
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Answers (1)
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What happens to a floating charge when it crystallizes?
(Solved)
What happens to a floating charge when it crystallizes?
Date posted:
February 6, 2019
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Answers (1)
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A part from the appointment of a receiver, four other events will cause a floating charge to crystallize. Describe these four events.
(Solved)
A part from the appointment of a receiver, four other events will cause a floating charge to crystallize. Describe these four events.
Date posted:
February 6, 2019
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Answers (1)
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a)Explain the proprietary rights of a member in a company.
(b) Rita applied for 2,000 shares in Bidii Yako Company Ltd. following her application, no...
(Solved)
a)Explain the proprietary rights of a member in a company.
(b) Rita applied for 2,000 shares in Bidii Yako Company Ltd. following her application, no allotment at the time was made. Later on without her application, 2,000 shares were transferred to her and her name placed in the register of members.
Rita knowing that her name was in the register of members took no steps to have it rectified. Later on, the company collapsed. Rita was called upon to pay up on her shares and she has declined to do so arguing that she was not a member of Bidii Yako Company Ltd. She seeks your advice on the matter. Advise Rita
Date posted:
February 6, 2019
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Answers (1)
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a) Outline the information that is required when registering a charge.
b) In July 2001, Muungano Ltd obtained an overdraft from a bank upon...
(Solved)
a) Outline the information that is required when registering a charge.
b) In July 2001, Muungano Ltd obtained an overdraft from a bank upon deposit of title deeds and the execution of a memorandum of charge the memorandum was executed in due form by the company but left undated. The overdraft continued and subsequently the manager of the bank filled in the date as 10th January 2002. The memorandum was then registered with the registrar of company‟s on 31st January 2002 and the registrars certificate to that effect was duly issued.
Discuss the validity of the charge
Date posted:
February 6, 2019
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Answers (1)
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Triple H, Undertaker Austin and Flair are directors of Mieleka Ltd a company regulated by Table A. Fair is the managing director and undertaker...
(Solved)
Triple H, Undertaker Austin and Flair are directors of Mieleka Ltd a company regulated by Table A. Fair is the managing director and undertaker is the chairperson of the company. Sometime ago the directors meeting as a board decided to:
i) Lend Triple H Shs.500,000 to purchase a car for his wife Stephane for her personal use;
ii) Advance Shs.500,000 to Austin to cover his expenses on a worldwide (promotional tour on behalf of the company).
Booker T, the company secretary informs you that Stone Cold a shareholder claims that this transaction should have been approved by the members and that he intends to raise the matter during the next general meeting.
Required
i) Advise Booker T which of the transactions need approval by the members in general meeting
ii) What are the consequences of the necessary approval not being obtained?
Date posted:
February 6, 2019
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Answers (1)
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Discuss the rules relating to appointment and vacation of office of directors.
(Solved)
Discuss the rules relating to appointment and vacation of office of directors .
Date posted:
February 6, 2019
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Answers (1)
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Outline the various matters that require to be sanctioned by members through a special
resolution.
(Solved)
Outline the various matters that require to be sanctioned by members through a special
resolution.
Date posted:
February 6, 2019
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Answers (1)
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a)State the circumstances under which a company would be required to maintain an index
of the register of members
b) Kazi Bure borrowed...
(Solved)
a)State the circumstances under which a company would be required to maintain an index
of the register of members
b) Kazi Bure borrowed Shs.50,000 from Tumaini Bank and deposited his XYZ Supermarket Ltd‟s share certificate with a blank transfer as a security. Subsequently he bought goods from the supermarket on credit. The goods were worth Shs.15,000. The articles of association of XYZ Supermarket Ltd claimed a first and paramount lien on its members shares on debts due to the supermarket. However, before the supermarket lien arose the bank gave the supermarket notice of Kazi Bure's share certificate having been lodged with the bank as a security for the loan. Kazi Bure is unable to pay for the goods he obtained from the supermarket and has also defaulted on the loan. XYZ Supermarket Ltd wants to exercise its lien and the bank wants to exercise its equitable right to have the shares transferred to into its name.
In this situation discuss the rights of
i) The Bank
ii) XYZ Supermarket Ltd
c) Bob and Babs jointly own shares in Powerfoam Ltd. They are seeking your advice
regarding their legal position as joint holders of the shares. Advice them
Date posted:
February 6, 2019
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Answers (1)
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The capital of may no doubt be diminished by the expenditure upon and reasonably incidental to all the objects specified. A part of it may...
(Solved)
The capital of may no doubt be diminished by the expenditure upon and reasonably incidental to all the objects specified. A part of it may be lost in carrying on the business operations authorized. Of this, all persons trusting the company are aware and take the risk. But creditors have the right to rely and were intended by the legislature to have the right to rely on the capital remaining undistributed by any expenditure outside these limits or by the return of nay of it to the shareholders.
Per Lord Herchell L.J. in Trevor v Whitworth (1837) 12 App. Cap 409 at 415.
a)Discuss this statement outlining the circumstances and conditions under which companies may reduce their capital.
b) State what is meant by underwriting commission and distinguish it from brokerage
Date posted:
February 6, 2019
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Answers (1)
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a) James and Shem proposed to form a company by the name 'Micromine Limited'. On behalf of the proposed company, Shem entered into contracts to...
(Solved)
a) James and Shem proposed to form a company by the name 'Micromine Limited'. On behalf of the proposed company, Shem entered into contracts to purchase office furniture and stationery.
Required:
i) What are the company's rights and liabilities under such contracts after incorporation?
ii) What provisions for the protection of Shem are found in such contracts?
Date posted:
February 6, 2019
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Answers (1)
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The shares of Promotion Limited, a private company are held by members of three families, that is, the family of Mr. Karanja, Mr. Mutisya...
(Solved)
The shares of Promotion Limited, a private company are held by members of three families, that is, the family of Mr. Karanja, Mr. Mutisya and Mr. Otieno.
Mr. Karanja and Mr. Mutisya hold 90% of the company's shares. However, they feel that, the company is in need of further capital but due to the squabbles among the families, Mr. Otieno is not willing to inject additional funds so long as Mr. Karanja still holds any shares in the company. Further, Mr. Karanja and Mr. Mutisya have reasonable cause to believe and do in fact believe that the family of Mr. Otiengo is running their own business which is competing with that of Promotion Limited. It is known as a fact that Mr. Otieno is obtaining information as a member of Promotion Limited, which he is using to the benefit of his competing business.
To resolve the problems, Mr. Karanja and Mr. Mutisya propose to alter the company‟s articles of association by adding two new articles. The first article will enable the shareholders of 90% of the company's shares to compulsorily acquire the shares of the minority shareholder. The second one will require any shareholder who carries on competing business with company's business to transfer his shares to the nominee of the directors.
Required:
i) State the restrictions imposed both by common law and statute law upon a company's
power to alter its articles of association.
ii) Discuss the validity of the proposed alteration
Date posted:
February 6, 2019
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Answers (1)
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Outline the documents that are normally kept at the registered office of a company.
(Solved)
Outline the documents that are normally kept at the registered office of a company.
Date posted:
February 6, 2019
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Answers (1)