-This case is authorized for the proposition that a registered company's capacity is restricted to the transactions set forth in the objects clause of the memorandum other transactions are ultra vires and therefore null and void.
- In this case the transaction in question i.e. purchase of concession and construction of railways was not authorized by the objects and was therefore declared ultra vires.
- This case interpreted the doctrine of ultra vires very restrictively thereby limiting corporate capacity.
- However, in Attorney General V. Great Eastern Railway Co. it was held that a transaction reasonably incidental to the attainment or pursuit of the objects of the company was Ultra Viresthe company. In the words of Lord Selbourne 'whatever may be regarded as fairly incidental to or consequential upon'
-The second aspect of ruling relates to ratification of an ultra vires transaction. In Ashburys case although members in general meeting purported to ratify the transaction it was held that the ratification had no legal effect since the transaction was void. This ruling is correct in that a void transaction is incapable of ratification. This principle was upheld in Rolled Steel Products (Holdings) Ltd V. British Steel Corporation and Others(1986) where Slade L. J. was emphatic that an ultra vires transaction cannot be rendered intra vires by ratification, delay acquiescence estoppel or lapse of time.
(b)
- As a general rule a pre incorporation contract against the company did not exist and cannot ratify the transaction when incorporated, nor can directors of the company adopt or conform the contract (see Kelner V. Baxter) (Price V. Kelsal) (North SydneyInvestments and General Tramways V. Higgins & Another) (Natal Land Company V.Pauline Colliery Syndicate)
-However a person can escape liability on per incorporation contracts by:
- The company entering into a new contract to the same effect as the previous one (Mawagolas case). -Entering into a contract which expressly provides that the promoters liability shall cease when the company is formed.
- Entering into an agreement which expressly provides that it becomes legally binding upon the company when incorporated.
(c)
- This provision is to the effect that when the Articles are registered there comes into being a contract between the company on one hand and shareholders on the other to observe the provisions of the articles.
- Either party is free to sue the other for non compliance with the provisions of the articles. Welton V. Sattery.
- Hickman V. Kent or Romney Mash Sheep Breeders Association
marto answered the question on February 7, 2019 at 06:16
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(a) The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases....
(Solved)
(a) The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases.
(b) Ropoff Company Ltd., a private limited company, has been under inquiry on alleged fraudulent financial transactions. The officers of the company under suspicion have denied any association with the company.
At the inquiry it was suggested that the corporate veil be lifted and the realities of the company in question be looked into.
Explain the instances when the veil of incorporation may be l
Date posted:
February 7, 2019
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Answers (1)
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Two years ago, Smart Limited issued a series of debentures in favor of Tumaini Bank. The debentures were in the Standard Bank form described as...
(Solved)
Two years ago, Smart Limited issued a series of debentures in favor of Tumaini Bank. The debentures were in the Standard Bank form described as a fixed and floating charge over all the company‟s assets. There was an express term of the debenture that the company would not issue a subsequent fixed charge to rank in priority to the floating charge. Six months later, Smart Limited issued a fixed charge over its freehold property in favor of Mali Bank Mali Bank was unaware of the prohibition. Smart Limited has gone into liquidation and both banks are proving their debts on priority basis.
Discuss the legal position of each bank.
(c) The most common method of securing debentures is to execute a trust deed.
Explain the meaning of a trust deed and outline its advantages
Date posted:
February 7, 2019
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Answers (1)
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(a) The law governing the directors' duty of care and skill takes account of the fact that the director may be a part-time counselor rather...
(Solved)
(a) The law governing the directors' duty of care and skill takes account of the fact that the director may be a part-time counselor rather than a full-time professional manager.
Discuss.
(b) Mwerevu is one of the directors of Kamaliza Ltd. whose articles of association are in the form of Table A. He knows that his fellow directors are interested in obtaining motor vehicles from Modern Vehicles Ltd. to increase the company‟s fleet of trucks. Mwerevu purchases controlling shares in Modern Vehicles Ltd.
Modern Vehicles Ltd. then sells the trucks to Kamaliza Ltd. at Sh. 100,000 over and above the true market price. Mwerevu voted at the board meeting of Kamaliza Ltd. which decided on the purchase price, without revealing that he controlled the vendor company. When true facts are discovered, the company's board of directors does not protest against Mwerevu's conduct.
Mpole, a minority shareholder is aggrieved.
Advise him.
Date posted:
February 7, 2019
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Answers (1)
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(a) Joe owns 2000 shares in Lotto Limited and 1000 shares in Jolles Ltd. He sells all his shares in Lotto Limited to Janet and...
(Solved)
(a) Joe owns 2000 shares in Lotto Limited and 1000 shares in Jolles Ltd. He sells all his shares in Lotto Limited to Janet and 500 shares in Jolles Ltd. to Jeremy. All the shares in Lotto Limited are partly paid up. Six months later, Lotto limited goes into liquidation.
(i) In the absence of any express agreement, discuss the liability of Joe and Janet in relation to the company's debts.
(ii) State the steps to be taken to register the transfer of shareholding from Joe and Jeremy.
(b) Outline the exceptional cases when a member may be held liable in excess of the limited liability which he undertook when he became a member of the company
Date posted:
February 7, 2019
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Answers (1)
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(i)State the circumstances under which the objects clause of a company may
be altered
(ii) Explain the procedure to be followed in altering...
(Solved)
(i)State the circumstances under which the objects clause of a company may
be altered
(ii) Explain the procedure to be followed in altering the objects clause.
Date posted:
February 7, 2019
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Answers (1)
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In what way does the decision in the case of Macaura Versus Northern Assurance
Company Limited (1925) illustrate the corporate entity theory?
(Solved)
In what way does the decision in the case of Macaura Versus Northern Assurance
Company Limited (1925) illustrate the corporate entity theory?
Date posted:
February 7, 2019
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Answers (1)
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Tama Quin Ltd., a company manufacturing pharmaceutical drugs is about to make a new issue of 400,000 shares of Sh. 40 each at the current...
(Solved)
Tama Quin Ltd., a company manufacturing pharmaceutical drugs is about to make a new issue of 400,000 shares of Sh. 40 each at the current market price of Sh. 50 each.
The prospectus states: 'The company has just patented the manufacture of a drug that cures malaria.'
Jacob White, the managing director of the company is interviewed on television and he states that the news to be released shortly will demonstrate a great break-through in the control of malaria. He also stated that the company was the only one with modern technical knowledge of this great invention. As a result there is over-subscription of the shares.
Allan, who has not read the prospectus, applied for shares and is allotted 2000 at the price of Sh. 50 each.
Betty, who read the prospectus, is not allotted any shares but buys 3000 shares at the stock exchange at Sh. 60 per share.
Charles, who read the report of the interview in the national newspaper, bought 5000 shares at the stock exchange at Sh. 55 per share.
In the meantime, the patents are found not to be original and are revoked. The shares fall in value to Sh. 10 per share.
David who owned 10,000 shares in the company long before the new issue is disappointed as he believes the publicity has caused the shares to fall in price (value).
Advise Allan, Betty, Charles and David
Date posted:
February 6, 2019
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Answers (1)
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(b)
(i)State the circumstances under which the objects clause of a company may
be altered.
(ii) Explain the procedure to be followed in...
(Solved)
(b)
(i)State the circumstances under which the objects clause of a company may
be altered.
(ii) Explain the procedure to be followed in altering the objects clause.
Date posted:
February 6, 2019
.
Answers (1)
-
In what way does the decision in the case of Macaura Versus Northern Assurance
Company Limited (1925) illustrate the corporate entity theory.
(Solved)
In what way does the decision in the case of Macaura Versus Northern Assurance
Company Limited (1925) illustrate the corporate entity theory.
Date posted:
February 6, 2019
.
Answers (1)
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What are the contents of the memorandum of association as stated in the...
(Solved)
What are the contents of the memorandum of association as stated 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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(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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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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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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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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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)
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Distinguish between a corporation sole and a corporation aggregate.
(Solved)
Distinguish between a corporation sole and a corporation aggregate.
Date posted:
February 6, 2019
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Answers (1)
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Highlight the circumstances under which a person may cease to be a member of a
company.
(Solved)
Highlight the circumstances under which a person may cease to be a member of a
company.
Date posted:
February 6, 2019
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Answers (1)
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Birds Limited has three directors: Peacock, Sparrow and Vulture. Explain the legal implication of each of the following situations: a) Vultures son has recently...
(Solved)
Birds Limited has three directors: Peacock, Sparrow and Vulture. Explain the legal implication of each of the following situations:
a) Vulture's son has recently come of age and vulture wishes to appoint him a director of
the company.
b) The company is considering the purchase of a substantial quantity of goods from fly ltd., in which sparrow has a large shareholding through he is not a director peacock and vulture are unaware of sparrow's interest in fly ltd.
c) Because of adverse publicity about peacock's private life, vulture and sparrow wish to
remove him as a director, since he refuses to resign.
d) In view of the adverse publicity, vulture and sparrow decide to exclude peacock from participation in the company's affairs.
e) The directors are advised by wise & co., the company's auditors, that there is no possibility of the company trading at a profit in the foreseeable future and no reasonable prospect of its paying its debts
Date posted:
February 6, 2019
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Answers (1)