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(a)
- Ascertainment and determination of the company's name. This is necessary before the application or reservation of the name is made to the registrar.
- Determination whether the company is public or private. This is critical as it affects the contents of the articles of association.
- Determination whether liability is limited by shares or guarantee. For trading companies liability is limited by shares while non-trading companies are limited by guarantee.
- Determination whether the company shall have a share capital. This depends on:
- Whether liability is limited by shares or guarantee.
- Intention of promoters.
In law, promoters are not entitled to remuneration for incorporating a company for the simple reason that the company did not engage their services. However, promoters may be rewarded in other ways:
- acting as commission agents.
- being appointed the first directors of the company.
- being afforded the opportunity to take up extra shares at par value after market value has risen.
- being offered deferred or founders or management shares.
- upon disclosure, a promoter is free to sell overvalued assets to the company for a profit.
- upon, disclosure a promote is free to sell overvalued assets to the company is return for fully paid shares of the company.
(b) In law, promoters are not entitled to remuneration for incorporating a company for the simple reason that the company did not engage their services. However, promoters may be rewarded in other ways:
- acting as commission agents.
-being appointed the first directors of the company.
-Being afforded the opportunity to take up extra shares at par value after market value has risen.
- being offered deferred or founders or management shares.
- upon disclosure, a promoter is free to sell overvalued assets to the company for a profit.
- upon, disclosure a promote is free to sell overvalued assets to the company is return for fully paid shares of the company.
marto answered the question on February 7, 2019 at 07:21
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Discuss the ways in which the traditional role of an auditor has been affected by recent demands by regulatory authorities and shareholders. (Solved)
Discuss the ways in which the traditional role of an auditor has been affected by recent demands by regulatory authorities and shareholders.
Date posted: February 7, 2019. Answers (1)
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The law requires that certain statutory books must be kept in the registered offices of the company.
Explain the contents and matters...(Solved)
The law requires that certain statutory books 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.
(b) Register of directors and secretaries.
(c) Register of directors' interests.
(d) Register of charges.
Date posted: February 7, 2019. Answers (1)
- 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...(Solved)
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 lifted
Date posted: February 7, 2019. Answers (1)
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The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases.(Solved)
-The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases.
Date posted: February 7, 2019. Answers (1)
- Explain the effect of the failure by the company to register a charge of a debenture.(Solved)
Explain the effect of the failure by the company to register a charge of a debenture.
Date posted: February 7, 2019. Answers (1)
- Give reasons why a company may seek to control the funds from which dividends are paid.(Solved)
Give reasons why a company may seek to control the funds from which dividends are paid.
Date posted: February 7, 2019. Answers (1)
- Explain the circumstances when a dividend may become payable and enforceable as a debt against the company.(Solved)
Explain the circumstances when a dividend may become payable and enforceable as a debt against the company.
Date posted: February 7, 2019. Answers (1)
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(a) Explain the category of persons to whom an auditor owes a duty of care in the preparation of his audit report.
...(Solved)
(a) Explain the category of persons to whom an auditor owes a duty of care in the preparation of his audit report.
(b) Enumerate the rights accorded to an auditor to enable him perform his duties as the auditor of a company.
(c) In Hedley Byrne V. Heller (1964) the court held that provided that it could be established that a special relationship existed between parties it was possible for a person to sue for having suffered a financial loss even though no contractual relationship existed between the parties.
Highlight the factors that should be established in order for a third party to successfully sue an auditor for professional negligence.
Date posted: February 7, 2019. Answers (1)
- (a) Outline the qualified minority rights of a member which can only be enforced by the joint efforts of a membership group as defined under...(Solved)
(a) Outline the qualified minority rights of a member which can only be enforced by the joint efforts of a membership group as defined under the Companies Act.
(b) The Articles of X Company Ltd provide that every member is entitled to one vote for each of the first ten shares and thereafter to one vote for each additional ten shares. Jane owns one hundred shares. She transfers ten of her shares to her nine nominees to increase her voting powering general meetings. Joseph, who is the chairman at the general meeting, refuses to accept the votes of Jane‟s nominees.
Advise Jane on the validity of the Chairman‟s action and her right as a member.
Date posted: February 7, 2019. Answers (1)
- 'The rule in the case of Ashbury Railway Carriage Vs. Riche (1875)stated that an act has not been authorized by the objects clause of a...(Solved)
'The rule in the case of Ashbury Railway Carriage Vs. Riche (1875)stated that an act has not been authorized by the objects clause of a company's Memorandum of Association in ultra vires to the company and the members cannot ratify it.'
Discuss.
b) Explain the various ways in which persons intending to form a company may avoid
personal liability on contracts they make on behalf of the proposed company.
c) It has been held that the memorandum and Articles of Association of a company shall, when registered, bind the company and the members to the same extent as if the documents has been signed and sealed by each member and contained covenants an the part of each member to observe all the provisions of the memorandum and the articles.
Explain the effect of this provision on the relationship between shareholders and their company and between shareholders themselves.
Date posted: February 7, 2019. Answers (1)
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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. Answers (1)
- (a) Explain the rules that govern quorum and the exceptions thereof
(b) In relation to proxies, write brief notes on:
(i) General proxies.
(ii) Special proxies....(Solved)
(a) Explain the rules that govern quorum and the exceptions thereof
(b) In relation to proxies, write brief notes on:
(i) General proxies.
(ii) Special proxies.
Date posted: February 7, 2019. Answers (1)
- Discuss the powers of the liquidator:
(a) With the sanction of the court.
(b) Without the sanction of the court(Solved)
Discuss the powers of the liquidator:
(a) With the sanction of the court.
(b) Without the sanction of the court
Date posted: February 7, 2019. Answers (1)
- 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. Answers (1)
- Enumerate the various types of charges that require registration as stated under the
Companies Act.(Solved)
Enumerate the various types of charges that require registration as stated under the
Companies Act.
Date posted: February 7, 2019. Answers (1)
- (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. Answers (1)
- (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. Answers (1)
- (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. 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 7, 2019. Answers (1)
- Mr. and Mrs. Matanguta intend to form a limited company known as M and M Hardware Limited. They approach you and seek you advice.
...(Solved)
Mr. and Mrs. Matanguta intend to form a limited company known as M and M Hardware Limited. They approach you and seek you advice.
Advise them on the following issues:
(i) What is the meaning of a private limited company according to the Companies Act?
(iii) Assuming Mr. and Mrs. Matanguta wish to convert the private company into a public company,
what would they be required to do?
Date posted: February 7, 2019. Answers (1)