Company law revision question and answer

Mar 16

CPA section 3: The Company Secretary

This is the officer appointed by the directors of a company as responsible for ensuring that firm’s legal obligations under the corporate legislation are complied with. The office of the Company Secretary, Corporate Secretary or Board Secretary is in charge Read more

Feb 25

Distinguish a private company according to section 30 of the Companies Act (Cap.486) from a partnership.

• A private company has many advantages over partnership. • Partnership is a relationship which subsists between persons carrying on business in common with a view of profit. • The difference between a private company and partnership are: a) Limited Read more

Feb 25

Outline the procedure for delivery of such a statement to the Registrar of Companies and indicate the information that must be disclosed by the statement.

A statement in lie of prospectus may be prepared in the following circumstances. 1) When a private company goes public Under section 32 (1) of the Act, if a private company by special resolution alters its articles converting itself to Read more

Feb 25

What is a “Statement in lieu of Prospects”.

The companies Act do not define the phrase „Statement in lieu of prospects‟. However, this is a document prepared and issued by companies in certain circumstances either in place of an ordinary prospectus or in addition to a prospectus. The Read more

Feb 25

The directors of Usafi Ltd. Diverted some funds meant for the extension of the commercial wing of the company‟s business premises to fund the expensive wedding of a son of one of the directors. At that particular time Juma was eth secretary. Eventually became a director. At Juma‟s very first board meeting, the earlier breach was ratified. To what extent, would Juma be liable for the earlier breach.

The act of Usafi Ltd was ultravires in the wides sense which is nothing but an abuse of power of the company by its officers often described as “Excess of directors‟ or transactions. • Ultravires the directors or transactions the Read more

Feb 25

In what circumstances, if any, will a director be treated as an agent of the company.

Directors are deemed to be agents of the company whenever they contract on its behalf. The relationship is governed by principles of agency and the company is generally liable as the principle. In borrowing contract, employment, and in contracts entered Read more

Feb 25

Discuss in details the rule and exceptions in Royal British Bank V. Turguard.

Royal British Bank V. Turguant • This is the indoor management rule. It is concerned with the liability of a company for acts of its officers. • It answers two questions; 1) Can a company escape liability by pleading an Read more

Feb 25

Explain the provisions of the Companies Act (Cap 486, Laws of Kenya) relating to registration of charges.

Registration of Charges: Under Section 96 (1) of the Act, a copy of every charge created by the company must be delivered to the registrar for registration within 42 days of its creation. However, under sections 10Z, the High court Read more

Feb 25

Gwanju Co. Ltd is in need of additional shares. The majority are willing to provide this capital if they could purchase the 20% of the shares held by the minority. The minority shareholders refuse to sell to the majority shareholders who then propose to alter the Articles of Association to provide for compulsory acquisition on a specified basis. Discuss the legality or otherwise of this proposal.

An alteration of articles must be bonafide for the benefit of the company as a whole. Regard must be had to existing and future shareholders of the company. • Whether the alteration is made in good faith or not is Read more

Feb 25

What is meant by the term “Fraud on the minority”.

Fraud on Minority • It has been asserted that the term fraud denotes an abuse of power or misuse of a fiduciary position. • The majority rule cannot apply if the conduct complained for amounts for fraud on minority e.g. Read more