THURSDAY: 24 August 2023. Morning Paper. Time Allowed: 3 hours.
Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
1. Explain THREE ways in which persons intending to form a company may avoid personal liability on contracts they make on behalf of the proposed company. (6 marks)
2. Summarise any FOUR legal duties of a company’s external auditor. (4 marks)
3. The general rule is that companies must not give loans to directors. However, there are certain circumstances under which a company can give loans to a director.
In relation to the above statement, examine THREE such circumstances. (6 marks)
4. Outline FOUR contents of a certificate of incorporation of a company. (4 marks)
(Total: 20 marks)
QUESTION TWO
1. Distinguish between “participative preference shares” and “non-participative preference shares”. (4 marks)
2. Highlight FOUR statutory registers that must be maintained and kept at the registered office of a company. (4 marks)
3. A company can be wound up for failure to pay its debts. Explain to Edna Makena, one of the creditors of Ushindi Co. Ltd, THREE circumstances under which a company may be deemed unable to pay its debts. (6 marks)
4. Describe THREE types of company prospectuses. (6 marks)
(Total: 20 marks)
QUESTION THREE
1. Explain THREE pieces of information that a Director’s report must contain once a company has issued debentures in any financial year. (6 marks)
2. Summarise SIX contents of a notice of a general meeting. (6 marks)
3. List FOUR fiduciary duties of company directors. (4 marks)
4. A private company need not have a company secretary.
Explain TWO ways in which service and actions are carried out when a private company elects not to have a company secretary. (4 marks)
(Total: 20 marks)
QUESTION FOUR
1. State SIX elements of proper accounting records under company law. (6 marks)
2. Highlight SIX offences relating to liquidation of companies. (6 marks)
3. Evaluate FOUR ways in which a company can reorganise its share capital. (8 marks)
(Total: 20 marks)
QUESTION FIVE
1. In relation to investigation of company affairs:
Explain the purpose of an investigation into a company’s affairs under company law. (4 marks)
Identify FOUR parties that have the authority to initiate an investigation of a company’s affairs under
company law. (4 marks)
Highlight SIX consequences of an adverse finding from investigation of a company’s affairs. (6 marks)
2. Describe THREE reporting requirements for foreign companies operating in Kenya. (6 marks)
(Total: 20 marks)
QUESTION SIX
1. In relation to corporate restructuring, explain the following terms:
Compromises. (2 marks)
Arrangements. (2 marks)
Reconstructions. (2 marks)
Takeovers. (2 marks)
2. Discuss THREE advantages and THREE disadvantages of the principle of legal personality. (12 marks)
(Total: 20 marks)
QUESTION SEVEN
1. Describe FOUR types of opinions that can be issued in an Auditor’s report. (8 marks)
2. With specific reference to beneficial ownership:
Explain THREE criteria that a beneficial owner must satisfy. (6 marks)
State SIX particulars to be entered in the register of beneficial owners as prescribed by the regulations on
beneficial ownership. (6 marks)
(Total: 20 marks)
