THURSDAY: 7 December 2023. Morning Paper. Time Allowed: 3 hours.
This paper has seven (7) questions. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
1. Explain the concept of legal personality in the context of corporate entities. (4 marks)
2. Examine THREE classifications of companies on the basis of liability. (6 marks)
3. Discuss the legal responsibilities and potential liabilities that promoters may incur during the pre-incorporation stage of a company. (6 marks)
4. Tom Bwire is acting as a promoter of Tomtom Company Ltd. and is negotiating a lease agreement for office space at Upper Hill in Nairobi.
Describe what Tom should do to ensure that once the company is formed, the lease agreement does not bind him personally. (4 marks)
(Total: 20 marks)
QUESTION TWO
1. Explain the term “membership” in a company. (2 marks)
2. Describe TWO different types of membership that may exist in a company. (4 marks)
3. Alan Simba purchased shares in NZE Company Ltd. hence became a shareholder. He is unaware of his rights as a shareholder and has approached you to advise him on his rights as a shareholder.
Advise Alan Simba on SIX rights conferred upon him for being a shareholder of the company. (6 marks)
4. Explain the term “bonus shares”. (2 marks)
Explain THREE reasons why a company may issue bonus shares to its shareholders. (6 marks)
(Total: 20 marks)
QUESTION THREE
1. Differentiate between “secured” and “unsecured” debt in a company. (4 marks)
Discuss THREE characteristics of a debenture. (6 marks)
2. Explain the meaning of the term “proxy” in relation to company meetings. (2 marks)
Analyse FOUR differences between a “board meeting” and a “general meeting”. (8 marks)
(Total: 20 marks)
QUESTION FOUR
1. Highlight FIVE main responsibilities of a board of directors in a company. (5 marks)
2. Explain FIVE key components that must be included in the financial reports of a company in your country. (5 marks)
3. In relation to company investigations:
Examine FIVE circumstances under which an investigation may be initiated. (5 marks)
Summarise FIVE potential outcomes or recommendations from an investigation into a company’s affairs. (5 marks)
(Total: 20 marks)
QUESTION FIVE
1. Highlight FOUR powers of an administrator in corporate administration. (4 marks)
2. Describe the process of appointing a receiver during the winding up of a company. (10 marks)
3. Examine THREE legal consequences that may befall a foreign company operating in your country, if it fails to comply with the legal requirements as provided for in the Companies Act. (6 marks)
(Total: 20 marks)
QUESTION SIX
1. The role of auditing is undertaken by a person with the relevant competencies and independence to make appropriate judgment.
With reference to the above statement, identify SIX persons who are disqualified from appointment as auditors. (6 marks)
2. Describe THREE rights of auditors of a company as provided for in the Companies Act in your country. (6 marks)
3. Explain FOUR ways through which a company limited by shares or guarantee may if authorised by its articles, alter its share capital. (8 marks)
(Total: 20 marks)
QUESTION SEVEN
1. Enumerate TWO documents that are required to accompany annual returns of company limited by guarantee. (2 marks)
2. Discuss TWO consequences that could arise when a company fails to lodge proper annual returns on time. (4 marks)
3. Identify TWO persons who are disqualified from acting as a company secretary. (2 marks)
Explain FOUR breaches and omissions of duty that might be committed by a company secretary.
(4 marks)
4. Patricia Wahito wishes to form a company and has approached you seeking guidance on the choice of a name. She has read from the Companies Act that the name chosen must not be undesirable in the opinion of the Registrar.
Required:
With reference to the above statement, advise Patricia Wahito on FOUR matters to consider in choosing a name for her company. (4 marks)
Identify FOUR places and documents upon which the company’s name must be displayed. (4 marks)
(Total: 20 marks)
