TOPIC 1
NATURE AND CLASSIFICATION OF COMPANIES
QUESTION 1
December 2024 Question One A and B
(a) Outline FOUR characteristics that define the legal framework within which companies operate in Kenya. (4 marks)
(b) Explain TWO differences between a “holding company” and a “subsidiary company”. (4 marks)
QUESTION 2
August 2024 Question One A and B
(a) With reference to companies, explain the term “body corporate”. (2 marks)
(b) Pizza World Enterprises Ltd., is a small family-owned company operating a chain of restaurants. The company has of late been facing financial difficulties. One reason being that the company’s directors have been using the company’s funds for personal expenses. As a result, the company has not been honouring its obligations to its creditors. The creditors are now contemplating suing the company directors.
Required:
Discuss THREE possibilities of the court lifting the veil of incorporation when the case is brought in a court of competent jurisdiction. (6 marks)
QUESTION 3
August 2024 Question Two A
Highlight THREE characteristics of a company limited by guarantee. (3 marks)
QUESTION 4
April 2024 Question Three B
Distinguish between “Private Limited Company” and “Public Limited Company”. (4 marks)
QUESTION 5
December 2023 Question One A and B
a) Explain the concept of legal personality in the context of corporate entities. (4 marks)
(b) Examine THREE classifications of companies on the basis of liability. (6 marks)
QUESTION 6
August 2023 Question Six B
Discuss THREE advantages and THREE disadvantages of the principle of legal personality. (12 marks)
QUESTION 7
April 2023 Question One A (i)
A group of four graduates have decided to form a small business firm to deal in import and export trade. You have been appointed as a member of the technical committee to help in registering the firm as a limited liability company. Explain to the committee the matters below:
(i) The FIVE legal characteristics of the entity that will be registered. (5 marks)
QUESTION 8
April 2023 Question One B and C
b) With respect to the nature and classification of companies, distinguish between a registered company and a:
(i) Statutory corporation. (1 mark)
(ii) Partnership. (4 marks)
c) Outline FIVE instances under common law where the veil of incorporation may be lifted. (5 marks)
QUESTION 9
December 2022 Question One
(a) Highlight FIVE rules relating to the naming of companies. (5 marks)
(b) Describe the effect of the principle elucidated by Lord MacNaghten in the case of Salomon-V-Salomon. (7 marks)
(c) Explain the difference between a “company limited by shares” and a “company limited by guarantee.” (4 marks)
(d) Identify FOUR features of an unlimited company. (4 marks)
QUESTION 10
August 2022 Question One A
(i) Explain three advantages of a public company over a private company. (6 marks)
(ii) Distinguish between “corporation sole” and “corporation aggregate”. (4 marks)
QUESTION 11
April 2022 Question Six D
Distinguish between a “private” and a “public” company. (4 marks)
QUESTION 12
April 2022 Question Seven C
Describe six grounds under which the veil of incorporation might be lifted. (6 marks)
QUESTION 13
September 2021 Question One A
Tom Jerry and Marsha Bear are purposing to form a joint business venture. They are debating whether to form a limited liability company (LLC) or a limited liability partnership (LLP). Their knowledge on these forms of business associations is limited and they have thus approached you for guidance.
Required:
Advise Tom Jerry and Marsha Bear on five differences between a limited liability company (LLC) and limited liability partnership (LLP). (10 marks)
QUESTION 14
May 2021 Question Two A
Explain three characteristics of a company. (6 marks)
QUESTION 15
May 2021 Question Two B
Highlight four differences between a “private company” and a “public company”. (4 marks)
QUESTION 16
May 2021 Question Four C
Highlight three conditions for a company to be deemed a “small company”. (6 marks)
QUESTION 17
November 2020 Question seven B
Explain the distinguishing features of the following types of companies:
(i) Companies limited by guarantee. (3 marks)
(ii) Private companies. (3 marks)
(iii) Public companies. (3 marks)
QUESTION 18
November 2019 Question three A
A company is a legal person and is distinct from its members. This principle is regarded as a curtain, a veil or shield between the company and its members. This veil can be lifted by the Courts and statutes.
Describe the circumstances for lifting of the veil by:
- The Courts. (6 marks)
- The Statutes. (6 marks)
QUESTION 19
May 2019 Question Two A
Joanne wishes to register a business enterprise but she knows very little about business associations. She mulls over various choices including partnerships, sole proprietorships and limited companies. Joanne is unable to make up her mind on the type of business to establish and seeks your advice.
Required:
(i)Advise Joanne on eight advantages of sole proprietorships over the other forms of business structures. (8 marks)
(ii) Distinguish between a “corporation sole” and “corporation aggregate.” (2 marks)
QUESTION 20
November 2018 Question three A
Explain the distinction between “statutory companies” and “non-statutory companies”. (4 marks)
QUESTION 21
November 2018 Question three B
Describe four reasons why a court in exercising its inherent jurisdiction for the sake of justice might disregard the principle of legal personality. (8 marks)
QUESTION 22
November 2018 Question five A
With reference to the types of companies, summarise three provisions relating to the liabilities of the members of a company.
QUESTION 23
May 2018 Question seven B
Cliff, Mohammed and Mwikali have been running the business of supplying stationary to various customers including some government ministries as a partnership trading under the name “Relax Enterprise”. They are desirous of converting their business into a limited liability company.
Explain to them two differences between companies and partnerships. (4 marks)
QUESTION 24
November 2017 Question five B (i)
Explain three categories of public companies. (3 marks)
QUESTION 25
May 2017 Question one A and B
Explain four distinctions between “co-operative societies” and “limited companies”. (4 marks)
QUESTION 26
May 2017 Question one B
Describe three circumstances under which the veil of incorporation of a company might be lifted under case law. (6 marks)
QUESTION 27
November 2016 Question one A
With reference to classification of companies, explain the meaning of a “holding company” in relation to another company. (4 marks)
QUESTION 28
November 2016 Question one B
A company cannot on its own execute contracts.
Describe three mechanisms provided by the Companies Act by which a company can sign documents. (6 marks)
QUESTION 29
May 2016 Question two B
Describe five classifications of companies under the Companies Act. (10 marks)
QUESTION 30
November 2015 Question one B
Sometimes a corporate entity works like a boomerang and hits the man who was trying to use it.
With reference to the above statement, describe five exceptional circumstances under which when a shareholder could institute proceedings as the plaintiff instead of those proceedings being instituted in the name of the company. (10 marks)
QUESTION 31
November 2015 Question two B
Describe five persons who are responsible for meeting the expenses of an investigation by an inspector appointed by the court. (10 marks)
QUESTION 32
November 2015 Question seven A
Discuss five advantages of a private company over a public company. (10 marks)
QUESTION 33
September 2015 Question seven C
Distinguish between companies and partnerships as forms of business associations. (6 marks)
