This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply and comply with the provisions of company law in relevant circumstances and environments.



A candidate who passes this paper should be able to:

  • Apply legal principles relating to formation of companies
  • Evaluate the rights and obligations of members and shareholders
  • Comply with the legal principles governing liquidation of corporates and restructuring
  • Comply with the legal principles relating to companies incorporated outside Kenya
  • Ensure books of account are prepared in compliance with the law.


7.1      Nature and classification of companies

  • Nature and characteristics of a company
  • Types of companies
  • Principle of legal personality and veil of incorporation
  • Distinction between companies and other forms of business associations, sole proprietorships, partnerships and cooperative societies.

7.2      Formation of companies

  • Promoters and pre-incorporation contracts
  • Process of forming a company
  • Memorandum and articles of association
  • Certificate of incorporation
  • Effects of incorporation

7.3         Membership of a company

  •  Acquisition of membership
  •  Register of members
  •  Rights and liabilities of members
  •  Cessation of membership


  • Classes of shares
  • Variation of class rights
  • Share certificates
  • Issue and allotment
  • Transfer and transmission
  • Transfer of shares under central depository system
  • Mortgaging and charging of shares

7.5         Share capital

  • Meaning and types of share capital
  • Raising of share capital
  • Prospectus/information memorandum
  • Maintenance of capital
  • Alteration of capital
  • Dividends

7. 6 Debt capital

  • Borrowing powers of the company
  • Debentures
  • Charges
  • Registration of charges
  • Remedies of debenture holders

7.7  Company meetings

  • Nature and classification of company meetings
  • Essentials of a valid meeting
  • Voting
  • Resolutions

7.8 Directors

  • Qualifications, appointment and disqualification
  • Powers and duties of directors
  • Removal and vacation of office
  • Register of directors
  • Remuneration of directors
  • Loans to directors
  • Compensation for loss of office
  • Disclosure of director’s interest in contracts
  • The rule in Turquand’s case/Indoor Management rule
  • Insider dealing

7.9 The company secretary

  • Qualification, appointment and removal
  • Powers and duties of the company secretary
  • Liability of the company secretary
  • Register of secretaries

7.10 Auditors

  • Qualification, appointment and removal
  • Remuneration of auditors
  • Powers and duties
  • Rights and liabilities

7.11 Company accounts, audit and investigation

  • Books of accounts
  • Form and content of accounts
  • Group accounts
  • Director’s report
  • Auditor’s report
  • Annual returns
  • Investigation of company affairs
  • Appointment and powers of inspectors
  • Inspector’s report

7.12      Corporate restructuring

  • Need for restructuring
  • Mergers,
  • Post merger reorganisation
  • Takeovers and acquisitions
  • Schemes of arrangement and compromises
  • Reconstruction

7.13      Receivership and liquidation of companies

  • Meaning of receivership
  • Appointment and vacation of office
  • Powers and duties of a receiver
  • Termination of receivership
  • Meaning of liquidation
  • Types of liquidation
  • Appointment, powers and duties of liquidators
  • Discharge of liquidators
  • Distribution of assets and dissolution of companies

7.14      Companies incorporated outside the country

  • Process of registering a company
  • Certificate of registration
  • Power to hold land
  • Registration of charges
  • Accounts of foreign companies
  • Service of process and notices on foreign companies
  • Returns
  • Penalties
  • Cessation of business

7.15    Emerging issues and trends

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