Bmgt 323: Company Law Year 2009 Question Paper
Bmgt 323: Company Law Year 2009
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2009
COURSE CODE: BMGT 323
COURSE TITLE: COMPANY LAW
STREAM: Y3S2
DAY: THURSDAY
TIME: 9:00 – 11:00A.M.
DATE: 03/12/2009
Instructions:
1. Answer All Questions in Section A and any Other Three From Section B
2. Be Precise and Clear in Your Answer
SECTION A
QUESTION 1
(a) What is the ‘Doctrine of Ultra Vires’? (5 Marks)
(b) Susan Robinson incorporated a company and appointed herself as the managing director and at
the same time a sales representative. On one of the unfortunate occasions when she was
delivering flowers to a customer, at the airport, on behalf of the company, she fell asleep on the
steering and rammed into a lorry and died on the spot. Her loving husband has sued the
company for compensation. Decide the case. (5 Marks)
(c) Explain the Doctrine in Salomon vs. Salomon Company Limited (1897). (7 Marks)
(d) Discuss the functions of a promoter 8 marks
SECTION B
QUESTION 2
(a) You have been called upon to address a group of enterprising Kabarak University Students on
how to register a public company which they intend to set up. Do so. (10 Marks)
(b) Eight directors of Sufferingcom Company were engaged in the process an IPO of their company.
They issued a prospectus calling for persons to subscribe for shares. The document was
published and persons did actually participate in the IPO exercise of subscription. The buyers of
the shares have discovered many anomalies in the statement when they contacted their
accountant. They have sued the directors. They directors, however, think that the case is
baseless. Give them the basis of a good defence. (5 marks)
QUESTION 3
(a) Explain when the veil of a company may be lifted by the court. (12 Marks)
(b) Discuss the fiduciary position of a promoter. (3 Marks)
QUESTION 4
(a) The Memorandum of Association of a company is a compulsory document in the registration
process but Articles of Association are not. Discuss this statement (7 marks)
(b) Chetna registered a company by the name Chetna Buttercup Limited and started her business of
manufacturing and selling Blue Band. The business did very well and Muli got to know about it.
He too started a similar business by the name Chetan Butttercup Limited. Chetna is very upset
about it because her business is dwindling. She has sued Muli. What should the court, and
subsequently Muli do? Explain. (5 Marks)
(c) Briefly explain the Rule in Foss versus Harbottle (1843) (3 marks)
QUESTION 5
(a) What are the three types of meetings a company may hold? (6 marks)
(b) What four restrictions are imposed on a company in its bid to alter its Articles of Association?
(4 Marks)
(c) Discuss in detail five ways one may be appointed to be a director of a company. (5 marks)
QUESTION 6
A company is totally separate from the persons who form or own it. Therefore whatever it does
is not to be attributed to the members whatsoever. But courts have been keen to overlook this
principle and reach the individuals or persons themselves in some instances. Discuss this
departure from the norm and where possible, use case law to explain yourself (15 Marks)
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