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Law Question Paper

Law

Course:

Exam Year:2005

KENYA ACCOUNTANTS AND SECRETARIES NATIONAL EXAMINATIONAS BOARD

CPA PART II

LAW
Time: 3hrs

Answer any FIVE questions.

ALL questions carry equal marks.

1.(a) Citing the relevant cases explain the statement "A company is a legal entity quite separate and distinct from the persons who constitute it."(10 marks)

(b) Explain the advantages of converting a business carried on in partnership into a company limited by shares under the Companies Act.(10 marks)

2.(a) (i) Explain whether a promoter is entitled to receive remuneration for services he has rendered.(4 marks)

(ii) If the answer to (i) above is negative,then explain how a promoter may receive his remuneration.(10 marks)

(b) Explain the circumstances under which a public company having share capital and has issued a prospectus may commence business.(6 marks)

3.(a) Explain what is meant by Company's Memorandum of Association.(6 marks)

(b) Explain the contents of or clauses which must be contained in a company's Memorandum of Association.(10 marks)

(c) Explain how a company may change its name.(4 marks)

4.(a) Outline the rights an applicant has in the case of there being fraud or misrepresentation in the prospectus when making an application of shares in a company.(4 marks)

(b) Explain the legal principles set out in the following cases:

(i) Derny V Peek (1889).(2 marks)

(ii) R V Kylsant (1932).(2 marks)

(c) Outline the various ways in which a person may become a member of a company.(12 marks)

5.(a) Explain the provisions of the Companies Act safeguarding the interests of the minority in a company.(10 marks)

(b) Explain the conditions under which redeemable preference shares may be issued.(10 marks)

Procedure voluntary winding up.

(i) Appointment of Receiver.

(ii) Notice of appointment of Receiver to be served on Registrar.

(iii) Declaration of solvency.

(iv) Duty of liquidator to call creditors meeting in case of insolvency.

(v) Meeting end of year.

(vi) Final meeting and dissolution.

Voluntary winding up under court supervision.

This is also called supervisory winding up.

This is regulated by Selecting 304 of the Companies Act.

When voluntary winding up of a company is in progress,the liquidator or any creditor or contributory may apply to court requesting that the winding up may be proceeded further under the supervision of the court.

Provisions Applicable To Every Mode Of Winding-up.

1.Contributory.

2.When does the liability of a contributory arise.

6.(a) The articles of Wangokho Ltd.a private company contain a pre-emptive clause.Explain the meaning of the pre-emptive clause in this context and the reasons why such a provision may be used.(6 marks)

(b) Beatrice who is a private secretary to Anyolo steals Anyolo's certificate and forges his signature to a transfer of shares to Charles.Charles lodges the transfer for registration and later transfers the transfers the shares to Daniel.Daniel in turn becomes registered as the holder and after holding the shares for some months transfers them to Edward.

Anyolo wondering why he has not been receiving dividends for the last year or so,checks with the company and finds to his surprise that he is no longer a member.Explain the respective rights of the parties involved.(14 marks)

7.(a) Explain the consequences that will ensue once a receiver has been appointed.(10 marks)

(b) Explain the various ways in which a registered company may be dissolved (wound up) by the Court.(10 marks)

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