Under Section 13 (1) of the Companies Act a registered company has statutory power to alter add to its articles. Under Sec 13 (2) such alteration or addition is as valid as if originally contained in the articles and is alterable. It was so held in Walker v London Tramways Co.Ltd
i) However, this power is subject to both statutory and common law restrictions.
Statutory Restrictions
- Under Section 13 (1) of the Act an alteration of the articles must be authorized by a special resolution of members in general meeting.
- The alteration must not be inconsistent with any written law including the Companies Act.
- It must not exceed the conditions contained in the Memorandum of Association of the company.
- It must not increase the liability of members ore require them to take up more shares without written consent.
- It must not amend the provisions of Section 30 of the Companies Act if the company is to remain private.
- It must not be inconsistent with a court order made pursuant to Section 211 of the Companies Act for purposes of minority protection in cases of oppression.
- It must not be contrary to the rights of dis sentient shareholders affected by a variation of class rights pursuant to Section 74(1) of the Act, to apply to the court for the variation to be cancelled.
- Common law or judicial restriction
- The alteration must be bonafide for the benefit of the company as a whole i.e. regard must be had to existing and future shareholders of the company. As was the case in Side bottom v Kershaw Leese & Co.. where the articles was altered to enable the company get rid of competitors from among its members. However, in Brown v British Abrasive Wheel where the articles were altered to enable the majority acquire the shares of the minority it was held that the alteration was not bonafide.
marto answered the question on February 6, 2019 at 08:38
- Outline the documents that are normally kept at the registered office of a company.(Solved)
Outline the documents that are normally kept at the registered office of a company.
Date posted: February 6, 2019. Answers (1)
- Tim and Tom wish to establish a business jointly. However, they are not sure whether to establish a limited liability company or an unlimited...(Solved)
Tim and Tom wish to establish a business jointly. However, they are not sure whether to establish a limited liability company or an unlimited liability company; as they know little about these types of companies.
i) Explain to them the differences between a limited company and an unlimited company.
ii) State the provisions of the Companies Act regarding the re-registration of unlimited company as limited.
Date posted: February 6, 2019. Answers (1)
- Distinguish between a corporation sole and a corporation aggregate.(Solved)
Distinguish between a corporation sole and a corporation aggregate.
Date posted: February 6, 2019. Answers (1)
- Happy co. Ltd was incorporated in January 2000 with an authorized share capital of 50,000,000 of one shilling per share which is fully issued and...(Solved)
Happy co. Ltd was incorporated in January 2000 with an authorized share capital of 50,000,000 of one shilling per share which is fully issued and fully paid. The original articles of association gave the directors authority to issue the initial authorized share capital.
The directors are proposing to purchase a plot from Mr Karan for KShs.3,000,000 and to finance the purchase by a fresh issue of 2,000,000 shares at one shilling per share to Mr. Karan. In order to develop the plot they propose to raise further capital by issuing a further 2,000,000 shares of one shilling each. The directors propose that 1,000,000 of the shares should be offered to existing shareholders and 1,000,000 to the general public. The shares to Mr Karan, the existing shareholders and to the general public are to be offered at one shilling and fifty cents each.
Explain the preliminary checks which the directors must make before proceeding with these proposals. State the steps the directors must take to give them effect.
Date posted: February 6, 2019. Answers (1)
-
Dividend is payable only in cash to shareholders out of profits available for distribution.
State the rules which determine the extent to which profits...(Solved)
Dividend is payable only in cash to shareholders out of profits available for distribution.
State the rules which determine the extent to which profits arising out of the disposal of fixed assets may be used to pay such dividends.
Date posted: February 6, 2019. Answers (1)
- In order to frustrate a threatened take-over bid, the directors of Kesho Ltd. issue to themselves and their nominees sufficient ordinary shares for cash so...(Solved)
In order to frustrate a threatened take-over bid, the directors of Kesho Ltd. issue to themselves and their nominees sufficient ordinary shares for cash so as to give themselves control of a majority of the shares which give the right to vote at a general meeting.
Mwananchi, a minority shareholder who had hoped to benefit by selling to the bidder, is very annoyed by the action of the directors.
Advise him as to his legal rights.
Date posted: February 6, 2019. Answers (1)
- Describe the various kinds of resolutions that may be passed at general meetings.
State the difference between them and list matters that require such resolutions...(Solved)
Describe the various kinds of resolutions that may be passed at general meetings.
State the difference between them and list matters that require such resolutions to be passed before they can have effect.
Date posted: February 6, 2019. Answers (1)
- In relation to corporate insolvency,
a)
i) Explain what is meant by a contributory.
ii) Distinguish between fraudulent and wrongful trading. Against whom...(Solved)
In relation to corporate insolvency
a)
i) Explain what is meant by a contributory.
ii) Distinguish between fraudulent and wrongful trading. Against whom may proceedings by brought for breaches of provisions against fraudulent trading and wrongful trading?
b) Highlight the powers of the court on hearing a petition.
Date posted: February 6, 2019. Answers (1)
- Highlight the circumstances under which a person may cease to be a member of a
company.(Solved)
Highlight the circumstances under which a person may cease to be a member of a
company.
Date posted: February 6, 2019. Answers (1)
- Birds Limited has three directors: Peacock, Sparrow and Vulture. Explain the legal implication of each of the following situations: a) Vultures son has recently...(Solved)
Birds Limited has three directors: Peacock, Sparrow and Vulture. Explain the legal implication of each of the following situations:
a) Vulture's son has recently come of age and vulture wishes to appoint him a director of
the company.
b) The company is considering the purchase of a substantial quantity of goods from fly ltd., in which sparrow has a large shareholding through he is not a director peacock and vulture are unaware of sparrow's interest in fly ltd.
c) Because of adverse publicity about peacock's private life, vulture and sparrow wish to
remove him as a director, since he refuses to resign.
d) In view of the adverse publicity, vulture and sparrow decide to exclude peacock from participation in the company's affairs.
e) The directors are advised by wise & co., the company's auditors, that there is no possibility of the company trading at a profit in the foreseeable future and no reasonable prospect of its paying its debts
Date posted: February 6, 2019. Answers (1)
- State the requirements of the Companies Act which relate to the company giving
financial assistance for purchase of its own shares....(Solved)
State the requirements of the Companies Act which relate to the company giving
financial assistance for purchase of its own shares. What are the consequences of non - compliance with these requirements?
Date posted: February 6, 2019. Answers (1)
- State and briefly discuss the conditions which must be fulfilled before a company can
either issue or redeem shares which are stated to be...(Solved)
State and briefly discuss the conditions which must be fulfilled before a company can
either issue or redeem shares which are stated to be redeemable.
Date posted: February 6, 2019. Answers (1)
- Y Ltd whose articles are similar to Table A, publish a weekly magazine. In one issue an article is critical of the policies of the...(Solved)
Y Ltd whose articles are similar to Table A, publish a weekly magazine. In one issue an article is critical of the policies of the city commission. A number of Commissioners who are also members of the company requisition a general meeting and secure the passing of an ordinary resolution ordering the company to publish in the next issue a withdrawal of the criticism. The directors of the company are adamant.
The angry commissioners approach you for the purpose of filing an action to compel the directors to publish a withdrawal.
Advise them.
Date posted: February 6, 2019. Answers (1)
- To what extent does the doctrine of constructive notice operate negatively? (Solved)
To what extent does the doctrine of constructive notice operate negatively?
Date posted: February 6, 2019. Answers (1)
- State the powers of the inspection appointed to investigate the affairs of the company(Solved)
State the powers of the inspection appointed to investigate the affairs of the company
Date posted: February 6, 2019. Answers (1)
- Detail the statutory provisions governing the investigation into the affairs of a company
by the registrar. (Solved)
Detail the statutory provisions governing the investigation into the affairs of a company
by the registrar.
Date posted: February 6, 2019. Answers (1)
- State the legal consequences of a winding up order made against a company.(Solved)
State the legal consequences of a winding up order made against a company.
Date posted: February 6, 2019. Answers (1)
- Describe the circumstance under which a company may be wound up on the ground that it is "just and equitable" to do so.(Solved)
Describe the circumstance under which a company may be wound up on the ground that it is "just and equitable" to do so.
Date posted: February 6, 2019. Answers (1)
- Outline the legal rules that govern the appointment of an Administrative Receiver by a holder of a floating charge. (Solved)
Outline the legal rules that govern the appointment of an Administrative Receiver by a holder of a floating charge.
Date posted: February 6, 2019. Answers (1)
-
b) The directors of Alumasi Co. Ltd borrowed Shs.20 million from Maendeleo Bank. The Bank was informed that the money was intended to...(Solved)
b) The directors of Alumasi Co. Ltd borrowed Shs.20 million from Maendeleo Bank. The Bank was informed that the money was intended to be used to expand the company‟s horticultural business. The bank however, did not ask for the company‟s Memorandum of Association and lent the money. The money was spent for purposes not intended. These facts have come to light and Maendeleo Bank seeks your advice on whether the bank can successfully recover the money.
Advise the bank.
Date posted: February 6, 2019. Answers (1)