Get premium membership and access questions with answers, video lessons as well as revision papers.

Triple H, Undertaker Austin and Flair are directors of Mieleka Ltd a company regulated by Table A. Fair is the managing director and undertaker...

      

Triple H, Undertaker Austin and Flair are directors of Mieleka Ltd a company regulated by Table A. Fair is the managing director and undertaker is the chairperson of the company. Sometime ago the directors meeting as a board decided to:

i) Lend Triple H Shs.500,000 to purchase a car for his wife Stephane for her personal use;

ii) Advance Shs.500,000 to Austin to cover his expenses on a worldwide (promotional tour on behalf of the company).

Booker T, the company secretary informs you that Stone Cold a shareholder claims that this transaction should have been approved by the members and that he intends to raise the matter during the next general meeting.
Required

i) Advise Booker T which of the transactions need approval by the members in general meeting

ii) What are the consequences of the necessary approval not being obtained?

  

Answers


Martin


- The transaction to advance Shs.500,000 to Austin to cover his expenses on worldwide promotional tour on behalf of the company required prior approval by members in general meeting pursuant to the proviso to Sec.191(1) of the Act which permits a company to provide funds to a director to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an office of the company.

- Under Sec.191 (3) of the Act if the requisite approval is not given by the company in general meeting the directors authorizing the making of the loan are jointly and severally liable to indemnify the company against any loss arising there from
marto answered the question on February 6, 2019 at 09:06


Next: Discuss the rules relating to appointment and vacation of office of directors.
Previous: Explain why a firm in perfect competition may continue in the production of goods which it can only sell at a loss and why it cannot...

View More CPA Company Law Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions