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a)- Special notice of the intended resolution must be given to the company.
- The company must send a copy thereof to the auditor.
- The auditor is entitled to make written representations as his defense.
- An extra-ordinary general meeting must be summoned. A special notice of the intended resolution must be sent to all members. If the auditor has made representations members must be notified and copies must be enclosed unless received too late.
-If copies are not enclosed due to lateness or default by the company the auditor is entitled to - An auditor can only be removed from office if a general meeting passes an ordinary resolution to that effect.-
(b) Since an auditor has the statutory right of access to all the company's books, accounts etc and is entitled to demand explanation from officers of the company the obstruction by the company officers is antithetical to his duty and is entitled to:
i) Demand that the officers forthwith desist from interfering with his duties failing which he instigates their investigation with a view to prosecution.
ii) Write a protest note to the company.
iii) Make a report on the information availed to him and set out the circumstances in which it was made highlighting the problems encountered.
(c) -This problem is based on the question whether an auditor owes legal duty of care to a third party. As a general rule, an auditor does not owe 3rd parties any legal duty of care when making his report. However, a 3rd party who suffers loss or damage by relying on an auditors report may recover from the auditor if it is established that:
marto answered the question on February 6, 2019 at 11:10
- Jane Wangokho is a minority shareholder of Tuzo Company Limited.
John Daudi is the managing director and majority shareholder of Tuzo Company Limited.
...(Solved)
Jane Wangokho is a minority shareholder of Tuzo Company Limited.
John Daudi is the managing director and majority shareholder of Tuzo Company Limited.
Jane Wangokho has discovered that John Daudi has breached his duties as a director by purchasing goods from the company at a gross undervalue. A general meeting of the company at which John Daudi attended and voted has ratified the sale.
Advise Jane Wangokho on the courses of action she may take.
Date posted: February 6, 2019. Answers (1)
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Explain the disadvantages to a minority shareholder in bringing a derivative action.
Date posted: February 6, 2019. Answers (1)
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Citing decided cases, state and describe the characteristics of a derivative action.(Solved)
Citing decided cases, state and describe the characteristics of a derivative action.
Date posted: February 6, 2019. Answers (1)
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with the memorandum of association.(Solved)
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with the memorandum of association.
Date posted: February 6, 2019. Answers (1)
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Date posted: February 6, 2019. Answers (1)
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(Solved)
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Date posted: February 6, 2019. Answers (1)
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(a) Bearer debentures and registered debentures.
(b) Redeemable debentures and irredeemable debentures.
(c) Debentures and debenture...(Solved)
Distinguish between the following classifications and debentures:
(a) Bearer debentures and registered debentures.
(b) Redeemable debentures and irredeemable debentures.
(c) Debentures and debenture stock
(d) Unsecured debentures and secured debentures
Date posted: February 6, 2019. Answers (1)
- Anna and Berita are directors of Pesa Limited and each holds forty per cent of the ordinary shares. The remainder is held by Charles.
...(Solved)
Anna and Berita are directors of Pesa Limited and each holds forty per cent of the ordinary shares. The remainder is held by Charles.
In addition to the shares, Anna also holds debentures issued by Pesa Limited, redeemable on 8 August 2003. Anna wishes to dispose of her shares and debentures.
On the other hand, Berita and Charles do not wish Anna's substantial interest in the company to pass to other people upon the sale of the shares and debentures.
Advise Pesa Limited on the legality of each of the courses of action listed below:
(a) Pesa Limited will raise the necessary funds and purchase the shares and debentures.
(b) Pesa Limited will raise funds and lend them to Charles so that he may purchase Anna's debentures. Charles will also arrange for a private loan guaranteed by Pesa Limited so that he may purchase Anna‟s shares.
(c) A new company, Pendo Limited, will be formed and eighty per cent of its ordinary shares will be held by Pesa Limited. Berita and Charles to hold ten per cent each. Pendo limited will borrow money to buy Anna's shares and debentures
Date posted: February 6, 2019. Answers (1)
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Martha is engaged in the promotion of a company. She seeks your advice on several matters relating to the promotion of a company. You are required to advise her on the following matters:
(a) The restrictions upon the choice of a corporate name with which a promoter must
comply.
(b) The legal duties of a promoter with regard to her responsibility where she sells her
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(c) The promoter's right to payment for her services by the company after
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Date posted: February 6, 2019. Answers (1)
- Section 213 of the Companies Act qualifies the liability of past and present members as contributors. Explain these qualifications as provided for in the...(Solved)
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Date posted: February 6, 2019. Answers (1)
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Rush, Fast and Speed are directors of Modern Technology Company Ltd. The company was formed with the main object of computer training. However, due to the power rationing, the company business has fallen below the expected productivity and is threatened with closure. In order to keep afloat, the three directors approached Money Bank Ltd for an overdraft of Sh. 2 million to establish an off-licence bar and restaurant within the city centre. The credit manager asked the company to provide its copy of the memorandum of association and the company complied. Modern Technology was then given the overdraft. However, it has run into financial difficulties and is unable to repay the loan.
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Date posted: February 6, 2019. Answers (1)
- Explain the circumstances under which directors of a company will be held personally liable to acts committed on behalf of the company.(Solved)
Explain the circumstances under which directors of a company will be held personally liable to acts committed on behalf of the company.
Date posted: February 6, 2019. Answers (1)
- (i)What is a special notice?
(ii) Give the circumstances under which a special notice would be required with respect to company meetings. (Solved)
(i)What is a special notice?
(ii) Give the circumstances under which a special notice would be required with respect to company meetings.
Date posted: February 6, 2019. Answers (1)
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Date posted: February 6, 2019. Answers (1)
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Date posted: February 6, 2019. Answers (1)
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A person who lends to the security of a specific mortgage of a company's property is always entitled to repayment on his loan out...(Solved)
A person who lends to the security of a specific mortgage of a company's property is always entitled to repayment on his loan out of the proceeds of the sale of the mortgaged property. This is done before any other creditor receives any payment. A person who takes a floating charge is not in such a secure position.
Why is the holder of a floating charge in a less favorable position?
Date posted: February 6, 2019. Answers (1)
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What happens to a floating charge when it crystallizes?
Date posted: February 6, 2019. Answers (1)
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A part from the appointment of a receiver, four other events will cause a floating charge to crystallize. Describe these four events.
Date posted: February 6, 2019. Answers (1)
- a)Explain the proprietary rights of a member in a company.
(b) Rita applied for 2,000 shares in Bidii Yako Company Ltd. following her application, no...(Solved)
a)Explain the proprietary rights of a member in a company.
(b) Rita applied for 2,000 shares in Bidii Yako Company Ltd. following her application, no allotment at the time was made. Later on without her application, 2,000 shares were transferred to her and her name placed in the register of members.
Rita knowing that her name was in the register of members took no steps to have it rectified. Later on, the company collapsed. Rita was called upon to pay up on her shares and she has declined to do so arguing that she was not a member of Bidii Yako Company Ltd. She seeks your advice on the matter. Advise Rita
Date posted: February 6, 2019. Answers (1)