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(a)
Under the provisions of the Companies Act the following rights are only enforceable by joint effort:
I) Under section 8 (1) of the Companies Act, a company may by special resolution alter the objects clause of the memorandum. However the proposed alteration may be objected to by either. Holders of not less than 15% in nominal value of the Company?s issued share capital. Holders of not less than 15% of any class of shares of the Company. Holders of not less than 15% of the Company's debenture entitling them to object. Not less than 15% of the Company's members.
II) Under section 74 (1) of the Company's Act, proposed variation of class rights may be objected to by holders of not less than 15% of that class of shares who did not consent or vote in favour, by an application to court within 30 days of the resolution or consent.
III) Under section 140 (1) of the Companies Act holders of not less than 1/20 of the total voting rights of all members or not less than 100 members of the Company may requisition notices of any resolution which may properly be moved at the next general meeting. They are also entitled to requisition the Company to circulate to members any statement of not more than 100 words with respect to the matter referred to any proposed resolution or business to be dealt with at a meeting. IV) Under section 132 (1) of the Companies Act holders of not less than 1/10 of the paid up capital of the Company or the total voting rights of all members may requisition an extra ordinary general meeting by depositing a requisition with the Company at its registered office and if the directors do not within 21 days thereof convene a meeting, the requisition or not less than ½ of them may convene a meeting. Such a meeting may be held within three months of the requisition.
V) Under section 137 (1) of the Companies Act, a poll can only be effectively demanded by: o Not less than five members present in person or by proxy. o A member or members representing not less than 1/10 of the total voting rights of all members having the right to vote. o A member or members representing not less than 1/10 of the paid up capital.VI) Under section 165 (1) of the Companies Act a Company?s affairs may be
investigated by an inspector or inspectors appointed by the court at the instigation of either. Not less than 200 members or members holding not less than 1/10 of the issued shares. Not less than 1/5 of the number of persons in the company?s register of members.
(b)
-This problem is based on the right of a member to vote in Company general meetings. It is a trite principle of law that the right to vote is one of the proprietary rights of a member. It is one of the so-called individual membership rights of a member exercisable by a member irrespective of the wishes of the majority and if the right is violated the member has a personal action for redress.
- In this case the articles of X Company are very clear on voting and the Chairman has declined to accept the votes of Jane nominees in violation of Jane?s right to vote in a general meeting. Jane has a course of action to compel the Chairman to adept the votes of her nominees.
- My advise to Jane is to institute legal proceedings against the chairman to 'compel him'to accept the votes, as was observed by Sir George Jessel MR in Pender V. Lushington.
- My advise is based on the decision in Pender V. Lushington whose facts were substantially similar to those of this case.
marto answered the question on February 7, 2019 at 06:20
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'The rule in the case of Ashbury Railway Carriage Vs. Riche (1875)stated that an act has not been authorized by the objects clause of a company's Memorandum of Association in ultra vires to the company and the members cannot ratify it.'
Discuss.
b) Explain the various ways in which persons intending to form a company may avoid
personal liability on contracts they make on behalf of the proposed company.
c) It has been held that the memorandum and Articles of Association of a company shall, when registered, bind the company and the members to the same extent as if the documents has been signed and sealed by each member and contained covenants an the part of each member to observe all the provisions of the memorandum and the articles.
Explain the effect of this provision on the relationship between shareholders and their company and between shareholders themselves.
Date posted: February 7, 2019. Answers (1)
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(a) The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases....(Solved)
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Discuss this statement citing relevant decided cases.
(b) Ropoff Company Ltd., a private limited company, has been under inquiry on alleged fraudulent financial transactions. The officers of the company under suspicion have denied any association with the company.
At the inquiry it was suggested that the corporate veil be lifted and the realities of the company in question be looked into.
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Date posted: February 7, 2019. Answers (1)
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(i) General proxies.
(ii) Special proxies....(Solved)
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(i) General proxies.
(ii) Special proxies.
Date posted: February 7, 2019. Answers (1)
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(b) Without the sanction of the court(Solved)
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Date posted: February 7, 2019. Answers (1)
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Two years ago, Smart Limited issued a series of debentures in favor of Tumaini Bank. The debentures were in the Standard Bank form described as a fixed and floating charge over all the company‟s assets. There was an express term of the debenture that the company would not issue a subsequent fixed charge to rank in priority to the floating charge. Six months later, Smart Limited issued a fixed charge over its freehold property in favor of Mali Bank Mali Bank was unaware of the prohibition. Smart Limited has gone into liquidation and both banks are proving their debts on priority basis.
Discuss the legal position of each bank.
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Explain the meaning of a trust deed and outline its advantages
Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Discuss.
(b) Mwerevu is one of the directors of Kamaliza Ltd. whose articles of association are in the form of Table A. He knows that his fellow directors are interested in obtaining motor vehicles from Modern Vehicles Ltd. to increase the company‟s fleet of trucks. Mwerevu purchases controlling shares in Modern Vehicles Ltd.
Modern Vehicles Ltd. then sells the trucks to Kamaliza Ltd. at Sh. 100,000 over and above the true market price. Mwerevu voted at the board meeting of Kamaliza Ltd. which decided on the purchase price, without revealing that he controlled the vendor company. When true facts are discovered, the company's board of directors does not protest against Mwerevu's conduct.
Mpole, a minority shareholder is aggrieved.
Advise him.
Date posted: February 7, 2019. Answers (1)
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(i) In the absence of any express agreement, discuss the liability of Joe and Janet in relation to the company's debts.
(ii) State the steps to be taken to register the transfer of shareholding from Joe and Jeremy.
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Date posted: February 7, 2019. Answers (1)
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(ii) Explain the procedure to be followed in altering...(Solved)
(i)State the circumstances under which the objects clause of a company may
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Date posted: February 7, 2019. Answers (1)
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(Solved)
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Date posted: February 7, 2019. Answers (1)
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...(Solved)
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Advise them on the following issues:
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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(b) An auditor considers that he has been intentionally obstructed by company officers
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(c) EFG Company Limited purchased shares in PQR Company Limited on the basis of
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EFG Company Limited considers that the auditor was negligent in carrying out his audit.
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Date posted: February 7, 2019. Answers (1)
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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 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Tama Quin Ltd., a company manufacturing pharmaceutical drugs is about to make a new issue of 400,000 shares of Sh. 40 each at the current market price of Sh. 50 each.
The prospectus states: 'The company has just patented the manufacture of a drug that cures malaria.'
Jacob White, the managing director of the company is interviewed on television and he states that the news to be released shortly will demonstrate a great break-through in the control of malaria. He also stated that the company was the only one with modern technical knowledge of this great invention. As a result there is over-subscription of the shares.
Allan, who has not read the prospectus, applied for shares and is allotted 2000 at the price of Sh. 50 each.
Betty, who read the prospectus, is not allotted any shares but buys 3000 shares at the stock exchange at Sh. 60 per share.
Charles, who read the report of the interview in the national newspaper, bought 5000 shares at the stock exchange at Sh. 55 per share.
In the meantime, the patents are found not to be original and are revoked. The shares fall in value to Sh. 10 per share.
David who owned 10,000 shares in the company long before the new issue is disappointed as he believes the publicity has caused the shares to fall in price (value).
Advise Allan, Betty, Charles and David
Date posted: February 6, 2019. Answers (1)
- (b)
(i)State the circumstances under which the objects clause of a company may
be altered.
(ii) Explain the procedure to be followed in...(Solved)
(b)
(i)State the circumstances under which the objects clause of a company may
be altered.
(ii) Explain the procedure to be followed in altering the objects clause.
Date posted: February 6, 2019. Answers (1)