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Basically liability means the extent to which a person can be made to account by law. He can be made to be accountable either for the full amount of his debts or else pay towards that debt only to a certain limit and not beyond it. In the context of company law liability may be limited either by shares Under Section 4 (2) (a) of the Companies Act cap 486, a company limited by shares the members’ liability to contribute to the companies assets is limited to the amount if any paid on their shares.
They have to choose between a private company and a public company. Section 30 of the Companies Act defines a private company as one which by its articles restricts the rights to transfer shares; restricts the number of its members to fifty (50); prohibits the invitation of members of the public to subscribe for any shares or debentures of the company.
In order to form a public company, there must be at least seven (7) subscribers signing the Memorandum of Association whereas only two (2) persons need to sign the Memorandum of Association in the case of a private company.
sharon kalunda answered the question on April 15, 2019 at 05:26
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What is meant by the term Declaration of Compliance?
Date posted: April 15, 2019. Answers (1)
- Explain how the Capital Authority can ensure:
(i) faster growth and development of the Nairobi Stock Exchange...(Solved)
Explain how the Capital Authority can ensure:
(i) faster growth and development of the Nairobi Stock Exchange or Stock Exchange in your country.
(ii) development of other stock exchanges in Kenya or in your country
Date posted: February 7, 2019. Answers (1)
- What economic advantages are created by the existence of:
(i) Primary markets.
(ii) Secondary markets
(iii) Portfolio management firms. (Solved)
What economic advantages are created by the existence of:
(i) Primary markets.
(ii) Secondary markets
(iii) Portfolio management firms.
Date posted: February 7, 2019. Answers (1)
- Mwinzi, a holder of shares in Hewa Airways Company Limited deposited his share certificate with a broker, Otieno. Otieno forged Mwinzi's signature on the share...(Solved)
Mwinzi, a holder of shares in Hewa Airways Company Limited deposited his share certificate with a broker, Otieno. Otieno forged Mwinzi's signature on the share certificate and transferred the shares to Kuria. When the share certificate and the transfer document were presented to the company for registration, the secretary wrote to Mwinzi advising him of the transfer. Mwinzi did not reply to this letter and Kuria was registered as the new shareholder. Kuria then transferred the shares to Wafula who was registered as the shareholder and a new certificate was issued.
Explain the effect of the forgery.
Date posted: February 7, 2019. Answers (1)
- Enumerate the sequence of events to be followed by a shareholder who intends to
transfer his shares to another person.(Solved)
Enumerate the sequence of events to be followed by a shareholder who intends to
transfer his shares to another person.
Date posted: February 7, 2019. Answers (1)
- Meshack was recently appointed an accountant of Economy Departmental Store, a public limited company.
The company intends to issue shares to the public. Meshack seeks...(Solved)
Meshack was recently appointed an accountant of Economy Departmental Store, a public limited company.
The company intends to issue shares to the public. Meshack seeks your ad
vice on whether there are any restrictions imposed by the Companies Act upon allotment of such shares.
Advise Meshack.
Date posted: February 7, 2019. Answers (1)
- In relation to allotment of shares in a company, discuss the legal position in each of the following situations:
(i) Sarah applied for 4,000...(Solved)
In relation to allotment of shares in a company, discuss the legal position in each of the following situations:
(i) Sarah applied for 4,000 shares in a public company known as ABC Ltd. She was allotted only 2,000 shares. She intends to sue the company.
Advise Sarah.
Date posted: February 7, 2019. Answers (1)
- With regard to investor protection, explain the meaning of inside information(Solved)
With regard to investor protection, explain the meaning of inside information.
Date posted: February 7, 2019. Answers (1)
- Explain to a new shareholder of a central depository account the circumstances in which a central depository securities account may be suspended.(Solved)
Explain to a new shareholder of a central depository account the circumstances in which a central depository securities account may be suspended.
Date posted: February 7, 2019. Answers (1)
- Abel and Boaz have been carrying out business as a partnership.
They have both been employed on full time basis in the business and have...(Solved)
Abel and Boaz have been carrying out business as a partnership. They have both been employed on full time basis in the business and have shared profits and losses equally. Abel wished to bring his son David into the business and Boaz accepts the proposal.
They wish to convert the partnership into a private limited company, ABD Company Ltd., in which Abel and Boaz will each hold 40 percent of the shares and David will hold 20 per cent. All the three shareholders will be directors of the new private company.
(a) Advise the three shareholders of ABD Company Ltd. on the documents which they
are required to submit to the registrar of companies for approval in connection with the formation of the private company.
(b) After ABD Company Ltd. was formed, there arose a disagreement between Boaz and David regarding the day-to-day management of the business. Abel and David decided to remove Boaz from the board of directors.
Date posted: February 7, 2019. Answers (1)
- In pursuit of good corporate governance practices by directors, enumerate the best practices relating to directors which would promote and protect the shareholders rights. (Solved)
In pursuit of good corporate governance practices by directors, enumerate the best practices relating to directors which would promote and protect the shareholders rights.
Date posted: February 7, 2019. Answers (1)
- Outline the reasons that may lead to suspension of promoters by a company.(Solved)
Outline the reasons that may lead to suspension of promoters by a company.
Date posted: February 7, 2019. Answers (1)
- Explain the preliminaries incidental to promotion of a company.(Solved)
Explain the preliminaries incidental to promotion of a company.
Date posted: February 7, 2019. Answers (1)
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Discuss the ways in which the traditional role of an auditor has been affected by recent demands by regulatory authorities and shareholders. (Solved)
Discuss the ways in which the traditional role of an auditor has been affected by recent demands by regulatory authorities and shareholders.
Date posted: February 7, 2019. Answers (1)
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The law requires that certain statutory books must be kept in the registered offices of the company.
Explain the contents and matters...(Solved)
The law requires that certain statutory books must be kept in the registered offices of the company.
Explain the contents and matters relating to inspection of the following statutory books:
(a) Register of members.
(b) Register of directors and secretaries.
(c) Register of directors' interests.
(d) Register of charges.
Date posted: February 7, 2019. Answers (1)
- 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...(Solved)
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.
Explain the instances when the veil of incorporation may be lifted
Date posted: February 7, 2019. Answers (1)
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The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases.(Solved)
-The principle of corporate legal personality is an important and fundamental aspect of company law.
Discuss this statement citing relevant decided cases.
Date posted: February 7, 2019. Answers (1)
- Explain the effect of the failure by the company to register a charge of a debenture.(Solved)
Explain the effect of the failure by the company to register a charge of a debenture.
Date posted: February 7, 2019. Answers (1)
- Give reasons why a company may seek to control the funds from which dividends are paid.(Solved)
Give reasons why a company may seek to control the funds from which dividends are paid.
Date posted: February 7, 2019. Answers (1)
- Explain the circumstances when a dividend may become payable and enforceable as a debt against the company.(Solved)
Explain the circumstances when a dividend may become payable and enforceable as a debt against the company.
Date posted: February 7, 2019. Answers (1)