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COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 1
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1.3.1 However, the company pays a price for such benefits
generally by following the stringent provisions of the
Companies Act and common law with regard to registration
of the MOA and AOA, publication of returns, meetings, and
resolutions e.t.c.
1.3.2 Making various disclosures in respect of its operations filing
various documents with the registrar.
1.3.3 Companies are also subjected to peculiar tax regimes.
1.4 Promoters
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 2
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1.4.3 Duties of a Promoter
A promoter owes fiduciary duty to the company he is
forming; he therefore has the following duties:-
(c) The company may sue the promoter for damages for
breach of his fiduciary duties
1.6 Incorporation
Broad classification
There are two broad classes first statutory companies (also called
parastatals) are created by an Act of Parliament/statute e.g. Water
Boards etc and secondly companies under the Companies Act
(Our major concern)
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 7
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1.8.1 Limited and unlimited companies
S. 5(1) (c) says that an unlimited company has no limit on
the liability of its members. At winding up members are
personally liable for all the debts of the company. In a
limited company the amount of capital to be contributed
by a member of the company is fixed by agreement
between him and the company such that his liability
attaches to the unpaid amount on any share the member
holds.
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 9
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Some of the privileges enjoyed by a private company over a
public company
1. Alteration of its memo is more difficult to effect therefore
members are assured that outsiders will not easily join
them;
2. It is easier to convert a private company into a public
company than it is to convert a public company into a
private company;
3. A private company is not under duty to send to its
members copies of the Profit and Loss account and
Balance Sheet.
4. A private company is not obliged to accompany the
Annual Return with the Profit and Loss account and
Balance Sheet.
5. There are strict rules on the payment for shares in a public
company (i.e. the payment must be in cash) than in a
private company (see Chapter 9).
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 11
Lecturer in Law Courses
CHAPTER ONE: Formation of a Company
(A selection of non-factual past questions)
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Promoters
1. Who is a promoter of a company (3 marks- Dec 2000, Dec 2001, Dec
2003, June 2005 & June 2007)
2. Explain the significance of a promoter in the formation of a company (5
marks- Dec 2002)
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 12
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3. Mention four activities that a promoter has to undertake in the course
of establishing a company (6 marks- June 2003 & Dec 2006)
4. What duties does a promoter owe to the company? (6 marks- June
2001 & Dec 2005)
5. The case of Erlanger v New Sombrero Phosphates Co. holds that
promoters of a company stand undoubtedly in a fiduciary position.
Mention four consequences of this fiduciary relationship in dealings
between the company and the promoters (8 marks- June 2001)
6. Define the fiduciary duties of a promoter. (6 marks- Dec 2000)
7. What remedies do members have against promoters who breach their
duties during the incorporation of a company (6 marks- Dec 2001 &
Dec 2006) (damages, rescission, compel to account}
8. Who is liable to pay for the price of goods bought by the promoters
on behalf of the company, once the company is incorporated? (8
marks- Dec 2001, June 2003 & Dec 2006)
9. Discuss the legal position regarding the effect of pre-incorporation
contracts to a company after its incorporation. (4 marks- Dec 2000, Dec
2003, June 2005, June 2007 & Dec 2009)
10.State two exceptions to the legal position discussed in the question
above (4 marks- Dec 2000 & June 2005)
Classification of companies
1. Mention two common features between a company limited by shares
and a company limited by guarantee (4 marks- June 2001, June 2004 &
June 2008)
2. Mention three differences between public companies and private
companies in relation to payment for shares (3 marks- Dec 2004)
3. What is a private company as defined by the Companies Act (3 marks-
June 2009)
4. Mention two types of companies limited by shares (2 marks- June
2001)
5. State and define types of companies under the Companies Act (7
marks- Dec 2005)
6. Distinguish a limited company from an unlimited company (4 marks-
June 2000, Dec 2000, June 2004, Dec 2006 & Dec 2009)
7. Distinguish a public company from a private company (5 marks- Dec
2002, June 2003 & Dec 2009 )
8. Distinguish a company limited by guarantee from one limited by shares
(4 marks- June 2000, Dec 2000 & Dec 2009)
9. Distinguish a holding company from a subsidiary company (5 marks-
Dec 2002, Dec 2009)
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 13
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Conversion of companies
Outline the procedure in converting
(a) a limited company to an unlimited company (6 marks- June 2000, June
2004 & Dec 2006)
(b) a company limited by shares to one limited by guarantee (6 marks- June
2000, June 2003, June 2004, Dec 2006 & June 2009)
(c) a private company limited by shares to a public company limited by
shares (5 marks- June 2003)
Registration
Give five functions of the registrar of companies (5 marks- June 2007 &
Dec 2008)
Incorporation
1. What is meant in company law by the term ‘incorporation’?
2. Explain the legal effect of the certificate of incorporation. (5 Marks- Dec
2009)
3. Discuss the legal position where a company enters into a contract and
it is subsequently discovered that it did not follow certain registration
requirements. Is the contract valid? Give reasons for your answer.
COMPANY LAW for PAEC students BYALLAN HANS MUHOME LLB (HONS) MW 14
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