The principle of corporate legal personality is an important and fundamental aspect of company law. Discuss this statement citing relevant decided cases

1.(a) (i) State the rules in Foss-vs-Harbottle,making clear the purpose and the rationale underlying the rule.(6 marks)

(ii) State briefly the principal exception to the rule.(4 marks)

(b) Shadrack Ruto owns 500 shares of Sh.20 each in Alpha and Omega Ltd.and 500 shares of Shares of Sh.10 each in the Beginning and End Ltd.Both companies are regulated by Table A-articles of association.Shadrack Ruto has agreed to sell all his shares in Alpha and Omega to Albelnego Soi and 300 shares in Beginning and End to Meshack Mamba.He has been informed that both companies use the form of transfer that is generally used by brokers,who are members of national stock exchange.

Advise Shadreck Ruto on:

(i) The information which is required on the share transfer form.(4 marks)

(ii) The procedure which should be followed to effect,and the duration it will take to issue the new share certificates.(6 marks)

2.Advise the directors of Tangaza Company on the following issues:

(a) The provisions of the Companies Act that relate to the calling of the annual general meeting and the duties of the chairman during such a meeting.(10 marks)

(b) When a company is compelled to call an extra ordinary general meeting.(5 marks)

(c) The procedure to be followed to remove a director from office.(5 marks)

3.(a) State the provisions of the Companies Act relating to the qualification and appointment of the company secretary can contractually bind a company.(10 marks)

(b) In what circumstances can a court make a disqualification order against a director of a company?(10 marks)<br
4.(a) Explain the various types of the Companies Act,Section 96,as registrable charges.(10 marks)

(b) Kazi Bure Company Ltd.brews alcohol.It obtains barley from Narok Farm Produce Ltd.on terms stating that the company will not have ownership of the consignment of barley until it has paid full purchase price for the consignment.Kazi Bure Company Ltd.has an overdraft facility with Liquidity Bank but only pays Narok Farm Produce full for a consignment of barley when the alcohol made using that barley is sold to and paid for by the company’s wholesalers (who receive on payment).

Kazi Bure Company Ltd has given Liquidity Bank a floating charge over all its assets.The company has however become insolvent and receiver,appointed by the bank under the floating charge,has taken over the brewery.

Explain how the receiver should handle each of the following items:

(i) Some bags of barley delivered by Narok Farm Produce Ltd.(6 marks)

(ii) Semi-processed alcohol in containers made of barley and yeast.(2 marks)

(iii) A consignment of brewed alcohol with a label marked “sold to wholesalers and paid for.”(2 marks)

5.(a) Outline the circumstances under which a company may be wound up by the court on just and equitable grounds.(12 marks)

(b) Highlight the types of debts which are treated as preferential in a winding up under the Companies Act.(8 marks)








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