Tim and Tom wish to establish a business jointly. However, they are not sure whether to establish a limited liability company or an unlimited liability company; as they know little about these types of companies. i) Explain to them the differences between a limited company and an unlimited company. ii) State the provisions of the Companies Act regarding the re-registration of unlimited company as limited.

Tim and Tom wish to establish a business jointly. However, they are not sure whether to establish a limited liability company or an unlimited liability company; as they know little about these types of companies. i) Explain to them the Read More …

Happy co. Ltd was incorporated in January 2000 with an authorized share capital of 50,000,000 of one shilling per share which is fully issued and fully paid. The original articles of association gave the directors authority to issue the initial authorized share capital. The directors are proposing to purchase a plot from Mr Karan for KShs.3,000,000 and to finance the purchase a fresh issue of 2,000,000 shares at one shilling per share to Mr. Karan. In order to develop the plot they propose to raise further capital issuing a further 2,000,000 shares of one shilling each. The directors propose that 1,000,000 of the shares should be offered to existing shareholders and 1,000,000 to the general public. The shares to Mr Karan, the existing shareholders and to the general public are to be offered at one shilling and fifty cents each. Explain the preliminary checks which the directors must make before proceeding with these proposals. State the steps the directors must take to give them effect.

Happy co. Ltd was incorporated in January 2000 with an authorized share capital of 50,000,000 of one shilling per share which is fully issued and fully paid. The original articles of association gave the directors authority to issue the initial Read More …

Dividend is payable only in cash to shareholders out of profits available for distribution. State the rules which determine the extent to which profits arising out of the disposal of fixed assets may be used to pay such dividends.

Dividend is payable only in cash to shareholders out of profits available for distribution. State the rules which determine the extent to which profits arising out of the disposal of fixed assets may be used to pay such dividends. ANSWER Read More …

In order to frustrate a threatened take-over bid, the directors of Kesho Ltd. issue to themselves and their nominees sufficient ordinary shares for cash so as to give themselves control of a majority of the shares which give the right to vote at a general meeting. Mwananchi, a minority shareholder who had hoped to benefit selling to the bidder, is very annoyed the action of the directors. Advise him as to his legal rights.

In order to frustrate a threatened take-over bid, the directors of Kesho Ltd. issue to themselves and their nominees sufficient ordinary shares for cash so as to give themselves control of a majority of the shares which give the right Read More …

Joan has inherited one million shillings from the estate of her late mother. She has decided to invest it in a small private company of which Janet and Jeffrey, her old friends are directors. However, Joan is not sure whether to lend the money to the company secured a debenture containing a fixed and floating charge or through purchase of ordinary preference shares. Joan now seeks your advise on the following issues: a) What is the difference between ordinary and preference shares, and what rights accrue to the holders of each class shares? b) i) What is the return on ordinary and preference share capital? ii) What are the restrictions that may be imposed on her ability to transfer any shares she may purchase in the Company?

Joan has inherited one million shillings from the estate of her late mother. She has decided to invest it in a small private company of which Janet and Jeffrey, her old friends are directors. However, Joan is not sure whether Read More …