UNIVERSITY EXAMINATIONS

COLLEGE OF BUSINESS
ORDINARY EXAMINATION FOR BACHEOR OF COMMERCE
BAM 2202: COMPANY LAW
DATE: AUGUST 2021 TIME: 3 HOURS

INSTRUCTIONS: ANSWER ALL QUESTIONS

QUESTION ONE

Y Ltd whose articles are similar to model article of association, publish a weekly magazine. In
one issue an article is critical of the policies of the city commission. A number of
Commissioners, who are also members of the company requisition, at a general meeting and
secure the passing of an ordinary resolution ordering the company to publish in the next issue a
withdrawal of the criticism. The directors of the company are adamant.
The angry commissioners approach you for the purpose of filing an action to compel the
directors to publish a withdrawal. Advise them. (20 Marks)

QUESTION TWO

Kioko, a sole trader carrying on a business in the printing industry has asked Neema Bank Ltd. to
advance him Sh. 500,000 as an additional working capital. The bank is prepared to advance the
money on condition that Kioko offers a security Kioko has a share certificate for 5,000 shares
issued by Big Star Company Limited Kioko wants to know whether he can use the shares whose
value is Sh. 650,000 as a security for the loan. He further seeks to know whether he would still
receive dividends even after he has charged the shares to the bank. Advise Kioko (20 Marks
QUESTION THREE:

James and Shem proposed to form a company by the name “Micromine Limited”. On behalf of
the proposed company, Shem entered into contracts to purchase office furniture and stationery.

Required:

What are the company’s rights and liabilities under such contracts after incorporation? (6 marks)

What provisions for the protection of Shem are found in such contracts? (4 mark)