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

Triple H, Undertaker Austin and Flair are directors of Mieleka Ltd a company regulated by the
companies Act. Fair is the managing director and undertaker is the chairperson of the company.
Sometime ago at the directors meeting as a board decided to:

 Lend Triple H Shs.500,000 to purchase a car for his wife Stephane for her personal use;
 Advance Shs.500, 000 to Austin to cover his expenses on a worldwide (promotional tour
on behalf of the company).
Booker T, the company secretary informs you that Stone Cold a shareholder claims that this
transaction should have been approved by the members and that he intends to raise the matter
during the next general meeting.

Required

1) Advise Booker T which of the transactions need approval by the members in general
meeting (10marks)
2) What are the consequences of the necessary approval not being obtained? (10 marks)
(Total: 20 marks)
QUESTION TWO

Don was instrumental in forming Eden Green Ltd, which was registered and received its trading
certificate in December 2019. It has subsequently come to the attention of the board of directors
that the following events had taken place prior to the incorporation of the company:
Don entered into a contract in the company's name to buy computer equipment, which the board
of directors does not wish to honour. Don entered into a contract in the company's name to
develop a particular patent, which the board of directors of Eden wishes to pursue but in relation
to which the other party does not wish to proceed. Don entered into a contract with Fad Co for
business equipment. The contract was made 'subject to adoption by Eden Green Ltd but now
Eden Green Ltd does not wish to pursue it.

With reference to principles of Pre- Incorporation Contracts, discuss whether the contracts are
enforceable or not enforceable. (20 Marks)

QUESTION THREE

George is a director of two companies that operate in the same industry, Zip Co and Bung Co.
Both Zip Co and Bung Co have recently tendered for the same contract with Jane Co. Only one
company will be awarded the contract.
In light of the above, discuss the statutory duties of a director and highlight which duty is George
in breach of? (10 Marks)