a) According to the decision of Romer L.J, in Re: Yorkshire Woolcombers Association Limited, one of the characteristics of a floating charge is “it hovers over all the assets of a company until some event occurs which causes the charge to crystallize”.
In reference to the above statement, explain the events that cause the crystallization of a floating charge. (8 marks)
b) Explain the ways in which the drafting style of the objects clause in the memorandum of association has expanded the contracting capacity of registered companies. (4 marks)
c) ABC and sons limited was incorporated in 2009 with a capital of sh.3 million divided into 30000 shares of sh.100 each. Its main object was to acquire and carry on the business of a hardware and any other business and transactions which the company might consider to be in any way conducive or auxiliary thereto. The company has gone into liquidation. James Fine, a former shareholder has made a claim against the company for the balance of the price of shares which he had sold to the company but which had not been fully paid for.
With reference to the above facts and in light of the ruling in Trevor V. Whitworth, explain:
1. The rule in Trevor V. Whitworth. (2 marks)
2. The exception to the rule in (c) (1) above. (6 marks)
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