1:(a) The law governing the director’s duty of care and skill takes account of the fact that the director may be a part-time counselor rather than a full-time professional manager(8 marks)

(b) Mwerevu is one of the directors of Kamaliza Ltd.whose articles of association are in the form of Table A.He knows that his fellow directors are interested in obtaining motor vehicles from Modern vehicles Ltd.to increase the company’s fleet of trucks.Mwerevu purchases controlling shares in Modern Ltd.

Modern Vehicles Ltd.then sells the trucks to Kamaliza Ltd.which at Sh.100,000 over and above the true market price.Mwerevu voted at the board meeting of Kamaliza Ltd.which decided on the purchase price.without revealing that he controlled the vendor company.When true facts are discovered,the company’s board of directors does not protest against Mwerevu’s conduct.

Mpole, a minority shareholder is aggrieved.

Advise him.(12 marks)

2:.(a) Enumerate the various types of charges that require registration as stated under the Companies Act.(8 marks)

(b) Two years ago, Smart Limited issued a series of debentures in favor of Tumaini Bank.The debentures were in the standard bank form described as a fixed and floating charge over all the company’s assets.There was an express term of the debenture that the company would not issue a subsequent fixed charge to rank in priority to the floating charge.Six months later,Smart Limited issued a fixed charge over its freehold property in favor of Mali Bank.

Mali Bank was unaware of the prohibition,Smart Limited has gone into liquidation and both banks are proving their debts on priority basis.

Discuss the legal position of each bank.(6 marks)

(c)The most common method of securing debentures to execute a trust deed.

Explain the meaning of a trust deed and outline its advantages.(6 marks)

3:.Discuss the powers of the liquidator:

(a) With the sanction of the court.(10 marks)

(b) Without the sanction of the court.(10 marks)

4:.(a) Explain the rules that govern quorum and the exceptions thereof.(14 marks)

(b) In relation to proxies,write brief notes on:

(i) General proxies.(3 marks)

(ii) Special proxies.(3 marks)

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