Company law notes

Company law notes Revised and Updated notes

PAPER NO.7 COMPANY LAW

GENERAL OBJECTIVES

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply and comply with the provisions of company law in relevant circumstances and environments.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Apply legal principles relating to formation of companies
  • Evaluate the rights and obligations of members and shareholders
  • Comply with the legal principles governing liquidation of corporates and restructuring
  • Comply with the legal principles relating to companies incorporated outside Kenya
  • Ensure books of account are prepared in compliance with the law.

SYLLABUS

 7.1 Nature and classification of companies

  • Nature and characteristics of a company
  • Types of companies
  • Principle of legal personality and veil of incorporation
  • Distinction between companies and other forms of business associations, sole proprietorships, partnerships and cooperative societies.

7.2 Formation of companies

  • Promoters and pre-incorporation contracts
  • Process of forming a company
  • Memorandum and articles of association
  • Certificate of incorporation
  • Effects of incorporation

7.3 Membership of a company

  • Acquisition of membership
  • Register of members
  • Rights and liabilities of members
  • Cessation of membership

 7.4 Shares

  • Classes of shares
  • Variation of class rights
  • Share certificates
  • Issue and allotment
  • Transfer and transmission
  • Transfer of shares under central depository system
  • Mortgaging and charging of shares

7.5 Share capital

  • Meaning and types of share capital
  • Raising of share capital
  • Prospectus/information memorandum
  • Maintenance of capital
  • Alteration of capital
  • Dividends

7.6 Debt capital

  • Borrowing powers of a company
  • Debentures
  • Charges
  • Registration of charges
  • Remedies for debenture holders

7.7 Company meetings

  • Nature and classification of company meetings
  • Essentials of a valid meeting
  • Voting
  • Resolutions

7.8 Directors

  • Qualifications, appointment and disqualification
  • Powers and duties of directors
  • Removal and vacation of office
  • Register of directors
  • Remuneration of directors
  • Loans to directors
  • Compensation for loss of office
  • Disclosure of director’s interest in contracts
  • The rule in Turquand’s case/Indoor Management rule
  • Insider dealing

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7.9 The company secretary

  • Qualification, appointment and removal
  • Powers and duties of the company secretary
  • Liability of the company secretary
  • Register of secretaries

7.10 Auditors

  • Qualification, appointment and removal
  • Remuneration of auditors
  • Powers and duties
  • Rights and liabilities

7.11 Company accounts, audit and investigation

  • Books of accounts
  • Form and content of accounts
  • Group accounts
  • Director’s report
  • Auditor’s report
  • Annual returns
  • Investigation of company affairs
  • Appointment and powers of inspectors
  • Inspector’s report

7.12 Corporate restructuring

  • Need for restructuring
  • Mergers,
  • Post merger reorganisation
  • Takeovers and acquisitions
  • Schemes of arrangement and compromises
  • Reconstruction

 7.13 Receivership and liquidation of companies

  • Meaning of receivership
  • Appointment and vacation of office
  • Powers and duties of a receiver
  • Termination of receivership
  • Meaning of liquidation
  • Types of liquidation
  • Appointment, powers and duties of liquidators
  • Discharge of liquidators
  • Distribution of assets and dissolution of companies

7.14 Companies incorporated outside the country

  • Process of registering a company
  • Certificate of registration
  • Power to hold land
  • Registration of charges
  • Accounts of foreign companies
  • Service of process and notices on foreign companies
  • Returns
  • Penalties
  • Cessation of business

 7.15 Emerging issues and trends

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