SHARES
QUESTION 1
April 2024 Question Five C
Patapata Company Ltd. is a company with both ordinary shares and preference shares issued to its shareholders. The ordinary shares carry voting rights whereas the preference shares do not. The company has been performing well and the board of directors proposes a variation of class rights, intending to grant voting rights to the preference shareholders. However, this proposed variation is met with resistance from some of the ordinary shareholders who fear dilution of their voting power.
Required:
Analyse the situation and advise the board of Patapata Company Ltd., on the legal framework regarding the variation of class rights. (10 marks)
QUESTION 2
December 2023 Question Two B
Describe TWO different types of membership that may exist in a company. (4 marks)
QUESTION 3
August 2023 Question Two A
Distinguish between “participative preference shares” and “non-participative preference shares”. (4 marks)
QUESTION 4
April 2023 Question Five A and B
(a) Describe THREE circumstances under which a company is allowed to pay commission on shares. (6 marks)
(b) Highlight the circumstances under which a company might decline to register a transfer of shares. (6 marks)
QUESTION 5
December 2022 Question Four B
Explain the following types of share capital:
(i) Paid-Up Capital. (2 marks)
(ii) Issued Share Capital. (2 marks)
QUESTION 6
April 2022 Question Six A
David is a director of a registered company that does not have a share capital. The company has proposed to vary the rights of a certain class of members, some of whom have bitterly resisted the proposal prompting David to seek your legal advice.
Advise David on five ways through which the proposed variation of class rights might be effected. (5 marks)
QUESTION 7
December 2021 Question Two A
The Board of Directors of Bull’s Eye Limited, a private company, has resolved to allocate shares in the company and has sought your guidance on the requirements to be satisfied before they can engage in the allotment of shares exercise.
Advise the directors of Bull’s Eye Limited on five circumstances under which they might exercise the powers of the company to allot shares. (10 marks)
QUESTION 8
September 2021 Question Three A
Describe five circumstances under which the issuer might refuse to register a transfer of a share certificate in the name of a central depository system. (10 marks)
QUESTION 9
May 2021 Question Six C
Explain six advantages of preference shares to both the shareholder and the company
(6 marks)
QUESTION 10
November 2020 Question two A
Kamau borrowed Sh.50,000 from Hope Bank and deposited his XYZ Ltd’s share certificate with a blank transfer as a security. Subsequently, he bought goods from the supermarket on credit worth Sh.15,000. The articles of association of XYZ Ltd. claimed a first and paramount lien on its members’ shares on debts due to the supermarket.
However, before the supermarket’s lien arose the bank gave the supermarket notice of Kamau’s share certificate having been lodged with the bank as a security for the loan. Kamau is unable to pay for the goods he obtained from the supermarket and has also defaulted on the loan. XYZ Supermarket wants to exercise its lien and the bank wants to exercise its equitable right to have the shares transferred into its name.
Analyse the rights of:
(i) The Bank. (6 marks)
(ii) XYZ Supermarket Ltd. (6 marks)
QUESTION 11
November 2019 Question four B
In relation to transfer and transmission of shares:
(i) Describe four effects of a share transfer. (8 marks)
(ii) Explain two consequences of a forged transfer. (4 marks)
QUESTION 12
November 2018 Question one C
Explain to a new shareholder of a central depository account three circumstances in which a central depository securities account might be suspended. (6 marks)
QUESTION 13
November 2018 Question seven B
ShauriMoyo Ltd. is a non-listed public company. The company has three directors; Bidii, Mapesa and Shinda who are also the only shareholders. The company requires additional finance and is proposing to issue a block of ordinary shares to Zindua. The shares have a nominal value of Sh.200 each and Zindua has agreed to pay Sh.220 per share. However, it is agreed that Zindua will only partly pay for the shares at the rate of Sh.20 per share.
Required:
Advise Bidii, Mapesa and Shinda on the legal issue relating to the proposed issue of shares to Zindua and payments thereon. (6 marks)
QUESTION 14
May 2018 Question five A
BigShow Ltd. is proposing to offer shares to its shareholders instead of giving them dividends. Philip Shaka, a shareholder has opposed the proposal on the grounds that it offends all the rules governing the maintenance of capital but BigShow Ltd. is adamant. Philip Shaka feels aggrieved and has approached you for your advice.
Advise Philip Shaka on the legality of the proposed offer by BigShow Ltd. (10 marks)
QUESTION 15
November 2017 Question three A
It is generally unlawful for a company to offer financial assistance to any person for the purpose of purchasing its own shares.
Required:
(i) Highlight three legal consequences of contravening this provision. (6 marks)
(ii) Summarise two exceptions to the above statement. (2 marks)
QUESTION 16
November 2017 Question four A
Summarise six regulations governing payment and financing of redeemable preference shares. (6 marks)
QUESTION 17
November 2017 Question four B
Distinguish between ”participating” and “non-participating” preference shares.
(4 marks)
QUESTION 18
May 2017 Question three B
With reference to floatation of shares, state two persons who might be held responsible for all or some part of the listing particulars in a prospectus. (2 marks)
QUESTION 19
May 2017 Question three C
Summarise three rights of the legal mortgagee of shares. (6 marks)
QUESTION 20
November 2016 Question seven B
With reference to shares:
(i) Define the term “Pre-emption rights”. (2marks)
(ii) Identify four instances when pre-emption rights do not apply. (4 marks)
(iii) Describe two rules on allotment of shares by public companies. (4 marks)
QUESTION 21
November 2015 Question three B
Bob Kuto and Ben Zawadi wish to jointly acquire shares in Miereka Company Ltd.
Advise them on the legal status regarding joint ownership of shares. (8 marks)
QUESTION 22
November 2015 Question three C
Explain six effects of a forged transfer of shares. (6 marks)
QUESTION 23
November 2015 Question four B
Discuss four regulations governing redeemable preference shares under the Companies Act. (8 marks)
QUESTION 24
September 2015 Question three D
(i) Define the term “derivative action”. (2 marks)
(ii) Explain four characteristics of a derivative action. (4 marks)
QUESTION 25
September 2015 Question four A
When debentures are offered for public subscription, the company usually enters into a trust deed with trustees.
List six contents of a trust deed. (6 marks)
QUESTION 26
September 2015 Question five B
State four special rights conferred to holders of preference shares of a company.
(4 marks)
