COMPANY LAW

Amani limited, is a public limited company. Its directors have decided to venture into transport business by acquiring a fleet of public services. They did not notice that this activity is outside its objective clause stated in the Memorandum of Association (MoA). The company's chairperson, Mary Komowho owns 10% of the voting share negotiated a loan which was in excess of the company's issued capital from, a financier. June Mariko did not refer to any of the company's registered documents nor did she inquire into the purpose to which the money would be put.

The money is used by the directors to pay part of the purchased price of the vehicles. The rest of the purchase price remains unpaid. Some members who had substantial number of shares in Amani limited intend to move a resolution to insert into the Memorandum of Association, an object permitting the acquisition and use of vehicles. One of the directors of Amani limited announces that if this is done, he will apply to court to have the new object clause quashed.

Required:

1. Analyze this case and explain the legal principle applicable in this case. (10 Marks)
2. Advise the directors of this company with reference to company law. (5 Marks)