Question 7 (a) Odwako (U) Ltd is a private Limited company incorporated in Uganda. One of the directors of the company, Mr. Rabangi, also serves as the company secretary. The articles of association of the company provide that all cheques issued on behalf of the company should be signed by at least one director and counter signed by the company secretary. Last month, Rabangi hired cars from Agwanga car rentals using hiring agreements which he signed and stamped ostensibly for the company's business. The company has refused to clear Agwanga car rentals outstanding charges conceding that Rabangi was not in position to bind the company at all. Rabangi also issued a cheque of Shs 10 million to Agwanga car rentals which he signed alone in his two capacities as director and secretary. In another development the directors have discovered that Rabangi borrowed Shs 100 million from Masebe Bank Ltd in capacity of secretary on behalf of the company and used the money to purchase furniture and office apartments for directors and staff of the company. The directors are not happy with the way Rabangi is conducting the affairs of the company and have stated that the company is not liable for the acts of Rabangi. They need your advice. Required: Identify the legal issues involved and advise the parties accordingly. (b) Describe the contents of the partnership deed.

Question 3 Linda, Monde, Maka, Sempa and Kakaju are shareholders of MTD Ltd. The company has been active for the last 20 years dealing in manufacturing of plastic containers of all kinds. The company's articles of association provide among others that "No member shall compete with the business of the company or transfer his/ her shares to any person who is not a company member". Sempa and Linda are the majority shareholders and more educated, they have been dominating as new appointed company directors a position they still hold at present. After its incorporation, the company sold its building in Wakiso town to Sempa. It transpired that in the course of business, Sempa and Linda borrowed Shs 20 million from Yoko Bank on behalf of the company. The loan was serviced for only 5 months because of financial hardships resulting from decreased sales of the plastic containers. Upon several demands for payment in vain, Yoko bank confronted Sempa for the outstanding loan payments and interest of Shs 13million. The bank even threatened to attach the building that Sempa purchased from MTD Ltd. In another development, Monde formed Pepe Ltd. He enticed most clients of MTD Ltd to buy basins and jerrycans from Pepe Ltd. His business is booming. When he was summoned by directors he argued that Pepe Ltd is a separate legal entity and that he is not concerned with its business. It transpired that Kakaju was facing family challenges and wishes to sell his shares to Maka but has been rejected by directors. In response, directors wrote circulars to all members informing them that no person is authorised to sell to any other member his/ her shares. Minority shareholders including Kakaju are wondering whether they have any redress.

Required: Raise and resolve all the issues.

Question 4 (20 marks) Manglo Ltd carries out hotel business and has its objects clause provision expressing authority for the company to do hotel business. Manglo Ltd's hotel is located a few meters from the shores of Lake Victoria. This prime location has helped the company business to thrive. The directors of Manglo Ltd borrowed money from Defu Bank and used it to buy three motor boats. The motor boats are used by several people including hotel guests, to move to and from several islands on the lake and the hotel.

Soon the directors learnt about thriving fishing business and contracted Nyanja, an expert fisherman, who agreed to do business with Manglo Ltd. It was agreed that Nyanja would use Manglo Ltd motor boat to fish and proceeds from sale would be shared. Later, Manglo Ltd borrowed money from Nsimbi Bank and bought the motor boat to be used by Nyanja. It also transpired that Manglo Ltd used hired trucks to transport fish to markets for sale. However, for the past three months neither Nyanja nor the hired truck owners were paid by Manglo Ltd. When the truck owners demanded for payment, the directors approached Abaca money lenders and explained that the company wanted to borrow money to boost the hotel transport department. Abaca money lenders thereafter granted a loan to Manglo Ltd. which amounted to the exact amount owed to the truck owners. On receipt of the money, Manglo Ltd used it to pay off the truck owners. In an effort to avoid complaints by company members, the directors of Manglo Ltd decided to convert 200 shares of the company into stock. 100 of these shares were fully paid-up while the other were partly paid. When further demands for payments started to come in from creditors, members of the company were furious and insisted that the company could not be made to pay for such debts.

Required: Identify relevant issues involved and resolve them.

Question 5 (a) Define the term 'prospectus'. (b) Describe the duties of a banker to a customer. (c) Explain the ways through which a partnership may be dissolved by court order. Question 6 (a) Explain the effects of registration of a company. (b) Explain the legal rules relating to payment of dividends. (10 marks) (Total 20 marks) (10 marks) (10 marks)