Two lawyers, Joseph Kavuyo, Robert Mapengoand engineer Abel Mulasi agreed

to form a partnership. They intend to register it as KMM and Company

Advocates.Their plan is to use Kavuyo and Mapengo's influence as lawyers to

obtain engineering contracts which Mulasi would execute on behalf of the firm.

Engineer Mulasiis also happy to work with lawyers because he knows that in case

of any legal issues, he will be covered by his partners.

On the other hand, Mbuzi, Kapalaga and Sekoko formed a company and

registered it as KambuseInvestments Limited (KIL). They were directors and the

only shareholders of the company. In the company's memorandum of association

there was a clause that the company's sole business was to buy hides and skins

from Uganda and sell them to Dubai.

KIL'sbusiness was performing well right from inception. When Mbuzi realised that

there were some substantial funds on the company's account, he suggested to

Kapalagathat they should divert some money to start trading in cars.This idea

was appreciated by Kapalaga. He in turn rangSekoko to inform him about

Mbuzi's idea.Sekokoalso agreed that they start dealing in cars.

As a result of the two businesses, the company capital increased tremendously

and the directors decided to declare dividends that would be distributed from

profits and part of capital. They also bought properties for themselves.

Thereafter, the company business started collapsing. The suppliers of hides and

skins as well as those for carsstartedto demand for payment. On approaching the

directors for payment they were advised to sue the company.

Required:

Raise issues and advise the parties involved.

Question 3

Mpamba, Moni and the late Nsatu were prominent members of

FalangaLtd.Nsatu, who was a widower, died 2 years ago. In his will, he

appointed his sister,Weke to hold his shares in the company in trust for his 2

children, Peter and John, who were then 16 and 14 years old, respectively.

The business was flourishing; therefore, the shareholders never querried the

actions of management. Upon attaining 18 years, Peter demanded for an

explanation as to why he and his brother were not benefitting from their late father's shares.He also demanded for the transfer of his father's shares into his

names, now that he was 18 years old. According to Peter, their aunt,Weke, was

a married woman and so was not the right person to be appointed as trustee in

respect of their shares. She was living with her husband in Kenya and for the last

14 months they had lost contact with her.So, according to Peter, their aunt could

not continue as trustee.

In response, the directors insisted that the boys' interests were well represented.

Two months and a half after Peter's request, the directors sent a written notice

to Peter, declining to transfer the late Nsatu's shares to him and gave no reason

for the refusal.

When Mpamba and Moni heard about Peter's complaints, they mobilised other

members to demand for accountability. They soon found out that there was a lot

of mismanagement.It was discovered that despite the fact that the auditor had

access to all relevant documents, the company's financial records were not

updated, yet the audit gave a clean opinion. When queriedabout his role, the

auditor insisted that he knew his responsibility very well. It has, however,

transpired that the Registrar of companies has queried the company's financial

records as well.

The shareholders of the company and Peter are now seeking for your advice on

what steps to take.

Required:

Raise the relevant issues and resolve them.

Question 4

Mpaka, an employee of Ken Ltd joined the company on 1 January, 2014.One of

the terms of his three year contract was that his contract was renewable for a

further period of 3 years, at the option of the employer.On 10 February 2017,

when the managing director, Katara, was perusing the employee's records, he

discovered that Mpaka had worked for a week after the expiry of his contract.

Katara immediately wrote a letter directingMpaka to leave the company premises

within 2 hours, as his contract had expired.Mpaka reluctantly left the company

premises, arguing that he was still an employee of the company.

On 10 February 2017 when Katarareturned home after work, Ndege, his

housekeeper requested for permission to go for a malaria blood check-up. The

permission was granted. Ndege went but never returned. The following day,

Ndege communicated to Katara on phone that he had left for good, as he could

no longer withstand his (Katara's) mistreatment. He accused him of locking the

gate and going with the keys to his office in order to frustrate any plans of

Ndege to move out of Katara'shome.Katarawas upset. He blamed Ndegefor

unlawfully abandoning his job.

In another case, Munta who was working under a contract of 2 years for Taka

TakaLtd received a termination notice of 2 months.Munta immediately packed his

belongings and left the company.Taka Taka Ltd has sued Munta for damages for

unlawfully absconding from work.

In yet another case, Simu Ltd is a private company limited by shares, dealing in

communication systems and delivery of parcels. Recently, the company by a

specialresolution of 5 members in an extraordinary general meeting made

changes in its operations from analogue to digital, an improved technology.As a

result, its memorandum of association was altered by adding another objective.

Kamese,a shareholder, has threatened to sue for unlawful alteration of the

company objectives.

Required:

a)Raise and resolve issues arising from the facts.

Question 5

Every company is required by the Companies Act, 2012 to keep a register of

itsdirectors and secretaries.

Required:

(a) Explain the general duties of a company secretary. (12 marks)

(b) Describe the contents of a register of directors and secretaries.

(8 marks)

Question 6

(a) Explain the meaning of the term 'agency'. (2 marks)

(b) Explain the circumstances under which an agency relationship may

beterminated.

(10 marks)

(c) Distinguish between criminal law and civil law. (8 marks)