watu ltd was incorporated in january 2018 with a norminal value of five milliomdivide into 100,00 shares each shares worth sh 50.the company has 2 directors.boss and mkubwa,with each with 20,000 shares.luka a localparliamentarian has 40,000shares and a few local investors own the other 20,000 shares .watu ltd ,market value was substantially reduced since its incorporation and the stake holders beleive that this is due to to mismanagement occassioned by boss and mkubwa.luka beleives that with the new management the company fortune can be turned around oncreasing the market value .luka beleives that in order to ensure that there is intentsions are met,needs to acquire as many shares as possible from the local investors .he therefore put a plan in motion and starts making offers for the purchase of the 20,000 shares held by the local investors .this is done with a view of outling boss and mkubwa from office

boss and mkubwa who are liked widely by the local investors,get tipped off of lukas activities and to mitigatethis,they cause the company to issue 60,000 new shares which they intend to purchase via another company that they own as sole directors and share holders,B&M ltd (a private limited liability company).However,in their haste they had forgotten that B&M ltd does not have sufficient funds in their account to purchase the share,Additionally,boss and mkubwa know that the have exhausted all other external resources.from pastinteractions with the local financial institutions.Boss and mkubwa know that their company has reached its threashold and is thereforw barred from borroww additional money from the banks.B&M ltdoffers Watu ltd some of its farm machinery worth sh 1 million which is enough to purchase 30,000 shares and rest of the shares are paid via KSsh 1 million loan from watu ltd to B&Mltd .watu ltd accepts this offer with a personal condition that B&M ltd will use their voting rights to defeat any motion to remove Boss and mkubwa from the office.

Luka who had by now managed to purchase 10,000 shares ,realizes this plan and is not going to work and instead decided to look for a buyer from his portion of the company /inorder for luka to cut his losses he agrees to sell off his shares to Watu ltd .Watu ltd buys the shares and subsequently cancels them.Having gotten rid of luka,Mkubwa and Boss recommend and subsequently declaire that they pay themselves a divided at the rate of Kshs 5 per share

with aid of examples,discuss the validity of boss and mkubwa s actions