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SAMPLE QUESTION AND ANSWERS
Q&A
(a) FIVE Statutory Requirements for Managing Occupational Safety and Health (OSH) Registers
(5 marks –
1 mark each)
Under Kenya’s Occupational Safety and Health Act, 2007, the following
are key statutory requirements:
1.
Accident Register
Employers must maintain a register of all accidents and dangerous occurrences
that happen at the workplace.
2.
Health Surveillance Register
Records of employee medical examinations and exposure to hazardous substances
must be maintained and updated regularly.
3.
Risk Assessment Register
Employers are required to assess and record workplace risks, including control
measures implemented.
4.
Safety and Health Audit Reports
Employers must conduct regular safety audits and keep records as mandated by
the Directorate of Occupational Safety and Health Services (DOSHS).
5.
Training and Induction Register
Documentation of all safety and health training, including induction for new
employees, must be maintained and available for inspection.
(b) FIVE Circumstances Under Which a Company May Reject a Shareholder’s Request to Circulate a Resolution or Statement
(10 marks
– 2 marks each)
As per Section 304 of the Companies Act, 2015 (Kenya) and aligned with
general corporate law principles, a company may reject a shareholder’s request
if:
1.
The Request Is Not Submitted Within Required Timeframe
If the resolution or statement is not received at least 6 weeks before the
general meeting, or before notice of the meeting is issued, the
company may lawfully reject it.
2.
The Request Is Not Made by the Required Threshold of Shareholders
If fewer than 100 members or members holding less than 5% of voting
rights support the request, the company may refuse circulation.
3.
The Content Is Defamatory, Frivolous, or Offensive
The company can decline to circulate resolutions or statements that are abusive,
libelous, or breach the law (e.g., promoting hate speech or defamation).
4.
The Purpose Is to Promote Personal or Commercial Interests
If the statement or resolution is being used for personal gain or marketing,
and not aligned with shareholder interests or company affairs, it may be
rejected.
5.
The Request Does Not Comply with Legal or Procedural Requirements
For example, if the request is not submitted in writing, lacks necessary
shareholder details (e.g., names, shareholding), or fails to include a proper
draft of the resolution.
(c) FIVE Legal and Procedural Requirements for the Valid Execution of a Document Under a Common Seal
(5 marks –
1 mark each)
Under the Companies Act, 2015 and standard legal practice, valid
execution of a document using a company’s common seal requires:
1.
Authority of the Board of Directors
The use of the common seal must be authorized by a resolution of the board
of directors or in accordance with the company’s articles of association.
2.
Presence of Authorized Signatories
The seal must be affixed in the presence of two directors, or one
director and the company secretary, who must sign the document.
3.
Proper Placement of the Seal
The seal must be physically affixed to the document at a designated
area, usually next to or above the directors’ signatures.
4.
Recording in the Seal Register/Minute Book
The act of sealing should be recorded in the seal register or board minutes,
detailing the nature of the document and the authorization.
5.
Compliance with Company’s Articles of Association
The procedure followed must be in line with the company’s articles,
which may prescribe specific methods or limitations for using the seal.
Q&A
(a) FOUR Rights That Can Be Attached to Shares with Differential Rights
(4 marks –
1 mark each)
Shares with differential rights are those issued with variations in voting,
dividend, or other shareholder entitlements. Rights that can be attached
include:
1.
Differential Voting Rights
Some shares may carry more or fewer votes per share compared to ordinary
shares, or even no voting rights at all.
2.
Preferential Dividend Rights
Holders may receive higher or fixed dividends before dividends are paid
to ordinary shareholders.
3.
Priority in Capital Repayment
In the event of liquidation, these shares may have priority in repayment
over ordinary shares.
4.
Limited or Conditional Participation in Profits
Some shares may have restricted rights to share in surplus profits or
capital gains beyond a certain threshold.
(b) FIVE Legal Considerations for Convening Virtual Meetings by the National Assembly
(5 marks – 1 mark each)
1.
Legal Authority or Enabling Provisions
The Constitution or Standing Orders of the National Assembly must allow or be
amended to permit virtual sittings.
2.
Quorum Requirements
There must be clear provisions to determine how quorum is established and
verified virtually.
3.
Authentication of Members’ Identity
Secure systems must be in place to confirm the identity of members
attending virtually, ensuring legitimacy of votes and contributions.
4.
Transparency and Public Access
Virtual sessions must comply with constitutional requirements for public
participation and access, such as live streaming.
5.
Cybersecurity and Data Integrity
Robust systems must be employed to protect against hacking, data
breaches, or interference with proceedings.
(c) FIVE Essential Roles Played by Advisers During Company Listing on a Securities Exchange
(5 marks – 1 mark each)
1.
Legal Advisers
Ensure compliance with securities laws, draft legal documents, and
handle regulatory submissions.
2.
Financial Advisers
Provide valuation, pricing strategies, and financial structuring advice
during the initial public offering (IPO).
3.
Sponsoring Broker/Investment Bankers
Facilitate the actual listing process, including marketing shares, book
building, and liaison with the exchange.
4.
Auditors
Certify the company’s financial statements to ensure they are accurate,
complete, and meet listing standards.
5.
Public Relations and Communication Experts
Manage stakeholder communication, brand image, and investor relations
during and after the listing process.
(d) THREE Governance Principles for the Conduct of General Meetings
(6 marks –
2 marks each)
As outlined in governance standards and guidelines (e.g., from the
Capital Markets Authority and other corporate governance codes):
1.
Transparency and Disclosure
Shareholders must be provided with timely, accurate, and sufficient
information before and during the meeting to make informed decisions.
2.
Equitable Treatment of Shareholders
All shareholders, regardless of shareholding size, should be given equal
opportunity to participate, ask questions, and vote on agenda items.
3.
Effective Participation and Engagement
The company should enable meaningful shareholder participation through
accessible venues (physical or virtual), interpretation where needed, and
effective moderation.
Q&A
(a) FOUR Best Practices Company Secretaries Could Employ to Ensure Effective CPD
(4 marks – 1 mark each)
1.
Needs-Based Planning
Identify personal skill gaps or emerging industry trends and align CPD
activities to address those specific needs.
2.
Maintain a CPD Log or Record
Keep an up-to-date record of CPD activities undertaken, including learning
outcomes and how they apply to current or future roles.
3.
Diversify Learning Methods
Participate in various formats such as seminars, workshops, webinars,
e-learning, and peer group discussions to enhance learning effectiveness.
4.
Evaluate and Reflect on Learning Outcomes
Assess how each CPD activity has improved professional knowledge or performance
and identify areas for future learning.
(b) FIVE Objectives of a Shareholders’ Agreement
(5 marks – 1 mark each)
1.
Define Roles and Responsibilities of Shareholders
Clarifies each shareholder’s involvement, voting rights, and level of
participation in decision-making.
2.
Regulate Share Transfers
Sets out procedures for selling, transferring, or issuing new shares to prevent
unwanted third-party control.
3.
Dispute Resolution Mechanism
Provides structured approaches to resolving shareholder disagreements without
harming company operations.
4.
Protect Minority Shareholders
Ensures that the rights and interests of minority shareholders are safeguarded
from potential majority abuse.
5.
Outline Exit Strategies
Specifies terms under which shareholders can exit the company, such as through
buyouts or triggering events.
(c) FIVE Ways a Liquidator Can Maintain Impartiality and Avoid Conflicts of Interest
(5 marks – 1 mark each)
1.
Full Disclosure of Personal Interests
Declare any prior or existing relationships with creditors, directors, or
shareholders to avoid bias.
2.
Adherence to Professional Ethics and Codes of Conduct
Follow statutory and professional guidelines governing insolvency practitioners
and liquidators.
3.
Avoid Preferential Treatment of Stakeholders
Treat all creditors and stakeholders equally according to the law, without
favouritism or discrimination.
4.
Independent Decision-Making
Base decisions strictly on objective criteria and the best interests of the
company’s creditors and stakeholders.
5.
Regular and Transparent Reporting
Provide accurate and timely reports to creditors, courts, and regulators to
maintain accountability and public confidence.
(d) SIX Benefits of Subsequent Board Meetings
(6 marks – 1 mark each)
1.
Monitoring Progress of Previous Resolutions
Allows the board to track implementation of decisions made in earlier meetings.
2.
Review of Financial and Operational Performance
Facilitates regular evaluation of company performance and necessary
adjustments.
3.
Strategic Planning and Decision-Making
Provides a platform for discussing new strategies and responding to emerging
challenges or opportunities.
4.
Risk Management and Compliance Oversight
Enables the board to assess regulatory compliance and address any new risks
facing the organization.
5.
Strengthening Board Cohesion and Communication
Promotes teamwork, accountability, and shared vision among board members.
6.
Updating Policies and Governance Frameworks
Ensures continuous improvement and adaptation of corporate governance policies
in response to changing environments.
Q&A
(a) FIVE Stages of the Evolution of the Corporate Secretarial Profession in Kenya
(5 marks – 1 mark each)
1.
Clerical and Administrative Origins
The role of company secretaries initially focused on basic record-keeping,
minute-taking, and administrative support to company directors.
2.
Formal Recognition by Law
With the enactment of the Companies Act (Cap 486) and later Companies
Act, 2015, the position of a company secretary became a mandatory
statutory office in certain companies.
3.
Professionalization of the Role
Establishment of the Institute of Certified Secretaries (ICS) (formerly
ICPSK) to regulate the profession and promote standards of ethics, training,
and certification.
4.
Expansion into Governance and Compliance
The role evolved to include responsibilities in corporate governance,
compliance, risk management, and advisory to the board.
5.
Integration into Strategic Leadership
Modern company secretaries now serve as governance professionals,
contributing to strategy, board effectiveness, stakeholder engagement, and
sustainability.
(b) FIVE Critical Steps in the Preparation of Board Papers in Line with Governance Standards
(5 marks – 1 mark each)
1.
Agenda Planning and Approval
Drafting of a clear agenda aligned with the company’s strategic objectives,
approved by the chairperson or company secretary.
2.
Collation of Supporting Documentation
Collection of accurate and relevant reports, data, financials, and legal
opinions to support each agenda item.
3.
Quality Assurance and Review
Review of board papers for clarity, accuracy, completeness, and relevance to
ensure informed decision-making.
4.
Timely Circulation to Board Members
Distribution of board packs well in advance (e.g., 7 days before the meeting)
to allow adequate time for review and preparation.
5.
Confidentiality and Secure Handling
Ensuring board papers are distributed securely to protect sensitive information
and meet data protection obligations.
(c) FIVE Mandatory Legal Requirements for Keeping the Register of Charges and Debentures
(5 marks –
1 mark each)
Under the Companies Act, 2015 (Kenya):
1.
Maintenance of a Register
A company must keep a register of charges at its registered office or
principal place of business.
2.
Registration with the Registrar of Companies
Every charge created must be registered with the Registrar within 30
days of its creation.
3.
Details to Be Entered
The register must include details such as date of creation, amount
secured, description of the property charged, and the name of the
charge holder.
4.
Inspection Rights
The register must be open for inspection by creditors and members
without charge, and by others upon payment of a fee.
5.
Updates and Satisfaction of Charges
The register must be updated when a charge is satisfied or released, and
this must also be communicated to the Registrar.
(d) FIVE Legal Procedures for Amending the Articles of Association of a Company
(5 marks – 1 mark each)
1.
Board Resolution to Propose Amendment
The board must first pass a resolution proposing the change and calling a general
meeting of shareholders.
2.
Notice to Members
Members must be given at least 21 days’ notice of the meeting, including
the proposed amendments and rationale.
3.
Special Resolution at a General Meeting
A special resolution (requiring at least 75% approval) must be
passed by the shareholders to amend the articles.
4.
Filing with the Registrar of Companies
The amended articles and the special resolution must be filed with the
Registrar within 14 days of the resolution.
5.
Compliance with the Companies Act and Constitution
The changes must not be inconsistent with the Companies Act, the Memorandum
of Association, or any shareholders’ agreements.
Q&A
(a) FIVE Best Practices for Managing Corporate Minute Books
(5 marks – 1 mark each)
1.
Maintain Chronological and Complete Records
All board and committee minutes should be recorded in chronological order,
capturing resolutions and key discussions in full.
2.
Ensure Timely and Accurate Entry
Minutes should be drafted and approved promptly (typically at the next
meeting), ensuring accuracy and legal compliance.
3.
Secure Storage and Accessibility
Minute books should be stored in a secure but accessible format
(physical or electronic), protected from unauthorized access or loss.
4.
Proper Signing and Certification
Minutes must be signed by the chairperson of the meeting or the next
meeting, and authenticated by the company secretary where applicable.
5.
Compliance with Legal and Regulatory Requirements
Minute books must be maintained in accordance with the Companies Act, 2015,
and be available for inspection by regulators or shareholders as required.
(b) FIVE Elements to Include in a Board’s Annual Work Plan and Calendar
(5 marks – 1 mark each)
1.
Scheduled Board and Committee Meetings
Clearly outline the dates, frequency, and structure of board and
committee meetings across the year.
2.
Review of Strategic and Business Plans
Include timeframes for strategy sessions, performance reviews, and
evaluation of business plans.
3.
Compliance and Regulatory Milestones
Plan for approval and submission of statutory returns, financial
statements, and other compliance obligations.
4.
Board Evaluation and Development Activities
Schedule board performance evaluations, director training, and
capacity-building programs.
5.
Engagement with Stakeholders
Allocate time for the Annual General Meeting (AGM), investor briefings,
or stakeholder engagement initiatives.
(c) FIVE Guidelines for Registration and Compliance of Residents’ Associations (in Kenya)
(5 marks – 1 mark each)
1.
Registration with the Registrar of Societies or Companies
Associations must be formally registered either as societies under the
Societies Act or as companies limited by guarantee under the
Companies Act.
2.
Development and Submission of a Constitution
A governing document outlining the objectives, membership rules, leadership
structure, and decision-making processes is required.
3.
Elections and Leadership Compliance
The association must conduct regular elections for office bearers in
accordance with its constitution and applicable laws.
4.
Filing of Annual Returns and Reports
Registered associations are required to file annual returns, financial
statements, and updates on officials with the relevant authority.
5.
Compliance with County By-Laws and Zoning Regulations
Associations must comply with local authority requirements, including
zoning rules, land use plans, and noise/environmental regulations.
(d) FIVE Types of Restrictions That Could Affect a Company’s Ability to Distribute Dividends
(5 marks – 1 mark each)
1.
Insufficient Profits or Retained Earnings
Dividends can only be paid out of realized profits, not from capital or
revaluation reserves, as per the Companies Act.
2.
Solvency Test Failure
A company must remain solvent after dividend distribution — it must be
able to pay its debts as they fall due.
3.
Contractual Restrictions
Loan agreements or debentures may include covenants that restrict
dividend payments unless certain financial ratios are met.
4.
Statutory or Regulatory Limitations
Certain regulated entities (e.g., banks, insurance companies) may require regulatory
approval before declaring dividends.
5.
Articles of Association Provisions
The company’s constitution may contain specific conditions or
restrictions on the declaration and payment of dividends.
Q&A
(a) FIVE Guidelines from CMA Circular No. CMA/MRT/005/2020 on Virtual General Meetings
(5 marks –
1 mark each)
Issued on 27 May 2020, this Circular by the Capital Markets Authority (CMA)
provides guidance to issuers on conducting virtual general meetings. Key
guidelines include:
1.
Notice and Agenda Must Be Clear and Accessible
Issuers must issue notices of virtual meetings in line with statutory
timelines and ensure that all agenda items are clear and accessible online.
2.
Use of Secure and Reliable Technology
Virtual platforms used must support real-time audio and visual participation,
voting, and secure access by shareholders.
3.
Provision for Shareholder Participation
Issuers must provide shareholders with the ability to ask questions, vote,
and receive clarifications during the virtual meeting.
4.
Submission of Questions Prior to the Meeting
Shareholders should be allowed to submit questions or comments in advance,
which must be addressed during the meeting.
5.
Filing of Meeting Outcomes with the CMA
Issuers must file the resolutions passed and a summary report of
proceedings with the CMA and the Nairobi Securities Exchange (NSE), where
applicable.
(b) FIVE Grounds for Removal of a Corporate Secretary from Office
(5 marks – 1 mark each)
1.
Professional Misconduct
Breach of ethical standards, fraud, conflict of interest, or other behavior
inconsistent with the responsibilities of the office.
2.
Incompetence or Gross Negligence
Repeated failure to perform duties, such as failure to file statutory
returns or poor record-keeping, justifies removal.
3.
Breach of Fiduciary Duty
Acting in a manner contrary to the interests of the company or disclosing
confidential information.
4.
Conviction of a Criminal Offence
Being found guilty of a criminal offence involving fraud, dishonesty, or
moral turpitude disqualifies the secretary.
5.
Restructuring or Change in Company Strategy
A company may remove the corporate secretary as part of organizational
restructuring or change in governance needs.
(c) FIVE Demonstrations of Good Etiquette in Virtual Meetings
(5 marks – 1 mark each)
1.
Punctuality
Log in on time and be ready to begin the meeting promptly.
2.
Mute When Not Speaking
Keep your microphone muted when not contributing to reduce background noise.
3.
Professional Appearance and Environment
Dress appropriately and choose a quiet, well-lit location with minimal
distractions.
4.
Use Appropriate Language and Tone
Maintain a professional tone and avoid interrupting or speaking over others.
5.
Engage Actively and Pay Attention
Maintain eye contact through the camera, respond when addressed, and avoid
multitasking during the session.
(d) FIVE Elements of a Defamation Claim
(5 marks –
1 mark each)
To successfully sue for defamation under Kenyan law, Evans Kola must
prove the following elements:
1.
Defamatory Statement
The statement must lower the plaintiff’s reputation in the eyes of
right-thinking members of society.
2.
Reference to the Plaintiff
The defamatory material must refer directly or indirectly to Evans Kola,
such that he is identifiable.
3.
Publication to a Third Party
The statement must have been communicated to at least one person other
than Evans Kola.
4.
Falsity of the Statement
The statement must be false; truth is a valid defence in defamation
claims.
5.
Harm or Injury to Reputation
Evans must demonstrate that the statement caused actual damage to his
reputation, career, or social standing.
Q&A
(a) FIVE Duties of an Appointed Liquidator at the First Meeting of Creditors
(5 marks –
1 mark each)
During the first creditors' meeting in a company liquidation process, the
liquidator has several key responsibilities:
1.
Provide a Statement of Affairs
Present a comprehensive statement of the company’s assets, liabilities, and
financial position for creditors to assess the status.
2.
Explain the Causes of Liquidation
Outline the circumstances leading to the company’s insolvency, including
any operational or financial challenges.
3.
Disclose Details of the Liquidation Process
Inform creditors about the liquidation timeline, steps involved, and
procedures for lodging claims.
4.
Facilitate the Appointment of a Committee of Inspection (if required)
Creditors may elect a committee to oversee the liquidation process — the
liquidator must facilitate this process.
5.
Answer Questions from Creditors
Address queries from creditors regarding asset recovery, debt priorities,
costs, and expected returns.
(b) FIVE Parties That Must Be Invited to a General Meeting of Bidii Limited
(5 marks –
1 mark each)
In line with the Companies Act, 2015 (Kenya) and standard governance
practices, the following parties must be invited:
1.
All Shareholders (Members)
As the owners of the company, all registered members are entitled to
attend and vote.
2.
Directors of the Company
Especially the Chairperson, Managing Director, and Finance Director who
will present and respond to questions.
3.
Company Secretary
Responsible for organizing the meeting, preparing minutes, and advising on
compliance matters.
4.
Auditors of the Company
If financial statements are being discussed, the external auditor must
attend to present the audit opinion and respond to financial questions.
5.
Regulatory Authorities (if required)
In some cases, e.g., for listed companies, representatives from the Capital
Markets Authority (CMA) or NSE may be invited to observe compliance.
(c) FIVE Limitations of Directors’ Powers
(10 marks
– 2 marks each)
While directors are empowered to manage company affairs, their powers are
limited by several legal, statutory, and internal governance instruments:
1.
Bound by the Company’s Articles of Association
Directors must act within the scope of authority granted by the
Articles. Any action outside these powers may be deemed ultra vires (beyond
power) and invalid.
2.
Fiduciary Duty to the Company
Directors must act in good faith, in the best interest of the company,
and avoid conflicts of interest. Breach can lead to personal liability.
3.
Statutory Restrictions under the Companies Act
The Companies Act, 2015 restricts actions like making large loans to
directors, issuing new shares, or selling major assets without shareholder
approval.
4.
Subject to Oversight by Shareholders
In significant decisions, such as mergers, changes to the capital structure,
or winding up, directors must obtain approval through special
resolutions by shareholders.
5.
Prohibited from Misusing Company Resources
Directors are legally restricted from using company funds or assets for
personal gain or non-business purposes. This includes limits on remuneration,
benefits, and related-party transactions without proper disclosure and
approval.
Q&A
(a) FIVE Ethical Issues That May Arise from Use of Artificial Intelligence (AI) in Managing Meetings
(5 marks – 1 mark each)
1.
Privacy and Data Protection
AI tools often collect and process participants’ personal data (e.g. facial
recognition, voice recordings), raising risks of unauthorised access or
misuse.
2.
Bias and Discrimination
AI systems may reflect or amplify algorithmic bias, leading to unfair
treatment of certain individuals or groups during participation or
decision-making.
3.
Lack of Transparency
Many AI systems operate as "black boxes," meaning their
decision-making process is unclear, which can undermine accountability
and trust in meeting outcomes.
4.
Surveillance and Autonomy Concerns
Constant monitoring of participants using AI can lead to over-surveillance,
reducing individual freedom, innovation, and comfort in expressing dissenting
views.
5.
Manipulation or Misuse
AI can be used to manipulate meeting content, attendance, or voting
records—raising serious ethical concerns about integrity and governance.
(b) FIVE Strategies an Organisation Might Adopt to Restore a Compliance Culture After Failures
(5 marks – 1 mark each)
1.
Leadership Commitment and Accountability
Top management must set the tone by publicly acknowledging the failure,
taking responsibility, and committing to ethical and compliant operations.
2.
Reinforcement of Policies and Internal Controls
Review and revise compliance frameworks, internal controls, and reporting
systems to close gaps that enabled the failure.
3.
Comprehensive Ethics and Compliance Training
Conduct regular, mandatory training for all employees to reinforce
knowledge and awareness of regulatory obligations and ethical conduct.
4.
Encouragement of Whistleblowing and Transparency
Establish or strengthen secure, anonymous reporting channels and promote a speak-up
culture without fear of retaliation.
5.
Monitoring and Auditing Compliance Efforts
Implement routine compliance audits and monitoring to evaluate
effectiveness of new measures and ensure sustained adherence.
(c) FIVE Factors Members of the National Assembly Should Consider When Framing Questions
(10 marks – 2 marks each)
1.
Relevance to Public Interest
Questions should address matters of national concern, public service
delivery, or policy oversight—avoiding personal or trivial issues.
2.
Clarity and Precision
The question must be clearly worded, unambiguous, and direct, ensuring
ministers or relevant officials can provide focused and meaningful answers.
3.
Constitutionality and Legal Compliance
Questions should not breach any constitutional provisions, legal constraints,
or violate the rights of individuals or state organs.
4.
Non-Partisanship and Objectivity
Members must avoid framing questions that are politically biased,
inflammatory, or meant to incite or embarrass individuals or institutions.
5.
Compliance with Parliamentary Standing Orders
Questions must align with the rules of procedure and decorum set by the
National Assembly Standing Orders, including limits on length, language, and
admissibility.
Q&A
(a) FIVE Requirements During a Call on Shares by ABC Limited
(5 marks –
1 mark each)
When ABC Limited makes a call on shares (i.e. demands payment from shareholders
for unpaid share capital), the following requirements apply:
1.
Board Resolution
The board of directors must pass a formal resolution authorising the call,
specifying the amount, due date, and method of payment.
2.
Notice to Shareholders
Shareholders must be issued a call notice indicating the amount due per
share, the due date for payment, and consequences for non-payment.
3.
Adherence to Company’s Articles of Association
The process must conform to any specific provisions in the Articles
regarding timing, procedure, and authority to make calls.
4.
Equitable Treatment
The call must be made uniformly on all shares of the same class,
ensuring no shareholder is unfairly targeted or favoured.
5.
Proper Accounting and Record Keeping
The company must record call amounts, payments received, and any outstanding
balances in the register of members and financial accounts.
(b) FIVE Actions a Company Secretary Can Undertake to Minimise Outstanding Dividend Warrants
(5 marks – 1 mark each)
1.
Maintain Updated Shareholder Records
Ensure the register of members is current, especially postal/email
addresses and bank account details to prevent misdirected payments.
2.
Promote Electronic Dividend Payment (E-dividends)
Encourage shareholders to opt for direct bank transfers or mobile money
to eliminate the need for physical dividend warrants.
3.
Conduct Public Awareness Campaigns
Notify shareholders through media, website, or SMS about dividend
payment dates and encourage early claim or registration.
4.
Collaborate with Registrars and Banks
Work closely with the company’s share registrars or bankers to track and
follow up on unclaimed or returned dividend warrants.
5.
Timely Reminders and Follow-ups
Send reminder notices to shareholders who have not cashed their dividend
warrants or whose warrants were returned undelivered.
(c) FIVE Merits of Operating a Business as an Unlimited Company
(10 marks
– 2 marks each)
An unlimited company is one where the liability of shareholders is not
limited—they are personally liable for company debts in the event of winding
up. Its advantages include:
1.
Greater Confidentiality
Unlimited companies are often exempt from filing full financial statements
publicly, offering greater privacy in financial affairs.
2.
Higher Creditworthiness
Since members are personally liable, creditors and banks may view the
company as lower risk, making it easier to obtain credit or loans.
3.
Operational Flexibility
Unlimited companies may enjoy fewer regulatory restrictions compared to
public limited companies, especially for small or closely held businesses.
4.
Strong Shareholder Commitment
Because members bear full liability, they are likely to exercise greater
diligence and oversight, enhancing management quality and risk management.
5.
Continuity of Legal Personality
Like all registered companies, an unlimited company is a separate legal
entity, ensuring perpetual succession despite the unlimited liability.
Q&A
(a) FIVE Types of Classified Information Held Within a Company
(5 marks –
1 mark each)
Classified information refers to sensitive or confidential data that a company
protects from unauthorised access. Key types include:
1.
Financial Information
Includes budgets, audit reports, financial statements, profit margins, and
forecasts, which could impact investor or competitor decisions.
2.
Trade Secrets
Proprietary knowledge such as formulas, product designs, software code, or
processes that give the company a competitive advantage.
3.
Strategic Plans
Information on future mergers, acquisitions, market entry, or investment
plans that are not yet publicly disclosed.
4.
Human Resource Records
Confidential details such as employee contracts, performance reviews,
disciplinary actions, and payroll data.
5.
Client or Customer Data
Includes contracts, contact information, purchase histories, and
confidential communications with clients or partners.
(b) FIVE Good Governance Practices for Maintenance and Security of Electronic Minutes
(5 marks – 1 mark each)
1.
Use of Secure Digital Platforms
Minutes should be stored on secure, encrypted platforms with access
controls to prevent unauthorised viewing or tampering.
2.
Version Control and Audit Trails
Maintain a clear record of who accessed or modified the minutes, and
ensure only the final, approved version is retained.
3.
Regular Backups
Implement automated and secure backups to cloud or physical storage to
protect records from accidental loss or system failure.
4.
Restricted Access
Limit access to minutes to authorised personnel only, such as board
members and the company secretary.
5.
Compliance with Legal Retention Requirements
Ensure electronic minutes are retained in line with the Companies Act and
internal policies, typically for a minimum of 7 years.
(c) FIVE Methods Nyuki Sellers Might Use to Issue Shares to the Public
(10 marks
– 2 marks each)
Nyuki Sellers can use the following methods to issue shares to the public in
accordance with Kenyan capital markets regulations:
1.
Initial Public Offering (IPO)
The company offers shares to the public for the first time via a stock
exchange, requiring approval from the Capital Markets Authority (CMA)
and compliance with listing requirements.
2.
Rights Issue
Existing shareholders are offered the right to purchase additional shares
at a discounted price, usually in proportion to their existing holdings.
3.
Private Placement
Shares are offered to a select group of investors such as institutional
investors or high-net-worth individuals, often used to raise capital
quickly with fewer regulatory requirements.
4.
Public Offer for Sale
The company or existing shareholders offer shares for sale to the public
through an approved prospectus, typically managed by issuing houses and
underwriters.
5.
Offer Through Prospectus
A detailed prospectus is issued to the public, outlining company
performance, risks, and share details, inviting applications for share
subscriptions.
Q&A
(a) FOUR Benefits of Integrated Reporting
(4 marks –
1 mark each)
Integrated reporting (IR) combines financial and non-financial information to
provide a holistic view of a company’s performance, sustainability, and value
creation.
1.
Enhanced Decision-Making
IR provides stakeholders with a comprehensive understanding of value creation,
enabling more informed decision-making.
2.
Improved Transparency and Accountability
It promotes full disclosure of financial, environmental, social, and
governance (ESG) issues, improving corporate transparency.
3.
Better Stakeholder Communication
Integrated reports help align corporate goals with stakeholder expectations,
building trust and long-term relationships.
4.
Focus on Long-Term Value
Encourages companies to adopt sustainable strategies by assessing
performance beyond short-term financial results.
(b) FIVE Requirements for Circulation of Resolutions in a Members’ Meeting
(5 marks –
1 mark each)
The circulation of proposed resolutions by members must meet specific
conditions, including those under the Companies Act and company constitutions:
1.
Minimum Shareholding Threshold
A minimum percentage of shareholding (e.g. 5%) may be required for
members to validly request circulation of a resolution.
2.
Written Request
The request must be in writing, stating clearly the proposed resolution
or accompanying statement.
3.
Timely Submission
The request must be made within a specified time before the meeting
(e.g., at least 6 weeks or as per the company’s articles).
4.
Compliance with Content Standards
The resolution must be proper in form, lawful, and not defamatory,
offensive, or frivolous.
5.
Responsibility for Costs
Unless otherwise waived, members requesting the circulation may need to bear
the cost of publication or circulation, especially for long statements.
(c) FIVE Strategies to Mitigate Emerging Challenges Posed by Virtual Meetings
(5 marks –
1 mark each)
To ensure effectiveness and inclusivity in virtual meetings, companies can
adopt the following strategies:
1.
Invest in Secure and Reliable Technology
Use secure, user-friendly platforms that support real-time interaction,
voting, and document sharing.
2.
Ensure Digital Accessibility
Provide technical support and training to ensure all participants,
including less tech-savvy members, can access and participate.
3.
Establish Clear Virtual Meeting Protocols
Set and communicate rules of engagement, such as speaking order, voting
procedures, and Q&A management.
4.
Test Systems in Advance
Conduct pre-meeting system checks or rehearsals to avoid technical
disruptions.
5.
Maintain Meeting Records
Record meetings (where legally permissible) and maintain accurate digital
minutes to support future reference and legal compliance.
(d) SIX Differences Between “Postponement” and “Adjournment” of a Meeting
(6 marks – 1 mark each)
|
Aspect |
Postponement |
Adjournment |
|
1. Timing |
Done before the meeting starts |
Done after the meeting has commenced |
|
2. Authority |
Usually by the organiser or convenor |
Usually by the chairperson or members during the meeting |
|
3. Cause |
May occur due to lack of quorum, external issues |
May result from disruption, lack of time, or member resolution |
|
4. Notice Requirement |
Often requires fresh notice to all members |
May not require new notice if adjourned to a specific date |
|
5. Legal Effect |
Treated as a new meeting |
Treated as a continuation of the same meeting |
|
6. Mention in Agenda |
Not typically part of the agenda |
Can be proposed and approved as part of the meeting |
Q&A
(a) FOUR Reasons for Maintaining Registers of Interests in Voting Shares for a Public Company
(4 marks – 1 mark each)
1.
Regulatory Compliance
To comply with statutory requirements under the Companies Act, 2015,
which mandates public companies to maintain such registers for transparency.
2.
Disclosure of Significant Shareholders
Enables identification of persons with substantial control or influence
in the company, supporting corporate governance and accountability.
3.
Prevent Market Abuse
Helps in monitoring and deterring insider trading or conflicts of interest,
especially during sensitive corporate actions like mergers or takeovers.
4.
Facilitate Shareholder Communication and Voting
Ensures the company can accurately determine who is entitled to vote,
receive notices, and participate in shareholder decisions.
(b) FOUR Requirements for Keeping Records of County and National Assembly Meetings in Kenya
(4 marks – 1 mark each)
1.
Accurate Minute-Taking
Proceedings of all sittings must be accurately recorded in official minutes
or Hansard reports, as required under Standing Orders and Parliamentary
Powers and Privileges Act.
2.
Proper Custody and Archiving
Records must be kept securely and archived systematically for future
reference, audit, and public accountability.
3.
Public Accessibility (Where Applicable)
Some records, especially in open sessions, must be made accessible to the
public through gazettement, websites, or libraries, promoting transparency.
4.
Certification and Approval
Minutes and records must be certified by the Clerk or authorised officer
and approved by the relevant House or committee.
(c) FOUR Items Found in a Compliance Checklist of an Organisation
(4 marks – 1 mark each)
1.
Licensing and Permits
Verification that all mandatory business licenses, industry permits, and
operational certificates are current and valid.
2.
Tax Compliance
Confirmation of timely filing and payment of taxes (e.g., VAT, PAYE,
income tax) in line with KRA regulations.
3.
Employment Law Compliance
Adherence to labour laws, including contracts, minimum wage, safety
standards, and statutory deductions (e.g., NSSF, NHIF).
4.
Corporate Governance Obligations
Compliance with board meeting schedules, AGM requirements, director
disclosures, and statutory filings with the Registrar of Companies.
(d) FOUR Legal Provisions on Convening and Management of Board and Committee Meetings
(8 marks – 2 marks each)
1.
Notice of Meetings
Directors must be given reasonable notice of board or committee
meetings. The Companies Act, 2015 does not specify a fixed period, but
the Articles of Association typically define it (e.g., 7 days).
2.
Quorum Requirements
A meeting is valid only if the minimum number of directors (quorum) is
present, as defined in the company’s articles (often a majority of
directors).
3.
Chairperson's Role
Meetings must be chaired by the board chairperson, or another director
if absent, with the chair responsible for maintaining order and guiding
decision-making.
4.
Recording of Minutes
Accurate minutes must be kept as per the Companies Act, signed by the
chair, and stored safely as official records. These serve as legal evidence
of proceedings and resolutions.
Q&A
(a) FOUR Requirements of a Liquidator Where a Liquidation Order is Issued by a Court
(4 marks –
1 mark each)
When a court issues a liquidation (winding-up) order, the appointed
liquidator must comply with several legal obligations under the Companies
Act, 2015:
1.
Take Custody of Company Assets
The liquidator must immediately take control of all the company’s assets,
books, and records for safekeeping and distribution.
2.
Notify the Registrar of Companies
The liquidator must notify the Registrar of the winding-up order and
their appointment, usually within 7 days.
3.
Publish Notice of Liquidation
A notice of liquidation must be published in the Kenya Gazette and a
local newspaper, informing creditors and stakeholders.
4.
Prepare a Statement of Affairs
The liquidator must prepare and file a statement of affairs of the
company, detailing its assets, liabilities, and creditors.
(b) FIVE Components of Minute Extracts According to Governance Standards (GS 003)
(5 marks –
1 mark each)
Governance Standard GS 003 outlines the best practices for preparing
extracts of minutes. Each extract should include:
1.
Title of the Meeting
The name and type of meeting (e.g., Board Meeting, Audit Committee Meeting)
from which the extract is drawn.
2.
Date of the Meeting
The exact date on which the meeting took place.
3.
Agenda Item
A clear reference to the specific agenda item being extracted, with
context.
4.
Resolution or Decision Made
The exact wording of the resolution passed or the action agreed upon.
5.
Authentication
Signature of the Company Secretary or authorised officer, with a date
stamp, confirming the extract’s accuracy and approval.
(c) FIVE Defences Against a Defamation Suit
(5 marks –
1 mark each)
In a defamation case, the defendant may rely on the following common law and
statutory defences:
1.
Truth (Justification)
If the statement made is substantially true, it is a complete defence,
regardless of harm caused.
2.
Fair Comment (Honest Opinion)
The statement was a genuine opinion, not presented as fact, and based on
facts that are true and of public interest.
3.
Qualified Privilege
Statements made in good faith on certain occasions (e.g., to police or during
parliamentary debates) are protected from liability.
4.
Absolute Privilege
Some statements are completely protected, such as those made during
judicial proceedings or in Parliament.
5.
Innocent Dissemination
The defendant (e.g., a publisher or ISP) had no knowledge or control
over the defamatory content and did not act negligently.
(d) SIX Aspects of Police Powers in Relation to Public and Private Meetings
(6 marks –
1 mark each)
Under the Public Order Act (Cap 56) and the National Police Service
Act, 2011, the police have powers regarding the regulation of public and
private meetings:
1.
Notification of Public Gatherings
Organisers must notify the police at least 3 days in advance of a public
meeting, not seek permission.
2.
Prohibition or Postponement of Meetings
The police may prohibit or reschedule a meeting if there's a credible
threat to public safety or order.
3.
Use of Reasonable Force
Police may use reasonable force to disperse unlawful or violent gatherings,
subject to proportionality.
4.
Arrest Without Warrant
Officers can arrest individuals without a warrant if they are suspected
of inciting violence or breaking public order laws during meetings.
5.
Regulation of Processions and Demonstrations
Police can control routes, timing, and conditions of public processions
to ensure safety.
6.
Entry into Private Premises
In cases of a breach of peace or unlawful assembly, the police may enter
private property with reasonable cause and sometimes with a warrant.
Q&A
(a) FIVE Circumstances Where Use of a Common Seal May Be Required
(5 marks –
1 mark each)
Even though the Companies Act No.17 of 2015 makes the use of a Common
Seal optional, there are instances where its use is still relevant or
customary:
1.
Execution of Certain Legal Documents
Especially for deeds, contracts or instruments requiring formal
authentication (e.g., lease agreements).
2.
Transactions in Foreign Jurisdictions
Where a foreign law or counterparty requires the document to be sealed
for it to be legally binding.
3.
Title Deeds and Property Transfers
Some land transactions and property documents may require a seal for
registration with land authorities.
4.
Loan Agreements or Security Documents
Lenders may require company seals on debentures, guarantees or charges
as part of formality or evidence of authority.
5.
Company Constitution or Articles of Association Requirement
If the Articles of Association specifically require certain documents to
be executed under seal.
(b) FIVE Objectives of the Retirement Benefits Authority (RBA)
(5 marks –
1 mark each)
The RBA, established under the Retirement Benefits Act (Cap 197),
regulates and supervises retirement benefit schemes in Kenya. Its key
objectives include:
1.
Protect the Interests of Members and Beneficiaries
Ensures that pension contributors and retirees are treated fairly and
their funds are secure.
2.
Promote the Development of the Retirement Benefits Sector
Encourages growth and innovation within the pensions industry.
3.
Supervise and Regulate Retirement Schemes
Ensures compliance with laws, regulations, and governance standards
across all schemes.
4.
Advise the Cabinet Secretary on Pensions Policy
Offers expert input to help shape retirement-related legislation and
national policies.
5.
Educate the Public on Retirement Planning
Enhances financial literacy through awareness campaigns, training, and
outreach.
(c) FIVE Ways Artificial Intelligence (AI) Can Boost Meeting Productivity and Efficiency
(5 marks – 1 mark each)
1.
Automated Scheduling and Calendar Integration
AI tools like chatbots or scheduling assistants can efficiently coordinate
meeting times across calendars.
2.
Real-Time Transcription and Minute Taking
AI can transcribe discussions live, reducing manual effort and improving
record accuracy.
3.
Smart Agenda Management
AI can help prioritise agenda items based on urgency, past meeting
outcomes, or stakeholder input.
4.
Action Item Tracking and Follow-Up
AI tools can track assigned tasks, send reminders, and monitor
completion status post-meeting.
5.
Data-Driven Decision Support
AI can analyse relevant data before or during meetings to support
better, faster decision-making.
(d) FIVE Agenda Items That Constitute the Ordinary Business of an Annual General Meeting (AGM)
(5 marks –
1 mark each)
As per the Companies Act and best practice, the following items
typically fall under the “ordinary business” of an AGM:
1.
Presentation and Adoption of Financial Statements
Including the auditor’s report and directors’ report for the financial
year.
2.
Declaration of Dividends
Approval (or rejection) of proposed dividends for shareholders.
3.
Election or Re-Election of Directors
Appointment of new directors or confirmation of directors retiring by
rotation.
4.
Appointment or Reappointment of Auditors
Approval of the company’s external auditors and setting their
remuneration.
5.
Approval of Directors’ Remuneration
Shareholders may approve director fees and compensation as disclosed.
Q&A
(a) FOUR Benefits of Dematerialising Securities
(4 marks –
1 mark each)
Dematerialisation refers to converting physical share certificates into electronic
records held in a central depository system (like CDSC in Kenya).
1.
Enhanced Security and Reduced Risk of Loss
Eliminates risks associated with loss, theft, forgery, or damage of
physical certificates.
2.
Faster and Efficient Settlements
Enables quicker trade settlements and transfer of ownership through
electronic systems.
3.
Cost Reduction
Saves costs related to printing, storage, courier, and handling of
physical documents.
4.
Improved Transparency and Record Keeping
Facilitates accurate and real-time tracking of ownership and trading
activities.
(b) FIVE Advantages of Outsourcing Share Registry Services
(5 marks –
1 mark each)
Companies may outsource share registry functions to professional registrars or
service providers.
1.
Professional Expertise
Access to specialised skills and up-to-date knowledge on regulatory and
corporate actions.
2.
Compliance with Legal Requirements
Ensures timely and accurate regulatory filings and reporting as required
by the Companies Act and Capital Markets Authority.
3.
Enhanced Shareholder Service
Provides shareholders with faster responses and better access to
information.
4.
Cost Efficiency
Reduces the need to maintain an in-house share registry team, saving
operational costs.
5.
Use of Technology and Automation
Leverages registrar’s advanced systems for managing shareholding records
and communication.
(c) FIVE Reasons Why a Corporate Secretary Should Participate in a CPD Program
(5 marks – 1 mark each)
1.
Stay Updated on Legal and Regulatory Changes
CPD ensures the secretary remains aware of new laws and compliance
obligations.
2.
Enhance Professional Competence
Builds technical, ethical, and governance skills, improving job performance.
3.
Fulfil Professional Body Requirements
Necessary to maintain membership in ICS (Institute of Certified Secretaries)
or other professional bodies.
4.
Promote Good Governance Practices
Equips secretaries with tools to enhance board effectiveness and
organisational governance.
5.
Support Career Development
Increases career growth opportunities through networking, specialisation,
and certification.
(d) SIX Strategies to Ensure an Effective Compliance Programme
(6 marks – 1 mark each)
1.
Develop a Clear Compliance Policy Framework
Establish a written policy outlining the organisation’s commitment to legal
and regulatory compliance.
2.
Establish a Dedicated Compliance Officer or Team
Appoint competent professionals to monitor and enforce compliance standards.
3.
Conduct Regular Training and Awareness
Train employees on laws, ethics, and organisational procedures relevant
to their roles.
4.
Implement a Monitoring and Reporting Mechanism
Use internal audits, checklists, and reporting systems to detect and
report non-compliance early.
5.
Establish a Whistleblower Protection Mechanism
Encourage internal reporting of misconduct with confidentiality and
protection from retaliation.
6.
Undertake Regular Compliance Audits and Reviews
Perform periodic assessments to identify gaps and improve the compliance
programme continually.
Q&A
(a) FOUR Ways in Which Members Are Supposed to Behave Whenever the Speaker Is in the Assembly or Rises to Intervene in a Debate
(4 marks –
1 mark each)
Members of Parliament or County Assemblies must observe the following when the
Speaker is presiding or intervenes:
1.
Maintain Silence and Attention
All members must immediately stop speaking and listen attentively
when the Speaker rises.
2.
Resume Their Seats
Any member speaking must resume their seat immediately the Speaker
stands or interrupts.
3.
No Interruptions or Cross-Talking
Members must not interrupt or speak over the Speaker at any time.
4.
Show Respect to the Chair
Members must demonstrate utmost respect and decorum towards the Speaker
at all times.
(b) FIVE Parties That Could Represent a Creditor at a Creditors’ Meeting
(5 marks –
1 mark each)
At a creditors' meeting (e.g., during liquidation or administration), the
following parties can represent a creditor:
1.
The Creditor Personally
The creditor may attend and vote in person.
2.
An Appointed Proxy
A person authorised via a proxy form to represent and vote on behalf of
the creditor.
3.
A Legal Representative or Advocate
An advocate authorised to act on the creditor’s behalf.
4.
A Company Representative
In case of a corporate creditor, a duly authorised officer (e.g.,
company secretary or director).
5.
A Financial Advisor or Consultant
A professional advisor appointed to represent the creditor in technical
discussions.
(c) FIVE Roles of Stockbrokers in Securities Markets
(5 marks –
1 mark each)
Stockbrokers play a crucial intermediary role in securities trading. Their
roles include:
1.
Executing Buy and Sell Orders
Facilitate the purchase and sale of securities on behalf of clients.
2.
Providing Investment Advice
Offer market analysis and recommendations to clients on investments.
3.
Facilitating IPO Subscriptions
Assist clients in subscribing to Initial Public Offerings (IPOs) and
other public offers.
4.
Maintaining Client Accounts
Open and manage Central Depository System (CDS) accounts for trading.
5.
Ensuring Regulatory Compliance
Ensure transactions comply with the Capital Markets Authority (CMA) and
exchange rules.
(d) SIX Documents That May Be Maintained at the Registered Office of a Company
(6 marks –
1 mark each)
Under the Companies Act, 2015 (Kenya), companies are required to
maintain the following documents at their registered office:
1.
Register of Members (Shareholders)
A record of all current and past shareholders and their shareholdings.
2.
Register of Directors and Secretaries
Includes names, addresses, and particulars of directors and the company
secretary.
3.
Register of Charges
Contains details of all secured loans and charges over company property.
4.
Minute Books
Records of board meetings, general meetings, and resolutions passed.
5.
Certificates of Incorporation and Share Certificates
Key legal documents proving registration and shareholding.
6.
Accounting Records and Financial Statements
Includes books of account, audited financials, and reports available for
inspection where applicable.
Q&A
(a) FOUR Types of Dividends That Could Be Issued by a Company
(4 marks –
1 mark each)
Companies may issue different types of dividends depending on their financial
position and shareholder agreements:
1.
Cash Dividends
Payments made to shareholders in cash, usually from current or retained
profits.
2.
Stock (Scrip) Dividends
Additional shares issued to shareholders instead of cash. Useful when
conserving cash reserves.
3.
Property Dividends
Dividends paid in the form of non-cash assets, such as physical property
or products.
4.
Interim Dividends
Declared and paid before the end of the financial year, based on
projected profits.
(b) FIVE Items of Annual Returns Made by Cooperative Societies in Kenya
(5 marks –
1 mark each)
Under the Co-operative Societies Act (Cap 490), co-operative societies
are required to file annual returns containing:
1.
Audited Financial Statements
Including balance sheet, income statement, and cash flow statement.
2.
List of Members and Share Capital Contributions
Updated details of membership and individual capital contributions.
3.
Minutes of the Annual General Meeting (AGM)
Summary of resolutions and decisions made by members.
4.
Details of Elected Officials and Board Members
Names, positions, and tenure of committee or board members.
5.
Statutory Declaration or Certification by the Auditor
Confirming the accuracy and compliance of financial records.
(c) FIVE Roles of the Corporate Secretary in Ensuring Smooth Company Operations
(5 marks –
1 mark each)
The Corporate Secretary plays a vital governance and compliance role. Key
responsibilities include:
1.
Board Support and Governance Advisory
Facilitates board meetings, agenda preparation, and minute-taking, while
advising on corporate governance.
2.
Statutory and Regulatory Compliance
Ensures the company complies with Companies Act, CMA, and other regulatory
requirements.
3.
Maintenance of Statutory Registers and Records
Maintains registers of members, directors, charges, and other statutory
documents.
4.
Filing Returns and Corporate Disclosures
Oversees timely filing of annual returns, resolutions, and changes in
company structure.
5.
Liaison with Stakeholders
Acts as a link between the board, shareholders, regulators, and other
stakeholders.
(d) SIX Benefits of Holding Meetings Virtually
(6 marks –
1 mark each)
Virtual meetings have become increasingly important for governance, especially
after COVID-19. Benefits include:
1.
Cost Savings
Reduces expenses related to travel, accommodation, venue hire, and
refreshments.
2.
Time Efficiency
Meetings can be scheduled more quickly and run efficiently without
logistical delays.
3.
Greater Accessibility and Inclusivity
Enables participation from remote members, including those with mobility
or location constraints.
4.
Improved Attendance
Encourages better turnout and punctuality due to easier access.
5.
Real-Time Documentation and Recording
Easier to record proceedings and transcribe minutes with digital tools.
6.
Environmental Sustainability
Reduces carbon footprint by limiting travel and printing of materials.
Q&A
(a) FOUR Types of Dividends That Could Be Issued by a Company
(4 marks –
1 mark each)
Companies may issue different types of dividends depending on their financial
position and shareholder agreements:
1.
Cash Dividends
Payments made to shareholders in cash, usually from current or retained
profits.
2.
Stock (Scrip) Dividends
Additional shares issued to shareholders instead of cash. Useful when
conserving cash reserves.
3.
Property Dividends
Dividends paid in the form of non-cash assets, such as physical property
or products.
4.
Interim Dividends
Declared and paid before the end of the financial year, based on
projected profits.
(b) FIVE Items of Annual Returns Made by Cooperative Societies in Kenya
(5 marks –
1 mark each)
Under the Co-operative Societies Act (Cap 490), co-operative societies
are required to file annual returns containing:
1.
Audited Financial Statements
Including balance sheet, income statement, and cash flow statement.
2.
List of Members and Share Capital Contributions
Updated details of membership and individual capital contributions.
3.
Minutes of the Annual General Meeting (AGM)
Summary of resolutions and decisions made by members.
4.
Details of Elected Officials and Board Members
Names, positions, and tenure of committee or board members.
5.
Statutory Declaration or Certification by the Auditor
Confirming the accuracy and compliance of financial records.
(c) FIVE Roles of the Corporate Secretary in Ensuring Smooth Company Operations
(5 marks –
1 mark each)
The Corporate Secretary plays a vital governance and compliance role. Key
responsibilities include:
1.
Board Support and Governance Advisory
Facilitates board meetings, agenda preparation, and minute-taking, while
advising on corporate governance.
2.
Statutory and Regulatory Compliance
Ensures the company complies with Companies Act, CMA, and other regulatory
requirements.
3.
Maintenance of Statutory Registers and Records
Maintains registers of members, directors, charges, and other statutory
documents.
4.
Filing Returns and Corporate Disclosures
Oversees timely filing of annual returns, resolutions, and changes in
company structure.
5.
Liaison with Stakeholders
Acts as a link between the board, shareholders, regulators, and other
stakeholders.
(d) SIX Benefits of Holding Meetings Virtually
(6 marks –
1 mark each)
Virtual meetings have become increasingly important for governance, especially
after COVID-19. Benefits include:
1.
Cost Savings
Reduces expenses related to travel, accommodation, venue hire, and
refreshments.
2.
Time Efficiency
Meetings can be scheduled more quickly and run efficiently without
logistical delays.
3.
Greater Accessibility and Inclusivity
Enables participation from remote members, including those with mobility
or location constraints.
4.
Improved Attendance
Encourages better turnout and punctuality due to easier access.
5.
Real-Time Documentation and Recording
Easier to record proceedings and transcribe minutes with digital tools.
6.
Environmental Sustainability
Reduces carbon footprint by limiting travel and printing of materials.
Q&A
(a) FIVE Characteristics of a Good Resolution Made in a Meeting
(5 marks –
1 mark each)
A well-drafted resolution ensures clarity and enforceability. Characteristics
include:
1.
Clarity and Precision
The resolution should be clear, concise, and unambiguous, leaving no
room for misinterpretation.
2.
Legality
It must comply with the Companies Act, the company’s Articles of Association,
and any other applicable laws.
3.
Relevance
The resolution must directly relate to the business of the meeting and
be within the powers of the body making it.
4.
Properly Structured
Should include who is making the decision, the action to be taken, and
any conditions or timeframes.
5.
Recorded and Adopted Properly
It must be duly proposed, seconded, debated (if needed), voted upon, and
recorded in the minutes.
(b) FIVE Types of Company Meetings
(5 marks –
1 mark each)
Company meetings facilitate decision-making and compliance. Types include:
1.
Annual General Meeting (AGM)
Held once a year to review financials, declare dividends, appoint
auditors/directors, etc.
2.
Extraordinary General Meeting (EGM)
Called to discuss urgent or special matters that cannot wait until the
next AGM.
3.
Board Meeting
Meetings of the board of directors to discuss strategy, oversight,
compliance, and governance.
4.
Class Meetings
Held for specific classes of shareholders (e.g., preference
shareholders) to decide on matters affecting their rights.
5.
Statutory Meeting
Held once by public companies within a specific period after incorporation
to inform shareholders about company formation matters.
(c) FIVE Corporate Governance Considerations Before Listing on a Securities Exchange
(5 marks –
1 mark each)
Before listing on the Nairobi Securities Exchange (NSE) or other markets,
companies must address key governance issues:
1.
Board Composition and Independence
Must have a diverse and independent board, including non-executive
directors and an independent chair.
2.
Financial Reporting and Audit Compliance
Must produce audited financial statements in accordance with IFRS and
local regulations.
3.
Transparency and Disclosure
Companies must commit to timely and accurate public disclosures of
financial and material information.
4.
Internal Controls and Risk Management
Robust risk governance frameworks must be in place to protect investor
interests.
5.
Ethics and Code of Conduct
Companies should have a documented code of ethics and mechanisms to deal
with whistleblowing and misconduct.
(d) FIVE Fundamental Objectives of Pension Products Offered by Insurance Companies
(5 marks –
1 mark each)
Pension products help individuals secure financial stability in retirement.
Their key objectives are:
1.
Income Security in Old Age
To provide a steady source of income after retirement when regular
employment ceases.
2.
Encouraging Long-Term Savings
Promote habitual saving over the working life of individuals for future
benefits.
3.
Tax Efficiency
Contributions to pension schemes often attract tax relief, promoting
savings and reducing tax burdens.
4.
Financial Independence and Dignity
Helps retirees avoid dependency on family, community, or government aid
in old age.
5.
Investment Growth
Pension funds are invested in long-term assets, enabling the capital to
grow over time and beat inflation.
Q&A
(a) FOUR Conditions Under Which Dividends Can Be Declared Out of Reserves
(4 marks –
1 mark each)
Declaring dividends out of reserves (especially retained earnings or revenue
reserves) may be permitted only under specific conditions, typically
when current profits are insufficient. These include:
1.
Availability of Free Reserves
Dividends can only be declared from realised and distributable reserves,
not revaluation or capital reserves.
2.
Satisfactory Liquidity Position
The company must have adequate liquidity to meet its current obligations
after paying the dividend.
3.
Shareholder Approval (if required)
In some cases, declaration of dividends from reserves may require approval
from shareholders at a general meeting.
4.
No Contravention of Articles or Statute
The declaration must comply with the Companies Act and the company’s Articles
of Association, which may restrict such declarations.
(b) FOUR Differences Between a Rights Issue and a Bonus Issue
(8 marks – 2 marks each)
|
Aspect |
Rights Issue |
Bonus Issue |
|
Purpose |
Raises additional capital by offering new shares to existing shareholders at a discounted price. |
Rewards shareholders by issuing free additional shares from reserves. |
|
Payment Requirement |
Shareholders must pay for the new shares (at a discount). |
Shares are given free of charge — no payment required. |
|
Impact on Share Capital and Reserves |
Increases both share capital and cash (from payments by shareholders). |
Increases share capital but reduces free reserves (e.g., retained earnings). |
|
Dilution Effect |
May cause ownership dilution if shareholders do not subscribe. |
Does not dilute ownership; shareholding proportions remain unchanged. |
(c) FOUR Steps Necessary to Develop a Strong Compliance Strategy
(8 marks –
2 marks each)
An effective compliance strategy ensures that an organisation meets legal
and ethical obligations while supporting risk management. Key steps
include:
1.
Risk Assessment and Regulatory Mapping
Identify all laws, industry regulations, and internal policies
applicable to the organisation. Assess the compliance risks and
prioritise them based on impact and likelihood.
2.
Establish Clear Policies and Procedures
Develop written compliance policies, standard operating procedures
(SOPs), and codes of conduct. These must be tailored to specific regulatory
areas (e.g., tax, data protection, labour).
3.
Training and Awareness
Conduct regular compliance training for all staff, management, and
directors to ensure understanding of their legal and ethical responsibilities.
4.
Monitoring, Auditing, and Reporting Mechanisms
Implement tools for ongoing compliance monitoring, internal audits, and whistleblower
channels. Establish clear procedures for incident reporting and
resolution.
Q&A
(a) FOUR Requirements for Affixation of the Common Seal of a Company
(4 marks –
1 mark each)
Although the Companies Act No. 17 of 2015 (Kenya) made the use of a
common seal optional, where a company opts to use it, the following
requirements generally apply:
1.
Authorisation by the Board
The board of directors must pass a resolution authorising the affixation
of the common seal to a specific document.
2.
Presence of Authorised Officers
The seal must be affixed in the presence of at least two directors, or a
director and the company secretary, who must sign the document to
authenticate the seal.
3.
Correct Use and Custody
The seal must be properly maintained and securely kept, often by the
company secretary, and used only for authorised purposes.
4.
Proper Recording
Every instance of seal usage must be recorded in the Register of Sealings,
noting the date, nature of the document, and signatories.
(b) FIVE Benefits of a Records Retention Schedule
(5 marks –
1 mark each)
A Records Retention Schedule outlines how long each type of document
should be kept and when it should be disposed of. Benefits include:
1.
Legal and Regulatory Compliance
Ensures the organisation complies with statutory and regulatory requirements
for record-keeping.
2.
Operational Efficiency
Helps in decluttering obsolete documents, making it easier to retrieve
relevant information.
3.
Risk Management
Reduces the risk of data breaches or legal liability from retaining
records longer than necessary.
4.
Cost Reduction
Minimises storage costs by allowing systematic disposal of non-essential
records.
5.
Business Continuity and Accountability
Supports institutional memory and enables continuity in operations,
especially during audits or investigations.
(c) FIVE Types of Minutes
(5 marks –
1 mark each)
Minutes record the deliberations and resolutions of meetings. Types include:
1. Minutes of Board Meetings – Record discussions and resolutions made by the board of directors.
2. Minutes of General Meetings – Document proceedings of AGMs or EGMs held by shareholders.
3. Minutes of Committee Meetings – Capture outcomes of meetings held by subcommittees (e.g. audit, governance).
4. Action Minutes – Focus on decisions taken and actions assigned, rather than full discussion details.
5. Verbatim Minutes – Provide a word-for-word transcript of the meeting, used in sensitive or legal contexts.
(d) SIX Types of Resolutions
(6 marks –
1 mark each)
Resolutions are formal decisions adopted by a company through voting. Common
types include:
1.
Ordinary Resolution
Passed by a simple majority (50% + 1) of votes at a general meeting.
2.
Special Resolution
Requires at least 75% majority approval, used for major decisions like
changing the articles of association.
3.
Written Resolution
A resolution signed by the required majority of members without holding a
meeting, allowed for private companies.
4.
Board Resolution
Passed by the board of directors during a board meeting, often
concerning operational matters.
5.
Unanimous Resolution
Requires all eligible members to vote in favour — often used in closely
held companies or sensitive decisions.
6.
Resolution Requiring Regulatory Approval
A resolution that, even if passed by members, needs approval from a
regulator (e.g., CMA, CBK) to take effect.
Q&A
(a) FOUR Conditions for Adjournment of Formal Meetings
(4 marks –
1 mark each)
Adjournment refers to postponing the meeting to a later date or time,
either temporarily or completely. It may happen under the following conditions:
1.
Lack of Quorum
If the required minimum number of attendees (as per the Articles or law)
is not present, the meeting must be adjourned.
2.
Disruption or Disorder
When a meeting becomes disorderly or disrupted due to protests,
conflict, or technical failure (in virtual meetings), the chairperson may
adjourn it for order to be restored.
3.
At the Discretion of the Chairperson
The chair may adjourn the meeting if deemed necessary for further
consultation, clarification, or legal advice, unless restricted by the
Articles.
4.
By Resolution of the Meeting
Members present may pass a motion to adjourn, particularly when they
feel more time is needed for decision-making.
(b) FIVE Ways to Mitigate Risks When Hosting Virtual Meetings from Home
(5 marks –
1 mark each)
Virtual meetings carry data, security, and communication risks. Risk mitigation
strategies include:
1.
Secure Internet Connection
Use private, encrypted Wi-Fi and avoid public networks to prevent cyber
intrusion.
2.
Use of Secure Platforms
Host meetings on reliable and secure conferencing tools (e.g., Zoom with
password protection, MS Teams) that offer end-to-end encryption.
3.
Regular Software Updates
Ensure all devices and meeting applications are up to date with the
latest security patches.
4.
Confidentiality Measures
Use headphones, private rooms, and screen privacy settings to prevent
unintentional data leaks.
5.
Backup Power and Internet Solutions
Have alternatives like power banks, data bundles or Mi-Fi, to avoid
disruptions from power or ISP outages.
(c) FIVE Essential Skills for Company Secretaries
(5 marks –
1 mark each)
To fulfil their governance and compliance roles, company secretaries must
possess:
1.
Legal and Regulatory Knowledge
Deep understanding of company law, governance codes, and regulatory
compliance.
2.
Communication Skills
Ability to clearly and effectively communicate with the board,
shareholders, regulators, and stakeholders.
3.
Organisational and Time Management Skills
Skill in managing meetings, board calendars, filings, and corporate
documentation.
4.
Discretion and Confidentiality
Capacity to handle sensitive information with utmost discretion and
professionalism.
5.
Attention to Detail
Accuracy in drafting minutes, resolutions, and statutory returns is
crucial to avoid legal or procedural errors.
(d) SIX Reasons Why a Company May Undergo Creditors’ Voluntary Liquidation (CVL)
(6 marks –
1 mark each)
CVL is initiated when directors/shareholders recognize that the company cannot
pay its debts. Reasons include:
1.
Insolvency
The company is unable to meet its liabilities as they fall due,
indicating financial distress.
2.
Creditor Pressure
Persistent demands or threats of legal action by creditors may lead the
company to choose liquidation.
3.
To Avoid Compulsory Liquidation
Directors may prefer CVL over court-ordered liquidation, which is more
disruptive and costly.
4.
To Protect Remaining Assets
Liquidation ensures an orderly distribution of assets among creditors,
avoiding chaotic asset grabs.
5.
Mounting Legal Liabilities
The company may be facing lawsuits, penalties, or tax arrears, making
continued operations untenable.
6.
Loss of Business Viability
The business model may no longer be sustainable due to market changes,
technological disruption, or competition.
Q&A
(a) FOUR Types of Prospectus Used by Companies When Raising Additional Capital
(4 marks –
1 mark each)
A prospectus is a formal document issued by a company inviting the
public to subscribe to its securities. The main types include:
1.
Red Herring Prospectus
Issued before the final price and number of shares are determined; it
contains preliminary information and is often used in book-building issues.
2.
Shelf Prospectus
Allows a company to issue securities in tranches over time without
preparing a new prospectus for each offering, commonly used by banks or
financial institutions.
3.
Deemed Prospectus
A document deemed to be a prospectus when securities are offered to the
public through intermediaries, like offer for sale by a third party.
4.
Abridged Prospectus
A shortened version of the full prospectus provided to potential
investors, containing key highlights to aid in decision-making.
(b) FIVE Best Practices for Corporate Governance Reporting
(5 marks –
1 mark each)
Good corporate governance reporting enhances transparency and builds
stakeholder trust. Best practices include:
1.
Compliance with Applicable Frameworks
Align reports with legal and regulatory requirements (e.g., CMA Code of
Corporate Governance).
2.
Disclosure of Board Structure and Effectiveness
Provide details on board composition, independence, attendance, and
evaluation outcomes.
3.
Stakeholder Engagement
Demonstrate how the company engages stakeholders and incorporates environmental,
social, and governance (ESG) considerations.
4.
Clear Reporting on Risk Management and Internal Controls
Describe the company’s risk oversight structure, mitigation strategies,
and audit findings.
5.
Transparency in Director Remuneration and Conflict of Interest
Report on executive pay, benefits, and how conflicts of interest are
identified and managed.
(c) FIVE Types of Matters Discussed During the First Board Meeting of a Company
(5 marks –
1 mark each)
The first board meeting, usually held soon after incorporation, covers
foundational governance and operational matters, such as:
1.
Appointment of the First Directors and Company Secretary
Confirm those responsible for managing the affairs of the company.
2.
Adoption of Common Seal and Official Company Documents
Approve official company documents, including letterheads and use of the
common seal (if applicable).
3.
Opening of Bank Accounts
Approve signatories and mandates for operating company bank accounts.
4.
Allotment of Shares and Issuance of Share Certificates
Finalise initial capital structure, share allotment, and issuance of
share certificates.
5.
Fixing the Financial Year End and Auditor Appointment
Determine the company’s financial year and appoint the first auditors
(if required).
(d) SIX Factors Leading to Unclaimed Dividends Across Listed Companies
(6 marks –
1 mark each)
Unclaimed dividends are common in both private and listed companies. Causes
include:
1.
Outdated Shareholder Contact Information
Shareholders fail to update addresses or bank details, making payment
impossible.
2.
Physical Share Certificates or Lack of Dematerialisation
Shareholders may have lost physical share certificates or not migrated
to electronic systems.
3.
Deceased Shareholders
Dividends remain unclaimed if legal heirs haven't processed succession or
transmission.
4.
Dormant or Forgotten Investments
Some investors forget small investments, especially in IPOs or inherited
shares.
5.
Non-Presentation of Dividend Warrants
Dividend cheques or warrants are not banked within the validity period.
6.
Change in Bank Account or Name Without Notification
Failure to notify the company or registrar about name or account changes
leads to bounced payments.
Q&A
(a) FOUR Reasons Why an Extraordinary General Meeting (EGM) May Be Necessary
(4 marks –
1 mark each)
An EGM is convened outside the company’s Annual General Meeting (AGM) to
deal with urgent or special matters. Key reasons include:
1.
Approval of Major Transactions
When the company needs shareholder approval for mergers, acquisitions, or
disposal of substantial assets.
2.
Amendment of the Company’s Constitution
To approve changes to the Articles of Association or Memorandum.
3.
Removal or Appointment of Directors or Auditors
If a situation arises requiring immediate changes to leadership, outside
the AGM schedule.
4.
Raising Additional Capital
For decisions related to rights issues, bonus shares, or new share classes,
which require shareholder input.
(b) FOUR Positive Impacts of Virtual Meetings
(4 marks –
1 mark each)
Virtual meetings have brought several benefits to both public and private
organizations:
1.
Cost Reduction
Saves money on travel, venue hire, accommodation, and logistics.
2.
Improved Accessibility and Inclusivity
Enables participation from diverse geographical locations, including
stakeholders abroad.
3.
Time Efficiency
Meetings can start and end promptly, often resulting in more focused
discussions.
4.
Better Record Keeping
Many virtual platforms allow recording and transcription, which improves
transparency and accountability.
(c) FOUR Rights of Shareholders (Owners of Common Shares)
(4 marks –
1 mark each)
Shareholders, as owners of a company, enjoy various rights including:
1.
Right to Vote
Especially on key corporate decisions at general meetings (e.g. director
elections, mergers).
2.
Right to Dividends
Entitled to a share of profits if dividends are declared by the company.
3.
Right to Inspect Company Records
Shareholders may inspect registers, financial statements, and minutes of
general meetings.
4.
Right to Residual Assets Upon Winding Up
In case of liquidation, they have a claim on remaining assets after
creditors are paid.
(d) FOUR Procedural Limitations to Debates in the National Assembly
(8 marks –
2 marks each)
While debates are central to democracy, procedural rules may restrict or
regulate them. Limitations include:
1.
Time Constraints
Each member may have limited time to contribute to a motion, especially
in high-volume agendas or budget discussions.
2.
Relevance Rule (Rule of Relevance)
Contributions must strictly relate to the motion at hand; members are
not permitted to digress or introduce unrelated matters.
3.
Language and Decorum Restrictions
Offensive, unparliamentary, or defamatory language is prohibited under
Standing Orders.
4.
Limitations on Repetition and Redundancy
Members are not allowed to repeat arguments already made, ensuring
efficient use of time and avoiding unnecessary delays.
Q&A
(a) FOUR Duties of a Liquidator in Liquidation Initiated by the Court
(4 marks – 1 mark each)
1.
Take Custody of Company Assets
The liquidator must take control of all the company’s assets, books, and
records immediately after appointment.
2.
Settle Creditors’ Claims
Assess and verify claims from creditors, and ensure fair distribution of
proceeds according to priority under insolvency law.
3.
Sell Company Assets
Dispose of assets and properties of the company to raise funds for
settling debts and liquidation expenses.
4.
Report to the Court and Stakeholders
Regularly submit progress reports to the court, creditors, and other
stakeholders on the status of the liquidation.
(b) FIVE Basic Compliance Elements in Developing an Effective Compliance and Ethics Programme
(5 marks – 1 mark each)
1.
Leadership Commitment (Tone at the Top)
Senior management and board must demonstrate active support for ethical
conduct and compliance.
2.
Risk Assessment
Identify and assess compliance risks specific to the organisation’s
operations, industry, and jurisdiction.
3.
Policies and Procedures
Develop and implement clear codes of conduct, policies, and standard
operating procedures addressing compliance issues.
4.
Training and Communication
Provide ongoing training and communication to employees on legal
obligations, ethics, and compliance expectations.
5.
Monitoring and Enforcement
Implement systems to detect violations, conduct investigations, and
apply disciplinary measures when needed.
(c) FIVE Factors to Consider When Deciding the Method for Holding Company Meetings
(5 marks – 1 mark each)
1.
Legal and Regulatory Requirements
Ensure the meeting format (physical, virtual, or hybrid) complies with the Companies
Act and relevant regulations.
2.
Accessibility and Inclusion
Consider whether all shareholders or members can easily access the
meeting, especially in virtual formats.
3.
Technological Capacity
Evaluate the IT infrastructure, security, and reliability needed to hold
and manage virtual meetings effectively.
4.
Cost and Logistical Efficiency
Assess the cost-effectiveness of the chosen method compared to
alternatives.
5.
Nature and Purpose of the Meeting
For strategic or sensitive matters, physical meetings may be preferred;
routine updates can be done virtually.
(d) SIX Characteristics Distinguishing Cooperatives from Companies
(6 marks – 1 mark each)
1. Ownership and Control
o Cooperative: Owned and democratically controlled by members (one member, one vote).
o Company: Shareholders control in proportion to their shareholding (one share, one vote).
2. Purpose
o Cooperative: Formed to meet the economic and social needs of members.
o Company: Primarily established for profit-making and wealth maximization.
3. Profit Distribution
o Cooperative: Surplus is distributed as patronage refund based on member participation.
o Company: Profits are distributed as dividends based on shareholding.
4. Membership
o Cooperative: Membership is voluntary and open, often limited to a defined group.
o Company: Shares can be freely traded (especially for public companies).
5. Regulatory Framework
o Cooperative: Governed by the Co-operative Societies Act.
o Company: Regulated under the Companies Act.
6. Capital Formation
o Cooperative: Capital raised mainly through member contributions.
o Company: Can raise capital through equity and debt markets.
Q&A
(a) FOUR Purposes Served by the Board Annual Calendar
(4 marks –
1 mark each)
The Board Annual Calendar is a planning tool that outlines key board and
committee activities over the financial year. It serves the following purposes:
1.
Ensures Strategic Focus
Aligns board meetings and discussions with the company’s strategic
priorities and milestones.
2.
Promotes Good Governance
Encourages proper planning for fulfilling statutory and governance
obligations (e.g. AGM, financial reporting).
3.
Improves Board Efficiency
Allows directors to prepare in advance for meetings and avoid
last-minute scheduling conflicts.
4.
Enhances Accountability
Tracks progress of key decisions and timelines for deliverables across
the year.
(b) FIVE Characteristics That Make Board Papers Effective
(5 marks – 1 mark each)
1.
Clarity and Conciseness
The content is brief, clear, and to the point, avoiding unnecessary
detail or jargon.
2.
Relevance
Focused only on matters requiring board attention or decision, with
appropriate context.
3.
Well-Structured Format
Follows a logical structure – typically including an executive summary,
background, analysis, and recommendations.
4.
Evidence-Based
Uses accurate and verified data to support recommendations and proposed
decisions.
5.
Action-Oriented
Clearly outlines the decisions required, with well-defined options or
courses of action.
(c) FIVE Considerations for the Use of an Official Seal in a Foreign Country
(5 marks – 1 mark each)
1.
Compliance with Local Laws
Confirm whether the foreign jurisdiction recognises the use of a common
seal and under what conditions.
2.
Authority to Use the Seal
Ensure that the board or authorised officers have passed a resolution
approving the use of the seal abroad.
3.
Execution Formalities
Verify the required signatories for sealing documents internationally
(e.g. a director and company secretary).
4.
Authentication or Notarisation
In some jurisdictions, documents sealed must be notarised or legalised
for recognition.
5.
Record Keeping
Maintain proper records of all documents sealed abroad, including
purpose, signatories, and jurisdiction.
(d) THREE Potential Advantages of Adjournments of the National Assembly to the General Public
(6 marks – 2 marks each)
1.
Constituency Engagement
MPs can return to their constituencies during recess and engage with
citizens, assess local challenges, and collect views to represent in
Parliament.
2.
Policy Review and Public Consultations
Adjournment provides time for public participation in legislative processes,
especially during public hearings and stakeholder engagements.
3.
Reduced Political Tension and Reflection
Breaks offer a cooling-off period after intense parliamentary sessions,
allowing time for reflection, analysis, and review of debated issues
before enactment.
Q&A
(a) FOUR Precautions for Proper Use and Custody of the Company’s Seal
(4 marks –
1 mark each)
As a Company Secretary, you should ensure the following precautions:
1.
Secure Storage
Keep the seal in a locked and secure place (e.g. safe or lockable
cabinet) within the registered office.
2.
Maintain a Seal Register
Record every use of the seal in a Seal Register, indicating date,
purpose, document sealed, and authorised signatories.
3.
Board or Committee Authorisation
Ensure that the use of the seal is authorised by a board resolution or
in accordance with the company’s Articles of Association.
4.
Proper Witnessing and Signatures
Confirm that sealing is carried out in the presence of designated officers,
typically a director and the company secretary (or two directors), who should
sign accordingly.
(b) SIX Constituent Parts of the Directors’ Report in an Annual Report
(6 marks –
1 mark each)
The Directors’ Report forms part of the annual report and typically
includes:
1.
Company Overview
A brief description of the company’s principal activities, objectives,
and business model.
2.
Financial Performance Summary
Overview of the company’s financial results, including profit/loss and
dividend declarations.
3.
Directors’ Information
Details of current directors, changes during the year, and directors’
interests in shares.
4.
Risk Management and Internal Controls
Explanation of key risks, uncertainties, and internal control systems in
place.
5.
Corporate Governance Statement
A summary of how the company has complied with governance standards and
best practices.
6.
Future Outlook
Commentary on plans, projections, or expected developments in the coming
financial year.
(c) FIVE Permitted Uses of Share Premium Proceeds According to the Companies Act
(10 marks
– 2 marks each)
Under the Companies Act (Kenya or similar jurisdictions), share premium
must be treated as part of capital and is subject to strict usage. The
permitted uses include:
1.
Issuance of Bonus Shares
Share premium may be used to issue fully paid bonus shares to existing
shareholders, thereby increasing share capital without requiring cash
contribution.
2.
Paying Issue Expenses or Commission
Can be used to cover the expenses, commissions, or discounts incurred
during the issuance of shares (e.g. underwriting fees).
3.
Redemption of Redeemable Preference Shares
It may be applied in financing the redemption of preference shares,
provided the Articles of Association allow it.
4.
Writing Off Preliminary Expenses
Share premium can be used to write off the company’s preliminary (formation)
expenses, if authorised.
5.
Writing Off Expenses/Commission on Issue of Shares or Debentures
Used to cover costs or commission paid in connection with the issue of
shares or debentures.
Note: Share premium cannot be distributed as dividends or used to cover operating losses.
Q&A
(a) FOUR Criteria for Identifying a Beneficial Owner (BO)
(4 marks –
1 mark each)
A Beneficial Owner is the natural person who ultimately owns or controls
a company or asset, even if held under another name. The criteria for
identification include:
1.
Ownership of Share Capital
A person who directly or indirectly holds at least 10% (or the
applicable threshold) of the company’s issued share capital.
2.
Voting Rights
A person who directly or indirectly holds at least 10% of the voting rights
in the company.
3.
Control over Decision-Making
A person who exercises significant influence or control over the
company’s policies or decisions, regardless of shareholding.
4.
Indirect or Nominee Ownership
A person who owns or controls shares through another person or arrangement,
such as a trust, nominee, or other legal structures.
These criteria are in line with global best practices on AML/CFT and are mandated by laws like Kenya’s Companies (Beneficial Ownership Information) Regulations, 2020.
(b) SIX Ways Companies Can Manage Unclaimed Dividends
(6 marks – 1 mark each)
1.
Periodic Shareholder Verification
Regularly update shareholder records to ensure accurate addresses and bank
details.
2.
Electronic Dividend Payments
Promote use of Electronic Funds Transfer (EFT) or mobile money platforms
to reduce reliance on physical cheques.
3.
Public Awareness Campaigns
Educate shareholders about how to claim unclaimed dividends, including
processes and deadlines.
4.
Publishing Lists of Unclaimed Dividends
Display names of shareholders with unclaimed dividends on the company
website or in newspapers, as required by law.
5.
Partnering with Unclaimed Financial Assets Authority (UFAA)
Submit unclaimed dividends to UFAA (in Kenya) after the statutory holding
period and work with them to help shareholders claim their funds.
6.
Automation and Reminder Systems
Set up systems to send reminders (email/SMS) to shareholders before
dividend expiry.
(c) FIVE Typical Provisions in Shareholders’ Agreements
(10 marks
– 2 marks each)
A shareholders’ agreement outlines the rights, responsibilities, and
obligations of shareholders in a company. Common provisions include:
1.
Share Transfer Restrictions
Sets rules on how shares can be sold or transferred, including right of
first refusal, tag-along and drag-along rights.
2.
Dividend Policy
Outlines how and when dividends will be declared or paid, promoting
fairness and predictability among shareholders.
3.
Decision-Making and Voting Rights
Specifies how key decisions (e.g. mergers, borrowing, appointments) will
be made, often requiring special resolutions or unanimity for certain
actions.
4.
Dispute Resolution Mechanism
Provides mechanisms for resolving disputes, such as mediation, arbitration,
or recourse to courts.
5.
Exit Strategy and Termination Clauses
Defines procedures for exiting the business, such as IPO, sale of
shares, or company dissolution, protecting the interests of all parties.
Q&A
(a) FIVE Factors to Consider When Planning and Conducting Virtual Meetings
(5 marks – 1 mark each)
1.
Technology and Platform Reliability
Choose a secure and reliable video conferencing platform (e.g., Zoom, MS
Teams) that supports required features like screen sharing, voting, or breakout
rooms.
2.
Internet Connectivity
Ensure all participants have stable internet connections to avoid
disruptions during the meeting.
3.
Security and Privacy Measures
Implement measures such as password protection, waiting rooms,
and end-to-end encryption to safeguard confidential discussions.
4.
Agenda Circulation and Time Management
Distribute the agenda and supporting documents well in advance and strictly
manage meeting time to maintain focus.
5.
Participant Engagement and Etiquette
Encourage use of video and appropriate virtual meeting etiquette (e.g.,
muting microphones, using the “raise hand” feature), and assign a moderator to
guide participation.
(b) FIVE Items to Include in a Compliance Checklist
(5 marks – 1 mark each)
1.
Regulatory Requirements
List all applicable laws, regulations, and industry standards (e.g., tax
laws, data protection laws, occupational safety regulations).
2.
Internal Policies and Procedures
Include a review of internal rules such as code of conduct,
whistleblower policy, procurement policy, etc.
3.
Licences and Permits
Ensure all statutory licences, registrations, and renewals are current
and compliant (e.g., business permits, trade licences).
4.
Reporting Obligations
Track compliance with mandatory reporting deadlines to government
authorities or regulators (e.g., annual returns, tax filings).
5.
Employee Compliance Training
Include checks for staff awareness and participation in compliance
training programs, such as anti-corruption or data privacy.
(c) FIVE Restrictions on the Powers of Board Members
(10 marks – 2 marks each)
1.
Fiduciary Duty and Conflict of Interest Restrictions
Directors must avoid conflicts of interest and are prohibited from using
their position for personal gain. Transactions involving directors must
be disclosed and approved.
2.
Limits on Borrowing and Spending
Board members may be restricted from making large financial commitments without
shareholder approval, especially if the company’s constitution or
Companies Act imposes a borrowing limit.
3.
Compliance with Company Constitution and the Law
Directors can only act within the powers granted by the company’s Articles
of Association, Companies Act, and relevant laws. Actions beyond these may
be invalid.
4.
No Unilateral Decision-Making
Directors must act collectively as a board; individual directors
generally cannot bind the company unless specifically authorised.
5.
Prohibited Transactions and Insider Trading
Board members are restricted from engaging in insider trading, and
cannot approve certain related party transactions without following
proper legal procedures.
Q&A
(a) FIVE Strategies a Chairperson Can Use to Maintain Order in Meetings
(5 marks – 1 mark each)
1.
Set Clear Ground Rules
At the start, outline rules of engagement, such as speaking order, time
limits, and respect for differing opinions.
2.
Follow the Agenda Strictly
Ensure discussions stay focused on agenda items to avoid unnecessary
digressions and loss of time.
3.
Manage Speaking Time
Allocate equal time to participants and intervene politely when a
speaker exceeds their time or goes off-topic.
4.
Handle Disruptions Professionally
Address disruptive behavior tactfully and assertively, ensuring decorum is
maintained.
5.
Encourage Orderly Participation
Use tools like “raise hand” features (in virtual meetings) or speaker
lists to manage contributions in an orderly manner.
(b) FIVE Reasons That Could Lead to the Removal of a Corporation Secretary
(5 marks – 1 mark each)
1.
Gross Misconduct
Involvement in unethical or illegal practices such as fraud, corruption, or
abuse of office.
2.
Incompetence or Negligence
Failure to perform duties diligently, leading to regulatory non-compliance
or reputational harm.
3.
Conflict of Interest
Engaging in activities that compromise independence or loyalty to the
company.
4.
Loss of Professional Qualifications
If the secretary ceases to meet the legal or professional requirements
to hold office (e.g., deregistration by ICS).
5.
Breach of Confidentiality
Unauthorized disclosure of sensitive company information to third
parties.
(c) FIVE Principles of Professional Ethics
(5 marks – 1 mark each)
1.
Integrity
Professionals must be honest and straightforward in all professional and
business relationships.
2.
Objectivity
Must avoid bias, conflict of interest, or undue influence that could compromise
professional judgment.
3.
Professional Competence and Due Care
Obligation to maintain knowledge and skills at a level required to
deliver competent services.
4.
Confidentiality
Must not disclose confidential information without proper authority, even after
the relationship ends.
5.
Professional Behaviour
Must comply with relevant laws and avoid any conduct that discredits the
profession.
(d) FIVE Characteristics of Meetings of Debenture Holders
(5 marks – 1 mark each)
1.
Convened Under Trust Deed or Agreement
Held according to the terms in the debenture trust deed or instrument of
issue.
2.
Right to Vote on Key Decisions
Debenture holders can vote on issues like modification of terms, enforcement
actions, or appointment of trustees.
3.
Quorum Requirements
Meetings require a specific quorum to be valid, often stated in the
trust deed.
4.
Chaired by Trustee or Appointed Person
Usually chaired by the debenture trustee, not company management, to
ensure independence.
5.
Focus on Debt-Related Issues
The agenda typically includes issues like repayment terms, interest
defaults, or enforcement of security.
Q&A
(a) FOUR Essential Traits of a Corporation Secretary
(4 marks – 1 mark each)
1.
Integrity and Ethical Conduct
A corporation secretary must act with honesty, impartiality, and
confidentiality, maintaining trust among stakeholders.
2.
Attention to Detail
Must be meticulous in managing statutory records, minutes, filings, and
compliance obligations to avoid legal issues.
3.
Excellent Communication Skills
Needs strong written and verbal communication abilities to effectively
interact with the board, regulators, and shareholders.
4.
Knowledge of Corporate Law and Governance
Must have a solid understanding of company law, governance codes, and
compliance frameworks to advise the board appropriately.
(b) SIX Reasons Why Compliance Programmes Fail
(6 marks – 1 mark each)
1.
Lack of Management Support
When leadership fails to champion or prioritise compliance, it sends a
weak message to the rest of the organisation.
2.
Poorly Defined Compliance Objectives
Absence of clear, measurable, and achievable goals leads to confusion
and lack of direction.
3.
Inadequate Training and Awareness
Employees may not understand compliance obligations due to insufficient or
ineffective training.
4.
Lack of Resources
Underfunding or understaffing the compliance function leads to poor
monitoring and enforcement.
5.
Weak Internal Controls
Inadequate systems to detect, report, and correct violations create gaps
that compromise compliance.
6.
Failure to Update with Changing Laws
A non-responsive programme that doesn’t adapt to regulatory changes
becomes outdated and ineffective.
(c) FIVE Motions That May Be Moved Without Notice in a Legislative Body
(10 marks – 2 marks each)
1.
Adjournment Motion
A motion to adjourn a sitting or debate may be moved without notice,
particularly for suspending proceedings temporarily.
2.
Point of Order
Raised to draw attention to a breach of parliamentary procedure or standing
orders, and does not require prior notice.
3.
Motion to Suspend Standing Orders
Allows deviation from standard procedure to deal with urgent matters; can be
moved without notice if urgency is justified.
4.
Motion for the Closure of Debate (Closure Motion)
Used to bring a debate to an end and proceed to a vote; may be introduced
without notice if the debate is prolonged.
5.
Privilege Motion
Can be raised immediately if a member believes that the privileges of
Parliament or a member have been breached.
To Be Continued ...
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