JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY

BACHELOR OF LAWS

YEAR THREE SEMESTER ONE

LAW OF BUSINESS ASSOCIATIONS I (COMPANY LAW)

GROUP 1 ASSIGNMENT

MUMBI KELVIN KAMAU LSG201-C002-0016/2022

KIPNGETICH GIBSON LSG201-C002-0046/2022

OCHIENG SCHMIED MICHAELS LSG201-C002-0078/2022

MWANGI KELSEY NJERI LSS201-C002-0141/2022

OGWORA NYANCHAMA RUTH LSS201-C002-0150/2022

KIRATU GRACE NYAGUTHII LSS201-C002-0151/2022

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 QUESTION 1:

MEETINGS

The word ‘meeting’ prima facie means an assembly or a coming together of more than one
person. Even where a single member holds proxies for the other only members there is no
meeting. Thus in ordinary cases, it is quite clear a meeting consists of more than one person. In
Sharp vs. Dawes a meeting of a cost - book-mining company was summoned for the purpose of
inter alia, making a call. It was attended by only one member, Silvers ides, and the secretary
(who was not a member). The call was in due course made on a shareholder, Dawes, who refused
pay. The court held that the meeting was a nullity and that therefore the call was invalid.
TYPES OF MEETINGS

a.) Statutory Meetings

This is the first official general meeting of the shareholders/members.
It must be held within the first month and not exceeding three months from date the company
commenced business (incorporation).
This meeting is compulsory for all public companies.
Private companies are not required to have a statutory meeting or give a statutory report.
Meeting is convened by a 14 days’ Notice; Directors are required to give notice of meeting to all
company members at least 14 days before the meeting. A statutory report shall be read to the
members during this meeting.
Contents of a statutory report.
The statutory report should set out the following;
i) The total shares allotted, distinguishing shares allotted fully allotted paid up or otherwise than in
cash.
ii) The total amount of cash received by the company in respect of all the shares allotted
distinguished as aforesaid.
iii) The names, postal address and description of the directors, auditors, managers, if any, and the
secretary of the company.
iv) An Abstract of the receipts of the company and the payments made there out up to a date of the
report exhibiting under distinctive headings the receipts of the company from shares and
debentures and other sources and shall give an account or estimate of the preliminary expenses

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 of the company showing separately any commission paid or to be paid in the issue of shares or
debentures.
v) The particulars of any contract modification of which is to be submitted to the meeting for its
approval together with the particulars of the modification or proposed modification.
vi) The certification.
b.) Annual General Meetings
Section 131(1) provides that "every company shall in each year hold a general meeting as its
annual general meeting in addition to any other meetings in that year, and shall specify the
meeting as such in the notices calling it".
The first annual general meeting since the incorporation of the company should be held within
18 months.
For successive annual general meetings a period of no more than 15 months shall lapse between
one meeting and another.
Compulsory for public companies.
A notice of 21 days is required to be provided to the members.
Conducted once a year; every calendar year. The word "year" was defined in Gibson v Barton
as "calendar year", i.e. the period January 1 to December 31.
Business transacted during the annual general meeting
Some of the matters that are discussed at AGM include:
i. A consideration of annual accounts, balance sheet and reports of board of directors and
auditors
ii. The declaration of dividends of directors
iii. The appointment and the fixation of the remuneration of auditors
iv. Elections of directors in place of those retiring
v. Adoption of financial statements
vi. Discussion of activities of the company
vii. Decisions of the company are voted on.
c.) Extra-ordinary General meeting
Any other meeting of shareholders is known as extra-ordinary general meeting (EGM).
It can be called by the directors by giving a 14 days’ notice in writing or a 21 days’ notice if it is
the intention to pass a special resolution in the meeting.

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 This meeting is held to discuss the following;
i. Major changes happening in the company.
ii. New products or changes to be made to products.
iii. Change of location of the company.
iv. Happening of a merger.
v. Requisition (a proposal is required).
d.) Class meetings
This is a meeting of a particular class of shareholders.
Class meetings are convened by either the company or by the court to effect variations in the
rights of that particular class of shareholders or in connection with the scheme of arrangements
or at the time of winding up of the company.
A class meeting is not a general meeting but similar rules relating to convening and conducting
of meetings also apply to it.
The articles of association may provide that certain matter affecting the interests of the holders of
a particular class of shares shall be subject to the consideration and decision of a meeting of
those holders only.
e.) Directors Meeting
Also known as Board meetings.
Normally convened by directors pursuant to the relevant provision of the company’s articles.
Intimated by board of Directors 21 days before the meet.
It is held quarterly; 4 meetings a year.
There should be a clear decision and communication on the day, date time and place where the
meeting is to be held.
Proxies are not allowed in this meeting.
This meeting is held to discuss the following;
a. Investments of the company
b. Sharing of ideas
c. Taking into consideration the matters raised by the members

f.) Creditor’s Meeting

Creditors meeting is only relevant during the winding up of a company.

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 This is a meeting with bodies that loans the company and (financial)suppliers of the company.
g.) Meeting of committee of Directors
This is a meeting held by a particular committee.
Held twice a year.
h.) Meeting of Debenture holders
To collect capital –important aspect
Utilization of Debenture funds
Debenture Trust deed

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QUESTION 2:

PROCEDURES/PROCEEDINGS AT GENERAL MEETINGS.

The Companies Act,2015, provides clear guidelines on the necessary procedures that need to
take place in a General Meeting.

I)Quorum

It is the minimum number of members required to be present at any meeting to make the
proceedings of that meeting valid. A meeting with no quorum can be termed as null and void,
and any resolutions that may arise from it.

Section 292(1) of the Companies Act states that In the case of a company limited by shares
Quorum for general or guarantee and having only one member, one qualifying person present at
a meeting constitutes a quorum.

Section 292(2) of the Companies Act states that, In any other case, (subject to the articles of the
company) two qualifying persons present at a meeting are a quorum, unless-

(a) each is a qualifying person only because the person is authorized under section 297 to act as
the representative of a body corporate in relation to the meeting, and they are representatives of
the same body corporate; or

(b) each is a qualifying person only because the person is appointed as proxy of a member in
relation to the meeting, and they are proxies of the same member.

The chairperson of the meeting is the one who decides whether the quorum has been met before
the meeting proceeds and it should be effective, only persons entitled to participate in the
meeting are counted.

In the case of Re Hartley Baird Ltd, a company held a general meeting and a quorum was
present at the beginning of the meeting. However, as the meeting went on certain members left,
leaving less members than what the quorum required and despite this the meeting continued and
certain resolutions were passed. This raised the issue on whether the resolution passed should be
dropped due to absence of required quorum at the time it was being passed. The court held that a
quorum is only required at the beginning of the meeting, and hence the resolution passed was ok.

The case of Sharp v Dawes, also shows how quorum applies.

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 II)Adjournment

To adjourn a meeting is simply to postpone it. The chairperson, with the permission of members
present, may adjourn a meeting if the grounds are acceptable such as absence of a quorum,
absence of space, disorder or any other possible disruption.

A meeting adjourned due to lack of a quorum may be done by one member present or proxy.

Upon adjournment of the meeting a notice is issued containing all the necessary details of when
the meeting will take place such as date, venue and others. The agenda is still the same and any
resolution passed is deemed so on the date of the adjourned meeting. If a meeting is adjourned
for more than thirty days a new notice is issued.

III)Proxies

This means a person appointed by a shareholder(s) to attend a meeting on his or her behalf. The
appointed person does not need to be a member, and may be allowed to vote in place of whoever
he or she is representing.

There are two types of proxies;

 The general proxy- he or she is allowed to vote whoever they wish as per the discussions
conducted in the meeting.
 Special proxy- he or she already knows what they are going to vote for prior to the meeting.
They are put there to vote for or vote against a certain resolution.

Section 298 of the Companies Act states that;

(1) A member of a company is entitled to appoint another person as the member's proxy to
exercise all or any of the member's rights to attend and to speak and vote at a meeting of the
company.

(2) A member of a company that has a share capital may appoint more than one proxy for a
meeting provided each proxy is appointed to exercise the rights attached to a different share or
different shares held by the member.

A proxy enjoys certain rights, such as;

 Right to vote only on a poll.

 Right to attend meetings.

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 Right to join other proxies or members to demand vote by poll.
 In cases of private companies, they have the right to speak.

They must be appointed in writing, and the notice of proxy should be presented before the
meeting as per the company’s rules.

Section 302(1) provides that a proxy may be elected to preside at a general meeting by a
resolution of the company passed at the meeting.

Section 304(1) A member of a company who has appointed a person to act as a proxy of the
member may terminate the termination of appointment by notice. proxy's authority.

Section 304 (2) provides that termination of a proxy does not affect;

 whether the person counts when determining the quorum of the meeting.
 The validity of anything the person does in presiding at the meeting.
 the validity of a poll demanded by the person at the meeting, unless the company has received
notice of the termination before the start of the meeting.

IV)The chairperson

A chairperson is a person presiding over a meeting. As per section 293(1), members present at a
meeting may by ordinary resolution, elect one member to preside over the meeting.

Section 293(2) brings about who may or may not be a chairperson, or preside over the general
meeting.

In the case of National Dwelling Society v Sykes, a chairman attempted to adjourn a meeting due
to disagreements among the members. The chairman was not happy about how the meeting was
fairing on, but there were no obstructions or general disorder to prevent the meeting from going
on. The issue that arose was whether the chairman could adjourn the meeting. The court held that
he didn’t have the right to do so.

Duties of a chairperson.

Just to mention a few, the duties of a chairperson are wide but also limited as seen in National
Dwelling Society v Sykes.

 Determining that the quorum is met.

 Calling votes and managing the various voting procedures put in place.

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 Maintaining order during the meeting.
 Closing the meeting.
 Going through proposed orders and motions.

V)Voting

This is done to put into place new leaders. It should be fair and transparent.

There are two types of voting;

 By poll
 By show of hands

In the case of Re Horbury bridge coal co, the company was in financial ruin and included more
shareholders in an attempt to salvage themselves. The shareholders wanted to change certain
parts of the company’s articles. The court held that it was possible to do so as long as it was in
good faith and meant to benefit the whole company. This case also bore the base line for the
common law principle one man one vote.

Section 258 provides for when a vote on a written resolution put to the members of a company is
taken. If a company has a share capital each member has one vote for each share, and in the
absence of a share capital one member has one vote.

When voting by show of hands each proxy and member present has one vote.

Section 294 provides that a vote on a resolution at a meeting with a show of hands, the person
presiding at the meeting may declare result of voting on a show of declare that the resolution

(a) has or has not been passed; or

(b) has passed with a particular majority.

This is recorded in the minutes so as to form some sort of “evidence”.

Section 295 states that a provision of a company's articles is void to the extent that it would have
the effect of excluding the right to demand a poll general meeting on a resolution other than one
for-

(a) electing the member who is to preside at the meeting; or

(b) adjourning the meeting.

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 Section 296 brings about the fact that if a member has two or more votes, they are not obliged to
use all of them for the same purpose.

Section 297 brings about the instance in which a body corporate is a member of a company, then
the director may appoint a person or persons to act on behalf of it.

In instances of joint holders, the senior joint holders vote, whether in person or by proxy, is
accepted excluding the votes of the other joint holders. However, this faced some contradictions
in Burns v Siemens Dynamo Works ltd.

VI)Minutes

Minutes are a record of what was said or done during a meeting. When signed by a chairperson
they act as records or “evidence” that the meeting actually took place.

Section 317(1)(b), states that every company shall keep records comprising of all proceedings of
general meetings.

A company is required to store the records for a minimum duration of ten years failure to do so
and the records are needed they shall be fined by the court.

The minutes are required to be signed by whoever was presiding the meeting as per section 318.

The minutes which are stored together with other records should be well stored in a registered
place as per Section 320, and they should be put in a way that is easy to access in case of need to
do so.

VII)Resolutions

Decisions in company meetings are made by passing resolutions, simply they are the outcome of
the meeting.

The various types of resolutions include;

 Ordinary resolution
 Special resolution
 Written resolution
 Resolution requiring special notice

VIII)Conduct of business

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It is not necessarily governed by the act but rather it contained in the notice of the meetings.
Each item is dealt with individually. It allows members to propose amendments to resolutions.

In the case of Re Moorgate mercantile holdings, it set out to provide total cancellation of a share
premium account as the assets were misplaced. At the meeting the resolution was amended and
balance reduced, the resolution was deemed to be invalid.

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QUESTION 3:
RESOLUTIONS.

Company meetings make decisions by passing resolutions. A resolution is proposed, deliberated

upon and voted on.

Relevant Authority The Company’s Act Laws of Kenya 2015

A Private company and a public company

Section 255 of the act provides that a resolution of the members, or of a class of members of a
private company may be passed either as a written resolution or at a meeting of the members
while resolution of the members or of a class of members of a public company may be passed
only at a meeting of the members.

1. Written resolutions in private companies:

According to Section 262 of the Company’s Act.
Both the directors and members of a company have the authority to propose a resolution as a
written resolution.
Limitations on passing written resolutions: Certain resolutions, such as removing a director
prematurely or removing an auditor before the end of their term, cannot be passed as written
resolutions.
Legal effect of a written resolution: A written resolution holds the same weight as if it were
passed in a general meeting of the company or a meeting of a specific class of members.
Eligible members for a written resolution of a private company are those who would have been
entitled to vote on the resolution on the circulation date.
If there are changes in the persons entitled to vote during the circulation date, the eligible
members are determined based on the time when the first copy of the resolution was sent or
delivered for their agreement.
2.An ordinary resolution
According to Section 256 of the Company’s Act.
A resolution is an ordinary resolution of the members (or of a class of members) of a company if
it is passed by a simple majority.
A resolution shall be an ordinary resolution when the votes cast in favour of the resolution by
show of hands of members present in person who are entitled to vote and appointed proxies of
members entitled to vote on it.

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A resolution passed on a poll taken at a meeting is passed by a simple majority if it is passed by
members representing a simple majority of the total voting rights of members who, being entitled
to do so, vote in person or by proxy.
Most matters can be decided by ordinary resolution, and some must be (e.g. decision to remove a
director).

3.A special resolution

According to section 257 of the Company’s Act.
This resolution requires a majority of not less than seventy five percent of total voting rights of
eligible members.
If a resolution of a private company is passed as a written resolution the resolution is not a
special resolution unless it stated that it was proposed as a special resolution and if the resolution
so stated, may only be passed as a special resolution.
1. Show of hands resolution:
A resolution passed on a show of hands requires not less than seventy-five percent of members
who vote in person or by proxy to achieve the majority.
2. Poll taken resolution:
A resolution passed on a poll taken at a meeting needs not less than seventy-five percent
representation of the total voting rights by members who vote in person or by proxy to achieve
the majority.
3. Notice
A resolution passed at a meeting is considered a special resolution only if the notice of the
meeting included the text of the resolution and specified an intention to propose it as a special
resolution.
It is required for major changes in the company such as: Change of name, Alteration of the
articles or objects, Reduction of share capital.
4)Resolution requiring special notice
According to section 287 of the Company’s Act.
- A resolution in this Act that requires special notice to be given , the resolution is not effective
unless notice of the intention to move it has been given to the company at least twenty-eight days
before the meeting.
- The company shall, if practicable, give its members notice of any such resolution in the same
manner and at the same time as it gives notice of the meeting.
- If not feasible, notice regarding the resolution must be given at least fourteen days before the
meeting through means like newspaper advertisements or as per the company's articles.

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 - Even if a meeting is scheduled within the twenty-eight days after the notice, the resolution
notice is considered valid if given in a shorter period.
Registration of resolutions
Section 27
Lodging Requirements with the Registrar:
i. Companies must register a resolution within fourteen days with the Registrar.
ii. Required documents include a copy of the resolution.
Applicability of the Section:

a) Special resolutions.
b) a resolution or agreement must be approved by all company members to be effective for its
purpose. If not agreed upon by all members, the resolution would require a special resolution to
pass.
c) a resolution or agreement agreed to by all the members of a class of shareholders that, if not so
agreed to, would not have been effective for its purpose unless passed by a particular majority or
otherwise in a particular manner.
d) a resolution or agreement that effectively binds all members of a class of shareholders though not
agreed to by all those members.
e) a resolution to give, vary, revoke or renew authority for the purposes of section 451.
f) a resolution conferring, varying, revoking or renewing authority following market purchase of a
company's own shares.
g) a resolution for voluntary liquidation.
h) a resolution of the director of a private company that the company should be converted into a
public company; or a resolution passed regarding transfer of securities.

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QUESTION 4:
SHAREHOLDER DEMOCRACY
Meetings are essential tools in corporate governance, enabling shareholders, directors, and
managers to align on strategies, address issues, and make decisions that shape the company’s
future providing structured opportunities for decision-making, strategic alignment,
accountability, and open communication. Amongst the key players in meetings are shareholders
who exercise shareholder democracy in meetings of the company.
Shareholder democracy refers to the ability of shareholders to dictate or influence the policy,
governance, functions, and decisions of the corporation, either directly or through the board of
directors and management or through proxies.
Demonstrations Of Shareholder Democracy
The basic rights of shareholders in relation to meetings are: the right to require directors to call a
general meeting; the right to receive notices of general meetings; the right to require circulation
of a statement; and the right to appoint a proxy to act at a meeting
1. Rights to Attend and Participate in General Meetings

As a scrutiny and oversight measure by shareholders, Section 275A of the Companies Act
provides that every company shall convene a general meeting once a year unless it is a single
member company. Shareholders therefore have a platform to exercise their right to vote on
important matters, engage with the board and management, and influence the company’s
direction. By voicing concerns, approving major changes, and holding the board accountable,
shareholders play an active role in shaping the governance and future of the company
Furthermore, Section 276 provides that shareholder holding at least 10% of the voting rights
can call for Extraordinary General Meetings

2. Power of members to convene general meeting

Section 279 stipulates that If, after having been required to convene a general meeting under
section 277, the directors fail to do as required by section 278, the members who requested
the meeting, or any of them representing more than one half of the total voting rights of all
them, may convene a general meeting.

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 3. Appointment of proxies
Section 298, as read together with S114 (1), provide that A member of a company is
entitled to appoint another person as the member’s proxy to exercise all or any of the
member’s rights to attend and to speak and vote at a meeting of the company. A member
of a company that has a share capital may appoint more than one proxy for a meeting
provided each proxy is appointed to exercise the rights attached to a different share or
different shares held by the member.
4. Voting in meetings
Section 256 and 257 outlines how ordinary and special resolutions are passed. Ordinary
resolutions (simple majority) and special resolutions (75% majority) give shareholders a
say in critical decisions. It is material to note that if the company has share capital, a
member has votes equivalent to their total share and that if the company does not have a
share capital, each member has one vote
5. Election and Removal of Directors Director Removal:
Section 139 allows shareholders to remove directors through an ordinary resolution at a
general meeting. This power gives shareholders control over company leadership.
Appointment of Directors (s 132): Shareholders vote on director appointments during
AGMs, ensuring that those in leadership represent the shareholders’ interests.

6. Protection of members against oppressive conduct and unjust prejudice

S780 highlights that a member of a company may seek judicial intervention via courts on
the ground—(a)that the company's affairs are being or have been conducted in a manner
that is oppressive or is unfairly prejudicial to the interests of members generally or of
some part of its members (including the applicant); or(b)that an actual or proposed act or
omission of the company (including an act or omission on its behalf) is or would be
oppressive or so prejudicial. This may be predominantly utilized for protection of the
minority shareholders The case of Re Southern Counties Fresh Food Ltd (2008) where
Minority shareholders alleged that the directors acted unfairly by mismanaging the
company and excluding them from decision-making processes, the court granted minority
shareholders relief, emphasizing that shareholder democracy includes the fair treatment
of all shareholders, not just majority shareholders.

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 QUESTION 5:

VOTING IN GENERAL MEETINGS

Voting is a fundamental right for members in ensuring contribution towards the efficient
management of companies. To harness profit, every stakeholder is entitled to the goodwill and
development of the company. As such, voting takes place during meetings and special meetings
that the directors convene. A resolution of the members is either voted for as a written resolution
or at a meeting of the members

a) Written resolutions
If the company has a share capital—each member has one vote for each share, or each one
hundred shillings of stock, held by the member. If the company does not have a share capital —
each member has one vote. It is important to note that the written resolution must have been
circulated to all the members before the voting day. This is common in private companies. The
guidelines of the Companies Act are that the circulars must have been 21 days before the
meeting.
b) Meetings
In a meeting on a show of hands, each member present in person has one vote and each proxy
present who has been duly appointed by a member entitled to vote on the resolution has one vote.
According to Section 298(2) of the Companies Act, the chairman in ascertaining the number of
votes given on a show of hands must count the vote of each member who also holds proxies as a
single vote and not count a vote for each of the members whose proxies are held by the person.

Implications to Voting in General Meetings

It is believed that the majority vote of the members represents the best wishes of the members in
voting for resolutions. As such the minority shareholder have to be bound by the decision of the
majority no matter how unpopular this may be through their lens. Only the majority shareholders
can therefore institute suits for the company as was held in Foss vs Harbottle (1843) 2 Ha. 461;
67 E. R. 139.

However, there is an exception to the majoritarian rule. The minority shareholders who have a
lesser voice can instigate suits on behalf of themselves and all other shareholders if they feel that

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their rights are infringed. As such, the minority can bring a claim on Derivative Action and an
application against oppressive conduct and unfair Prejudice.

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