Commercial Transactions Lectures 2012

Commercial Transactions Lectures 2012 - COMMERCIAL...

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COMMERCIAL TRANSACTIONS Course Instructor: Mr. Dennis K. Kiura TOPICS 1. Companies 2. Partnerships 3. Agencies 4. Sale of Goods 5. Hire Purchase 6. Chattels Transfer 7. Negotiable Instruments 8. Insolvencies documentations 9. Commercial Agreements 10. Construction of specialized documents COMPANIES Procedure of incorporating a company Found in Part II of the Companies Act 1 For a private company limited by shares; 1. Identify a name. The name may not be available; therefore they must provide at least 3 names. You then conduct a search at the companies’ registry to check the availability of the name. if the name is available, they may then reserve the name. 2. Reservation of names This is carried out by making an application to the registrar of companies, requesting the registrar to reserve the names for purposes of utilizing them for business purposes. This is normally done through a letter. Legal prescriptions: 1. Initials cannot be used as business names. 2. The name must be desirable. Considerations the registrar may put in place for this purpose include; a. You cannot use an obscene name b. Names that suggest connection with the government c. Connection with public figures 1 Cap 486 Laws of Kenya
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d. Enjoy some form of government patronage, etc Once the name is reserved, it will be available for use for a period of 30 days from the date of reservation, i.e. you have 30 days to incorporate the company thereafter. If this is not possible for some reason, i.e. there is some sort of delay, you may apply for an extension for no more than another 30 days. Costs of the process The cost of reservation is currently at KES 100 per name. Therefore, if you reserve 10 names, it’ll be KES 1000. S5(1) (a) states that the name of the company must end with the word Limited. This can be dispensed with through an application to the minister. It is an offence to misuse the word ‘limited’. Once the name is reserved, you need to get some info from in regard to the company; 1. The nature of the business 2. The share capital of the company; the amount of the nominal capital and the denominations into which the nominal capital will be divided. You cannot have fractions. 2 3. Will the shares be of one class, and if not, what special rights attach to the different classes. You must be cautious as to the statutory regulations regarding the share capital. E.g, for banking, or hire purchase, etc 4. Take into consideration the number of directors. 3. Preparing MEMARTS. You must prepare a memorandum of association and articles of association. The Memo is the founding instrument of the company. It is behind the corporate structure of the company. The articles provide for the internal regulations governing the company. The Memo has 5 fundamental clauses; 1. Name of the company 2. Location/ address of the company 3. Objects of the company The objects should reflect the business inclinations of the clients.
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