CPA › Company law › December 2025

CPA Company law – December 2025 Past Paper & Answers

Unit: Company law

19 Questions

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Questions

Download CPA Company law December 2025 past paper with detailed answers and marking scheme. This paper is based on KASNEB examination standards and is ideal for revision and exam preparation.

Access the full paper online, download the PDF, or study offline. Each question includes step-by-step solutions to help you understand key concepts in Company law.

1a

Shares

Outline FOUR legal principles governing the variation of class rights of shareholders.

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1b

Company Directors

With reference to types of directors, explain the following terms:

(i) De jure director.

(ii) De facto director.

(iii) Shadow directors.

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1c

Nature and classification of companies

Examine FIVE roles of companies limited by guarantee in promoting non-profit activities in your country.

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2a

Audit of Company Accounts

With reference to Companies Act, analyse the concept of “true and fair view” in financial auditors’ report.

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2b

Share capital

Outline the process of issuing a prospectus with reference to the issue of shares in a company.

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2c

Shares

B Limited is a private company incorporated in your country. One of its members, Jane Kirunyu holds 20,000 ordinary shares in the company. She requires a bank loan of Sh.5 million from one of the leading financial institutions and proposes to use her shares as security for the loan.

Required:

(i) Advise the financial institution on the legal options available for securing the loan using Jane’s shares.

(ii) Summarise FIVE legal requirements that must be satisfied for the security interest created over the shares to be valid and enforceable against the company and third parties.

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3a

Company meetings

XYZ Ltd. a public company, plans to hold its Annual General Meeting (AGM). Due to logistical and financial challenges, the company’s board is considering three options: holding the AGM physically at its registered office, hosting it entirely online via a video-conferencing platform or conducting it as a hybrid meeting, allowing both physical and virtual attendance.

As a senior manager in the company, you are required to advise the board on:

(i) FIVE conditions that must be satisfied for a virtual meeting to be valid.

(ii) Additional safeguards which must be considered while holding a hybrid meeting.

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3b

Auditors

Examine FIVE duties of financial statements auditors

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4a

Debt capital

Highlight FOUR roles of the board of directors in authorising borrowing by a company.

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4b

Membership of a company

Outline SIX legal requirements for the register of shareholders in any company.

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4c

Formation of companies

Examine FIVE roles relating to execution of company documents under the Companies Act.

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5a

Foreign Companies

Highlight THREE obligations of a foreign company with regard to the service address under the Companies Act.

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5b

Receivership, Administration, Liquidation and Dissolution of companies

Outline the priority of payments during liquidation of a company.

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5c

Nature and classification of companies

Explain the legal procedure followed when the court is lifting the veil of incorporation of a company.

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6a

Company Investigation

Outline FOUR reasons for an investigation into the affairs of a company.

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6b

Corporate restructuring

Summarise the legal procedures involved in the company amalgamation of a company under the Companies Act.

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6c

Membership of a company

(i) With reference to legal personality, explain the rule in Foss Vs Harbottle.

(ii) Discuss FOUR exceptions in (c) (i) above.

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7a

Company meetings

X Ltd. a milk processing company, passed a resolution in its annual general meeting to retain and deduct the sum of five shillings from the annual bonus payable to each shareholder, who is a dairy farmer, for the purposes of expansion of its milk processing plant. After such retention and collection of Sh.100 million, the board of directors held a board meeting and instead resolved to channel the retained amount to purchase a parcel of land for the company arguing that the said AGM did not take place and no such resolution was passed. Some of the shareholders have got wind of this development and are aggrieved with the decision of the board. Advise the shareholders about the following:

(i) The effect and legality of the resolution passed by the shareholders at the annual general meeting.

(ii) SIX statutory rules governing evidence of record of meetings and resolutions passed in a company which could be applied in support of their case.

(iii) The remedy available to the shareholders of X Ltd.

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7b

Debt capital

Discuss FIVE remedies available to a lender who acted in good faith and without knowledge that a company borrowed beyond its powers in a case where a company has been cited for ultra vires borrowing.

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