DEBT CAPITAL
QUESTION 1
April 2024 Question One B
Summarise FIVE similarities between “debentures” and “shares”. (5 marks)
QUESTION 2
April 2024 Question Five A
Outline FIVE legal requirements for a company to issue bonds or debentures as a form of debt capital. (5 marks)
QUESTION 3
December 2023 Question Three A
(i) Differentiate between “secured” and “unsecured” debt in a company. (4 marks)
(ii) Discuss THREE characteristics of a debenture. (6 marks)
QUESTION 4
April 2023 Question Seven B
In the context of debt capital, state FIVE advantages of a trust deed. (5 marks)
QUESTION 5
December 2022 Question Five A and B
(a) In Re Yorkshire Wool Combers Association Limited, a floating charge is described as one that hovers over the assets of the company as compared to a fixed charge. With reference to the above statement:
(i) Describe THREE circumstances that will cause the crystallisation of a floating charge.
(4 marks)
(ii) Outline TWO characteristics of a fixed charge. (2 marks)
(b) Madax Transporters Limited registered a charge on its fleet of motor vehicles in favour of Kopesha Bank to secure a borrowing of Kenya Shillings Fifty Million (Sh. 50,000,000). Madax Transporters Limited has defaulted on the loan repayment.
Outline FOUR options available to Kopesha Bank as the chargee. (4 marks)
QUESTION 6
December 2022 Question Six B
Discuss THREE remedies available to a lender who has acted in good faith and without knowledge that the company has borrowed money beyond its powers. (6 marks)
QUESTION 7
August 2022 Question Five A
Outline six charges that must be submitted to the registrar of companies for registration.
(6 marks)
QUESTION 8
August 2022 Question Five B
Highlight three particulars of an existing charge acquired by a company that requires to be submitted to the registrar of companies. (6 marks)
QUESTION 9
April 2022 Question Four C
Describe three characteristics of a debenture which creates a floating charge on the assets of the company. (6 marks)
QUESTION 10
December 2021 Question Six A
(i) Identify two circumstances when a debenture is redeemable. (2 marks)
(ii) Outline four rights of secured debenture holders. (4 marks)
QUESTION 11
September 2021 Question One B
With reference to debt capital, describe five types of securities that must be registered as registrable charges. (10 marks)
QUESTION 12
May 2021 Question Four A
In the context of debt capital:
(i) Outline six terms contained in a debenture trust deed. (6 marks)
(ii) Highlight four advantages of a floating charge. (4 marks)
QUESTION 13
November 2020 Question seven A
Baridi Ltd. intends to expand its business by diversifying into other forms of business. The management of the company has resolved to start production of instant coffee. The management is contemplating on whether to issue shares or debentures.
Required:
Advise the management of Baridi Ltd. the disadvantages of debentures over shares as a method of raising capital. (10 marks)
QUESTION 14
November 2019 Question five C
Standard Limited issued a debenture to Finance Bank years ago. The debenture was described as a fixed and floating charge over all the assets of the company. However, due to inadvertence, the charge was not dated or registered within time. The company is now in liquidation and the loan is in arrears. Finance Bank seeks your legal advice on whether it can rely on the charge to prove its claim in liquidation proceedings of the company.
Advise Finance Bank. (6 marks)
QUESTION 15
May 2019 Question two B
In the context of debt capital:
(i) Outline four remedies of debenture holders if the company defaults. (4 marks)
(ii) Summarise three differences between “debentures” and “shares”. (6 marks)
QUESTION 16
Summarise six circumstances under which a company might pay interest out of capital.
(6 marks)
QUESTION 17
November 2018 Question six B
In relation to debt capital:
(i) Highlight six types of company charges which require registration as outlined in the Companies Act. (6 marks)
(ii) Explain four disadvantages of a floating charge to a debenture holder. (8 marks)
QUESTION 18
November 2018 Question seven C
Explain the benefits of including a negative pledge clause in a floating charge to the holder. (4 marks)
QUESTION 19
May 2018 Question two A
With reference to debt capital:
(i) Outline four circumstances under which a Boating charge will crystallise.
(10 marks)
(ii) Explain four contents of a trust deed. (8 marks)
QUESTION 20
November 2017 Question six B
Wheels Limited issued a debenture to East Bank Ltd. four years ago. The debenture was in the bank’s standard form described as a fixed and floating charge over all the assets of the company. However, due to inadvertence, the charge was neither dated nor registered within time. The company is now in liquidation and the loan is in arrears. The bank seeks your legal advice as to whether it can rely on the charge to prove its claim in the winding up proceedings of the company.
Advise East Bank Ltd. on the implications of non registration of the charge. (8 marks)
QUESTION 21
May 2017 Question four C
In the context of debt capital:
i. State four advantages of a trust deed. (4 marks)
ii. Explain three instances when a floating charge is deemed to crystallise. (6 marks)
QUESTION 22
May 2017 Question seven B
(i) Outline six contents of a debenture certificate. (6 marks)
(ii) Explain four rights that accrue to debenture holders. (8 marks)
QUESTION 23
November 2016 Question four B
In the context of company charges, describe five principles governing the priority of the charges. (10 marks)
QUESTION 24
November 2015 Question five B
In relation to a debenture trust deed:
(i) Explain live advantages of a trust deed. (10 marks)
(ii) Outline six particulars of the register of debenture holders. (6 marks)
QUESTION 25
September 2015 Question five C
Discuss three events when a floating charge might crystallise. (6 marks)
