- 6 Marks
BL – May 2017 – L1 – SB – Q5a – Company Law
Advises on the distribution of profits and reserve funds based on the provisions of the Banks and Other Financial Institutions Act.
Question
The Directors of Kitanga Bank Plc intend to please the shareholders of the bank by ensuring that they distribute all the profits of the bank as dividends without any fund conservation. They plan to do that so that the shareholders may vote to retain them in office. The bank’s paid-up capital is less than its reserve.
Required:
As the Company Secretary of Kitanga Bank Plc with knowledge of the Banks and Other Financial Institutions Act, advise the bank on reserve funds.
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