TABLE OF CONTENT

ENTERPRISE CREATION AND ENTREPRENEURSHIP PAPER .............. 4

PAST HND QUESTIONS AND STANDARD ANSWERS............................ 4
HND 2020 ......................................................................................................... 4
PART I: ENTREPRENEURSHIP(34MKS) ..................................................... 4
SECTION TWO; GENERAL ECONOMICS (33 MARKS)............................ 4
SECTION THREE; COMPANY LAW (33 MARKS) ..................................... 5
ANSWER GUIDE ............................................................................................ 6
PART I: ENTREPRENEURSHIP (34 marks) .................................................. 6
PART II: GENERAL ECONOMICS (33 marks) ............................................. 7
PART II: COMPANY LAW (33 marks) .......................................................... 9
HND EXAM 2021 .......................................................................................... 11
PART I: ENTREPRENEURSHIP(34MKS) ................................................... 11
PART II: General Economics (33mks) ........................................................... 11
PART III: Company law (33mks) ................................................................... 11
ANSWER GUIDE .......................................................................................... 12
PART I: ENTREPRENEURSHIP (34 marks) ................................................ 12
PART II: GENERAL ECONOMICS (33 marks) ........................................... 14
PART III COMPANY LAW (40 marks) ........................................................ 16
POSSIBLE HND QUESTIONS ..................................................................... 20
SET ONE ........................................................................................................ 20
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 20
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 20
SECTION THREE: COMPANY LAW (33 marks) ....................................... 21
MARKING GUIDE FOR SET ONE .............................................................. 21
SECTION ONE: ENTREPRENEURSHIP ..................................................... 21
SECTION TWO: GENERAL ECONOMICS ................................................ 24
SECTION C: COMPANY LAW .................................................................... 28
SET TWO ....................................................................................................... 31
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 31
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 31
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 33
MARKING GUIDE SET TWO ...................................................................... 33
SECTION ONE: ENTREPRENEURSHIP ..................................................... 33

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SECTION TWO: GENERAL ECONOMICS ................................................ 36
SECTION C: COMPANY LAW .................................................................... 39
SET THREE.................................................................................................... 41
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 41
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 41
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 41
MARKING GUIDE FOR SET THREE ......................................................... 42
SECTION ONE: ENTRPRENEURSHIP ....................................................... 42
SECTION TWO: GENERAL ECONOMICS ................................................ 46
SECTION THREE: COMPANY LAW .......................................................... 48
THE GOVERNING BODIES OF THE OHADA .......................................... 51
SET FOUR ...................................................................................................... 53
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 53
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 53
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 54
MARKING GUIDE FOR SET FOUR............................................................ 55
SECTION ONE: ENTRPRENEURSHIP ....................................................... 55
SECTION TWO: GENERAL ECONOMICS ................................................ 61
SECTION THREE: COMPANY LAW .......................................................... 63
SET FIVE........................................................................................................ 68
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 68
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 68
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 69
MARKING GUIDE FOR SET FIVE ............................................................. 69
SECTION ONE: ENTRPRENEURSHIP ....................................................... 69
SECTION TWO: GENERAL ECONOMICS ................................................ 72
SECTION THREE: COMPANY LAW .......................................................... 74
SET SIX .......................................................................................................... 77
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 77
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 77
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 78
MARKING GUIDE FOR SET SIX ................................................................ 78
SECTION ONE: ENTRPRENEURSHIP ....................................................... 78
SECTION TWO: GENERAL ECONOMICS ................................................ 83
SECTION THREE: COMPANY LAW .......................................................... 83
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SET SEVEN.................................................................................................... 85
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 85
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 85
SECTION THREE: COMPANY LAW (33 Marks) ....................................... 86
MARKING GUIDE FOR SET SEVEN ......................................................... 86
SECTION ONE: ENTRPRENEURSHIP ....................................................... 86
8. Product pre-sales ..................................................................................... 91
SECTION TWO: GENERAL ECONOMICS ................................................ 92
SECTION THREE: COMPANY LAW .......................................................... 93
SET EIGHT .................................................................................................... 99
SECTION ONE: ENTRPRENEURSHIP (34 marks) ..................................... 99
SECTION TWO: GENERAL ECONOMICS (33 marks) .............................. 99
SECTION THREE: COMPANY LAW (33 Marks) ..................................... 100
MARKING GUIDE FOR SET EIGHT ........................................................ 100
SECTION ONE: ENTRPRENEURSHIP ..................................................... 100
SECTION TWO: GENERAL ECONOMICS .............................................. 105
SECTION THREE: COMPANY LAW ........................................................ 106
SET NINE ..................................................................................................... 109
SECTION ONE: ENTRPRENEURSHIP (34 marks) ................................... 109
SECTION TWO: GENERAL ECONOMICS (33 marks) ............................ 109
SECTION THREE: COMPANY LAW (33 Marks) ..................................... 110
MARKING GUIDE FOR SET NINE ........................................................... 110
SECTION ONE: ENTRPRENEURSHIP ..................................................... 110
SECTION TWO: GENERAL ECONOMICS .............................................. 113
SECTION THREE: COMPANY LAW ........................................................ 114
SET TEN....................................................................................................... 119
SECTION ONE: ENTRPRENEURSHIP (34 marks) ................................... 119
SECTION TWO: GENERAL ECONOMICS (33 marks) ............................ 119
SECTION THREE: COMPANY LAW (33 Marks) ..................................... 120
MARKING GUIDE FOR SET TEN ............................................................ 120
SECTION ONE: ENTRPRENEURSHIP ..................................................... 120
SECTION TWO: GENERAL ECONOMICS .............................................. 123
SECTION THREE: COMPANY LAW ........................................................ 124
GENERAL QUESTIONS AND ANSWERS ON ENTREPRENEURSHIP.131

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 ENTERPRISE CREATION AND
ENTREPRENEURSHIP PAPER
PAST HND QUESTIONS AND STANDARD ANSWERS
HND 2020

PART I: ENTREPRENEURSHIP(34MKS)

Question 1
Define the following terms as used in entrepreneurship (4mks)
a. Franchise
b. Family business
c. Risk
d. Business idea
Question 2
Identify and explain the stages involved in the entrepreneurial process
(10mks)

Question 3
What are some of the challanges of entrepreneurship in cameroon and
how do you think you can overcome them as an entrepreneur. (10mk)

Question 4
a. Identify any five components of a business plan. (5mks)
b. Why is a business plan important for an entrepreneur. (5mks)

SECTION TWO; GENERAL ECONOMICS (33 MARKS)

Question 1
Briefly distinguish a market economy from a planned economy. (4mks)

4
Question 2
State and explain any three factors that affect price elasticity of demand.
(6mks)

Question 3
In modern days, commercial banking occupies an important place in
every economy. It is an important constituent of a countrys financial
system.
a. Define commercial bank citing two examples in Cameroon.
3mks
b. What are the main functions of commercial banks. 10mks
Question 4
Identify and explain five functions of money. (10mks)

SECTION THREE; COMPANY LAW (33 MARKS)

Question 1
After explaining what you understand by company law, explain four
reasons why it is important. (10mks)
Question 2
Breifly describe four types of companies provided by the OHADA law.
12mks
Question 3
A company is distinct from its memebers when it acquires the status of
a legal personality. State and explain three reasons under which this rule
can be violated. 6mks
Question 4
Identify and define any five required documemts for a succesful
registration of a company. 10mks

5
 ANSWER GUIDE
PART I: ENTREPRENEURSHIP (34 marks)
Question 1
a. Franchise; a form of business organization in which a firm
which already has a succesful product or service (the franchisor)
enters in to a continuing contractual relationship with other
businesses (franchisees) operating under the franchisors trade
name and usually with the franchisors guidance in exchange for
a fee
b. Family business; a family business is a commercial organization
in which decision making is influenced by multiple generations
of a family related by blood or marriage who are closely
identified with the firm thriugh leadership or ownership
c. Risks; its a probalistic situation that might negatively affect the
realization of the objectives of an organization if it occurs.
d. Business idea; business idea is a concept that can be used to
make money. Usually it is centred on a product or service that
can be offered for money.
Question 2
The following steps are involved in the entrepreneurial process
- Idea generation
- Opportunity evalaution or idea screening
- Business plan
- Implementation and evaluation.
Question 3
Some of the challenges and the proposed solutions can include
CHALLANGES PROPOSED SOLUTIONS
- Difficulty in raising funds - Adopts business forms that
requires
- Poor management - Little start up capital
- Time management - Training of managers
- Taxation - Proper planning of work
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- High level of risk Location in zones with tax
concessions
- Foreign competition - Spread risk using different forms
-Poor infrastructure developmenty - Production of high quality
products.
Question 4
a. The main components of a business plan includes,
- Executive summary
- Business description
- Market strategies
- Competitive analysis
- Design and development plan
- Operations, management and corporate plan
- Financial plan
b. A business plan is important for the following reasons
- To attract financial sponsors
- To have a comprehensive understanding of the business
- To understand the best marketing strategies to adopt for the business
- To fine out if the business is profitable or not
- To carry out a feasibility study to know if the needed resources are
available
- To better understand theexisting market and competitors

PART II: GENERAL ECONOMICS (33 marks)

Question one
Differences between a market economy and a planned economy
- The market economy resources of the nation are owned by
private individuals and firms who undertake production and
distribution based on the market forces of demand and supply
while the planned the government or state controls the factors of
production

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 - Consumers and producers in a capitalist economy enjoy freedom
of choice and decide on what, how and for whom to produce
based on the price mechanism while in a planned economic
system basic economic decisions are taking by central authority.
- In a market economy is unstable while a planned economic
system is stable due to government regulations
- In a market economy profit making is a is the driving force
while in a planned economy there is a non-profit motive
- Distribution of income and wealth
- Consumer and producer sovereignty
- Quality of goods
Question Two
Factors affecting price elasticity of demand include;
- The availability of close substitutes
- Habits
- The degree of necessity
- Time factor
- Number of users of the good
- The proportion of income spent on the good
- Level of income
Question Three
a. A commercial bank is a joint stock company which is privately
owned. These financial intermediaries collect deposits from
people with surplus and grant loans to those with immediate
financial needs. Examples include, BICEC, UBA, NFC,
AFRILAND, STANDARD CHARTERED BANK etc.
b. Main functions of the commercial banks include;
- Accepting deposits
- Granting of loans
- Act as agents of payment
- Transfer of funds
- Provision of money transfer services
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 - Act as trustees and executors
- Other services
Question Four
The five functions of money include;
- Medium of exchange
- Measure of value
- Store of value
- Standard of deferred payment
- Transfer of value

PART II: COMPANY LAW (33 marks)

Question One
a. Company law is the body of law governing the rights, relations
and conduct of persons, organizations, companies, and
businesses.
b. Company law is important for the following reasons;
- Helps to protect the interest of the business
- It allows stake holders the framework to act and operate
- It helps to hold businesses accountable for their actions
- Give business a road map to follow
- Provides stability and consistency in business relations
Question Two
Four types of companies provided by OHADA law include
- Public limited company
- Private limited company
- Partnership
- Joint venture
- Sole proprietorship
Question Three
Reasons could be from statutory provisions or from judicial grounds
a. Statutory provisions for such violations include;
- Officer in default
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 - Reduction of members
- Improper use of names
- Fraudulent conduct
- Failure to refund application money
- Lack of legal compliance
- Non respect of article of association
b. Judicial grounds for such violations include;
- Fraud
- Tax evasion
- Company as an agent
Question Four
Five documents needed for the registration of a company include;
- Memorandum of association
- Article of association
- Certificate of incorporation
- Prospectus
- Certificate of trading
Nb; Give the content of each document.

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 HND EXAM 2021

PART I: ENTREPRENEURSHIP(34MKS)
The following main skills are important for an entrepreneur to succeed:
-Ability to plan
-Basic management skills
-Creativity
-Self confidence
a)Analyse any of the two skills with concretze example
b)State the importance and the inconveniences of post graduate
education for entrepreneurship (15mks).

PART II: General Economics (33mks)

a) Differentiate the type of enterprise according to their size.(10mks)
b) Prepare a business plan for an entreprise that suppose to pay a short
term loan of 600 000frs for 3 months and has a cash flow of 100 000frs
per week, 50 000frs rent per month, VAT of 20 000frs per month,
wages of 100 000frs per month.(10mks)
c) Should the business take the loan or not? (10mks)

PART III: Company law (33mks)

1.Expatiate on the different steps to be followed to create a business
entity in Cameroon.(13mks)
2.Examine the causes and consequences of dissolution of a company
(20mks)
3.Briefly explain the pecuniary and non pecuniary right of shareholders
of a company.(10mks).

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 ANSWER GUIDE
PART I: ENTREPRENEURSHIP (34 marks)
Question 1
The following main skills are important for an entrepreneur to succeed
• Ability to plan
• Basic management skills
• Creativity
• Self confidence
a) Analyse any two with concrete examples (15 marks)
1. Ability to plan
Planning is determining well in advance what we intend to achieve in
future and then providing the resources to carry out the activities.
Therefore, an entrepreneur should have the ability to identify the
appropriate activities and be able to acquire the resources in terms of
financial, human and equipment to carry out the activities at the
appropriate time. (Forecasting and setting SMART objectives).
2. Basic Management skills
A good entrepreneur should be able to plan, organise, direct, coordinate
and control factors of production towards the achievement of pre-
defined objectives.
Or Technical skills, conceptual skills and interpersonal skills.
3. Creativity
It is the ability to develop new ideas and to discover new ways of
looking at problems and opportunities. It can also be seen as the start
point of entrepreneurs. The ability to imagine and create original ideas
that can create wealth is paramount. For example, if VATICA Express
introduces online booking, it’s a new idea in local travel agencies.
Being innovative and pro-active is the key.
4. Self - Confidence
Self-confidence is concerned with how a person feels about his ability.
A successful entrepreneur is not scared to explore new opportunities,

12
take risk and take decisions in his business. Entrepreneurs are not
carried away by difficulties; as they believe in their own abilities and
strengths. (self-belief).
Mark distribution: 7.5 marks for each point explained. (7.5*2=15
marks)
b. State the importance and inconvenience of post graduate
education for entrepreneurship (15 marks)
Importance
1. It will help you to have a mastery and a clear vision of what you
want to do as an entrepreneur.
2. It helps you to build good creative skills
3. It helps you to build good innovative skills.
4. It helps you build good management skills.
5. It helps you to gain good customer service skills and personal
relations skills.
6. It helps you to have high appetite to take risk and withstand
uncertainties.
7. The entrepreneur stands our since he has the possibility of
employing new strategies.
8. In the course of the training, you might know people who will
serve as relations in the job market. Networking and building
partnerships then makes post graduate education very important.
9. You can easily source capital.
10. Others

Inconvenience
1. Much money is spent on post graduate studies that would have
constituted capital for a new venture.
2. You might feel too qualified to undertake a small business.
3. You might minimize the reward at the start of the business as
you may think it doesn’t match your certification.

13
 4. You might value your certificates over a business and that may
blur your vision of the business.
5. You will not want to build partnership with people who are less
educated than you.
6. Others
Mark distribution: 3 marks for any 5 points explained, with at least
two points on each side. (3*5 = 15 marks)

PART II: GENERAL ECONOMICS (33 marks)

a) Differentiate the type of enterprises according to their
size (10 marks)
1. Micro-enterprises: It is a small business which sells goods and
services to a local area or a local market. It employs 1 to 9
employees. For example, a local tailor’s shop.
2. Small enterprises: 10 to 49 employees.
3. Medium-sized enterprises: 50 to 249 employees.
4. Large enterprises: 250 employees and above, for example
Guinness Cameroon SA
Here, we could use the number of workers, the capital, turn over etc. as
criteria for classification.

Mark distribution: 10 marks for any three types partially explained.

Or
Some candidates will put it as follows: they will earn the 10 marks
because these forms vary according to sizes, sole proprietor being the
smallest and public companies being the largest.
1. Sole proprietor
2. Partnership
3. Private limited company
4. Public limited company.
2.5*4=10 marks

14
 2. Prepare a business plan for an enterprise that supposed to pay a
short-term loan of 600 000 FRS for 3 months and has a cash
flow of 100,000frs per week, 50 000 FRS rent per month, VAT
of 20 000 FRS per month, wage of 100,000 FRS per month. (10
marks)
a. Business plan (10 marks)
Loan repayment per month = 600,000/3= 200,000frs (1 mark)
Monthly cash flow = 100,000 X 4 = 400,000 (1 mark)
Presentation of cash flow statement (8 marks, 3 correct figures equals
a mark)
Element /month Month 1 Month 2 Month 3

Opening cash 30000 60000

Cash Inflow (Income) 400,000 400,000 400,000
TOTAL INFLOW A 400,000 430000 460000
OUTFLOW (Expenses)
LOAN 200,000 200,000 200,000
RENT 50,000 50,000 50,000
VAT 20,000 20,000 20,000
WAGE 100,000 100,000 100,000
TOTAL OUT FLOW B 370,000 370,000 370,000
BALANCE(A-B) 30,000 60,000 90,000
If a candidate cumulates the cash inflow and outflow for the three
months, what is important is the cash balance of 90,000FCFA.
Or
Income per month (cash receipt) = 100,000*4=400,000FCFA (2 marks)
Expenditures per month
Rents 50,000
VAT 20,000
Wages 100,000
Total expenditures = 170,000 (2 marks)

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Balance (400,000 – 170,000) = 230,000
Minus loan repayment per month = 600,000/3 = 200,000 (2 marks)
Balance at the end of month (230,000 – 200,000) = 30,000FCFA (2
marks)
Surplus for the three months = 30,000*3 = 90,000FCFA (2 marks)
b. Should the business take the loan or not? (10marks)
i. The business should take the loan
ii. Since the inflow still permits the entity to make some profit
at the end of each month.
Mark allocation: yes earns 5 marks, justification 5 marks (positive
cash balance of 90,000FCFA).

PART III COMPANY LAW (40 marks)

1. Expatiate on the different steps to be followed to create a
business entity in Cameroon (10 marks)
Any logical steps that a candidate gives to explain the procedure an
entrepreneur can follow to create his business explaining at least five
logical steps should earn the 10 marks.
Art.5 of the OHADA uniform Act outlines the following steps:

First step: Substantive conditions: (3 marks)

➢ Consent among parties
➢ Capacity of the actors
➢ Object of the business
➢ Cause of the business.

Second step: Procedural conditions: (art. 12 of the UA) (7 marks)

➢ Establishing the article of association,
➢ Signing the Article of Association,
➢ The content of the AA, (art 13),
➢ Registration of the business (art 27), at the Trade and Personal
Property Register (TPPCR),
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 ➢ Publication to inform the 3rd parties of the existence of the
business (art 261)
Or (simply give 10 marks for this option 2)
➢ Memorandum of association
➢ Articles of association
➢ Incorporation or licensing
➢ The prospectus
➢ Going operational
Option 3: Steps in creating a business entity in Cameroon
1. Get a public notary and submit your file with the African
Intellectual property Organisation Office in Yaoundé
2. Deposit initial capital in the bank and obtain a receipt.
3. Present the physical location plan to the tax department and
obtain an attestation of business premises
4. Have a public notary/attorney draft the memorandum and article
of association.
5. Sign company bi-laws before public notary
6. Have the signed bi-laws duly registered with the registration and
stamp duty office of the department of taxation.
7. File an application to the registrar of companies in the court of
first instance
8. Publish the incorporation of the company in the legal journal
(Cameroon Tribune)
9. Obtain a tax payer card with the inspectorate in the area where
the enterprise is located.
10. Declare the existence of the company before the authorities in
charge of the industry.
11. Declare the existence of the company to the local office of the
department of labour.
12. Register workers with health and administration.
13. Declare the existence of the company and personnel employed
before the National Social Insurance Fund (CNPS)
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Option 4: Steps in creating a business entity in Cameroon
1. Create a business idea
2. Draw a business plan
3. Prepare documents: Article and Memorandum of Association.
4. Raise capital
5. Find location plan
6. Register business
7. Pay taxes and get a tax payer’s card.
8. Declare workers at CNPS

2. Examine the causes and the consequences of the dissolution

of a Company (20 marks)
a. Causes of dissolution of a Company (10 marks for any 4
points)
1. A change in existing profit sharing ratio among
partners/shareholders,
2. The admission of a new partner/shareholder,
3. The retirement of a partner/shareholder,
4. The dead of a partner/shareholder,
5. The insolvency of a partner/shareholder,
6. Upon completion of venture,
7. Expiration of the deadline of the formation of contract between
parties.
8. Decision of members as per the provision of the article of
association as per article 877 of the Uniform Act.
9. By the death of a natural person when it is stated in the article of
association that upon the death of a member, the company will
be dissolved.
10. When the company and its members are involved in criminal
activities.
11. Orders from the State
Mark Allocation: 2 marks each for any 5 points (2*5 = 10 marks)
18
 b. Consequences (10 marks)
1. All assets are turned into cash and shared among the members in
a certain proportion,
2. One partner may purchase the other's shares at their value,
3. All property is divided among the members in their proper
proportions.
4. Unemployment of company employees
5. Frustration of shareholders and workers
6. Fall in the standard of living of shareholders and workers
7. Fall in government income from taxes
8. Fall in the national output
9. It could lead to migration.
10. In the case of unlimited liability, all the shareholders will be
responsible to third parties for the debts of the company up to
their personal properties.
Mark Allocation: 2.5 marks each for any 4 points (2.5 * 5 = 10
marks)
3. Briefly explain the pecuniary & non-pecuniary rights of
shareholders of a Company (10 marks)
a. Pecuniary or financial rights/benefits of shareholders (5
marks)
1. Right to protect their interests in the business,
2. Right to benefit from the availability of large resources,
3. Right to benefit from the profit generated by the business
according to the size of their shares.
b. Non-pecuniary rights/benefits of shareholders mean non-
financial rights and include: (5mks)
1. Right to vote
2. Right to attend meetings
3. Right to partake in the decisions of the business,
4. Right to change the size and nature of the business.

19
 POSSIBLE HND QUESTIONS
SET ONE
SECTION ONE: ENTRPRENEURSHIP (34 marks)
QUESTION ONE
a) Differentiate between an entrepreneur and an intrapreneur.
2mks.
b) State and explain five importance of small business to an
economy.10mks
c) State the role of entrepreneurship in economic development.
8mks.

QUESTION TWO
a) Explain the different documents needed to start a new company.
8mks.
b) State the stages of a business plan. 6mks.

SECTION TWO: GENERAL ECONOMICS (33 marks)

QUESTION ONE
A demand equation for oranges is given by
QD = -3P+5000
And the supply equation for the same good is
Qs = 2P+2000
Where QD, Qs and P are the quantity demanded, quantity supplied and
price (in bags/units and FCFA) respectively

Required
(a) Find the equilibrium price and quantity (4marks)
(b) If government in trying to control the price of the good fixes
the price at 550 FCFA
i. Identify the type of price control measure the government has
applied (3marks)

20
 ii. Identify the primary economic problem associated with this
type of price control and justify your claim mathematically.
(6marks)
iii. State two economic problems associated with the primary
economic identified in (ii) above (3marks)

QUESTION TWO
a) What do you understand by Gross Domestic Product (GDP) and
Gross National Product (GNP) in national income accounting?
(4marks)
b) Identify and clearly explain four (4) main uses of National
Income Statistics and four problems involve in measuring
national income? (8Marks)
c) Explain the factors that aid the economic growth of a country. (5
Marks)

SECTION THREE: COMPANY LAW (33 marks)

a) The historical evolution of Company law in Cameroon (8 marks)
b) The formation of a Company under the new OHADA Law (9
marks)
c) The Ultra-vires doctrine (6 marks)
d) The principle of Corporate personality (7 marks)
e) The principle of veil lifting in an incorporation (5 marks)

MARKING GUIDE FOR SET ONE

SECTION ONE: ENTREPRENEURSHIP

QUESTION ONE
a) An entrepreneur is the owner of the business while an
intrapreneure is the person who manages the business

21
b) The importance of small business to an economy includes the
following;
• They perform task for which large-scale industry is ill suited.
For example, where there is only a small market or where the
products do not lend themselves to mass production techniques.
• They are often more efficient than large firms, having lower
overhead costs.
• They can adjust to changing market conditions more rapidly
than their larger counter-parts.
• Many are selling a combination of products and personal
services.
• They are an important source of innovation in product,
processes and services.
• They provide jobs to people whose personality ill suits them for
work in large impersonal organizations.
• The sector is a valuable training ground for “all-round”
managers. Expertise acquired is often attractive to and may very
well be drawn on by larger firms.
• They are a source of competition and thereby stimulate
efficiency throughout the industry.
• They are the traditional breeding-ground for new industries and
the seed-bed from which large firms grow to challenge the
established leaders of industry.
c) The role of entrepreneurship includes the following;
Helps to acquire capital through loans
Help to eliminate disparities between regions
It helps spreads economic power
It helps create and distribute wealth
It helps encourage innovation

22
QUESTION TWO
a) The major documents required by the registrar or Ministry of
commerce are:

1. The memorandum of Association

This document gives basic information of interest to shareholders and
other people who may deal with the proposed company, it contains six
clauses:
a. The name of the company followed by the word ‘Limited’ at the
end.
b. The address and location of its registered office.
c. The limited liability clause
d. The ‘objects’ clause – this clause indicates the purpose for
which the company is formed.
e. The amount of share capital that the company can raise must be
stated together with the values of shares it is to be divided into.
f. The association clause. This is a declaration made by those
signing it that they wish to form a company and will accept the
shares allocated to their names.

2. The Article of Association

This document refers to the internal constitutions of the company. It
gives information on such issues as the right of the shareholder, the
power of directors and the holding of meetings. Every company has to
draw an article to suits them and there is no necessity that article of
association must be uniform.

3. Statement of nominal capital

Should the registrar of companies be satisfied with the documents
presented to him he will issue a certificate of incorporation making
the business a separate legal entity with a life quite separate from that of
its shareholders. At this stage, a private company may commerce
23
business and enter into any contract allowed by its ‘objects’ clause.
There is however, a further requirement before a public limited
company can start business. It must be issued a certificate of trading
by the registrar of companies on receipt of the document indicating that
the company has the necessary financial stability to start business.
Where the company is raising capital by issuing shares to the
public, the company must submit a prospectus (i.e. the document
inviting the public to buy shares in the business) to the registrar and
statements that the minimum capital necessary to run the business has
been subscribed (this is stated in the prospectus) and that directors have
paid for their shares.
Where the promoters and directors can raise sufficient finance
without appealing to the public, a statement in lieu of a prospectus
(containing much the same information as the prospectus) will be
submitted to the registrar in addition to the statement mentioned above.
b) The stages of a business plan include the following;
• The summary
• The business description segment
• The marketing segment
• The research design and development segment
• The manufacturing segment
• The management segment
• The critical risks segment
• The financial segment
• The milestone schedule segment

SECTION TWO: GENERAL ECONOMICS

(a) Given the demand function QD= -3P+5000and the supply
function as
Qs=2P+2000. At equilibrium, QD=QS
-3 +5000 =2P+2000
24
5000 – 2000 =2P+3P
3000 =5P
3000/5 = P , P=600FCFA
Therefore
Q =2(600)+2000
Q =1200 +2000
Q =3200
bags/unit
s
The equilibrium price and quantity are 600fcfa and 3200
units respectively.
i). Ifgovernmentfixesthepriceofthegoodat550FCFA, this will be a
maximum price control. This is because 550FCFA is below the
equilibrium price of 600fcfa.
(ii) A shortage will be created
At the price of 550FCFA.
QD= -3P+5000= -3(550) + 5000 = -1650 + 5000
=3350bags/units
Qs =2 (550) + 2000 =1100 +2000
=3100bags/units
Excess demand =QD– Qs =3350 – 3100 =250
bags/units
At the maximum price of 550, quantity demanded of 3350bags/units
exceeds the quantity supplied of 3100bags/units resulting in an excess
demand of 250 bags/units.

(iii) The shortage created by price ceiling will in turn pose the
following problems:
• Rationing
• Queuing
• Black Market

25
 • Selling at Sellers’ Preference

B–
a. Gross Domestic Product (GDP) measures the total value of
goods and services produced by factors of production located
within the country irrespective of who owns them or their
nationalities. Gross National Product (GNP), on the other hand
measures the total monetary value of goods and services
produced by the nationals of a country both within and outside
the country. The GNP is obtained as GDP plus net factor
incomes from abroad.
b. USE OF NATIONAL INCOME ESTIMATES
• Indices of Economic Welfare: National income estimates
particularly the per capital income is a very useful indicator of
economic welfare. Per capital income in real terms gives a rough
idea about the economic welfare of people in a country.
• Use for Economic planning: National income estimates are
used to determine the savings and investment potential rate of
economic growth of a country. To plan for an increase in the
national income, current levels of national income must be
known. This information is provided if we calculate income
estimates.
• Helps policy makers to understand the economic structure
of a country: The product approach provides detailed
information on the contributions of the various sectors and sub-
sectors of the economy. Data provided by the expenditure
approach gives an idea about the proportion of income invested,
consumed or transferred. Finally, data provided by the income
approach provides information on functional distribution of
income, which is useful for income tax policies.
• Used to approximate the potential demand: Per Capital
Income data is used to estimate demand for various
26
 commodities. This is a very useful piece of information for
potential investors. An investor will be interested in per capital
income because generally the higher the per capital income, all
other things being equal, the higher will be the demand for
goods and services.
• To determine subscriptions to international organizations:
National income estimates are used to determine the
subscriptions of nations to international bodies e.g. IMF, IBRD,
UN, ECOWAS etc to which they belong.
• To compare international living standards: National Income
estimates are also useful as a basis for inter-temporal and
international comparison of living standards. These estimates
make it possible for comparison of standard of living of two or
more countries. In this respect, the per capital income in real
terms is normally used. In addition, the performance of an
economy after a planned period can be ascertained by
comparing the size of the national income before the plan with
the national income after the implementation of the plan. This is
known as inter-temporal comparison. The national income
statistics of different countries can be compared. This type of
comparison is called the international comparison.

c) Factors which aid economic growth include the following:

Natural resources: Countries that have abundance of natural resources
such as forests, solid and liquid minerals have the tendency to develop
faster through the exploitation of such resources. There is however no
guarantee that those countries that are well endowed with natural
resources will grow faster.
Technology: Countries with advanced technology are seen to be
developing faster than those technologically deficient. Hence,
technological advancement is an important factor of development.

27
Capital accumulation: Accumulation of physical capital and well
established and efficient infrastructures are also necessary for economic
growth. The more roundabout the method of production the higher
the rate of growth of the economy.
Human resources: Economic growth requires a pool of highly skilled
manpower to man the various sectors of the economy. In addition,
increase in working population may also grow the economy.
Non-economic factors: Institutional changes from primitive to modern
ways of life and attitudinal changes from a fatalistic outlook to a more
dynamic way of life may enhance productivity and grow the economy.

SECTION C: COMPANY LAW

1) The historical evolution of Company law in Cameroon (8 marks)

Key issues
►Define Company law: Company law” or “Corporations” law is the
study of how shareholders, directors, employees, creditors, and other
stakeholders such as consumers, the community and the environment
interact with one another. (2 marks)
►The history of company law is traced via 04 phases which are: (6
marks)
1. The period bifore 1922
2. The period between 1922-1961
3. The period between 1961-1998
4. The period after 1998

2) The formation of a Company under the new OHADA Law (9

marks)
Key issues
►Article 5 of the UA gives opportunity for a single person to also form
a company. The act of company formation is contractual, and this
implies that all the ingredients of a valid contract must be fulfilled.
28
These include offer and acceptance, intention to create legal relations,
consideration etc. parties to the contract must fulfilled both substantive
and procedural conditions. (1 mark)
Substantive: (4 marks)
- Offer
- Acceptance
- Intention to create legal relations
- Consideration
- Capacity
- Cause and oblect.

Procedural conditions (4 marks)

- Establish the article of association
- Content
- Signing
- Registration

3) The Ultra-vires doctrine (4 marks)

Key issues
►State the principle of the doctrine and cases were exceptions
apply.
-Principle: (2 marks) It has to do with the object of the Company
when operating in the field. It must not deviate from that object
found in the registration.
- Exception to the principle: (2marks) It applies in other sectors and
countries.
4) The principle of Corporate personality (7 marks)

29
 Key issues
► According to art. 98 of the Uniform Act, all companies have
legal personality which takes effect from the date of registration at
the TPPCR.
- Principle: The Separate Entity Principle is a fundamental
principle of Company Law applied on a global basis. Pursuant
to this principle, a company is treated as a distinct entity from its
members.
- Exception: The Solomon case.
5) The principle of veil lifting in an incorporation (5 marks)

Key issues
►"a company's property is owned by the company as a separate
person, not by the members; the company's business is conducted
by the company as a separate person, not by the members; it is the
company as a separate person that enters into contracts in relation
to the company's business and property".

30
 SET TWO
SECTION ONE: ENTRPRENEURSHIP (34 marks)
QUESTION ONE
d) State and explain five sources of capital to a small business.
10mks.
e) Explain the role of innovation to a small business.5mks
f) Explain internal environmental factors to a small business.
5mks.

QUESTION TWO
c) Explain the steps in starting a new business. 5mks.
d) State and explain the elements of a business plan. 9mks.

SECTION TWO: GENERAL ECONOMICS (33 marks)

A – MICRO
QUESTION ONE
A
Country X has a production possibility frontier represented by the
following diagram

Producer A C

B
Consumer
0

a) Which basic economic principle does the PC illustrate?

b) When is it possible for country X to produce at
i) Point Y? ii) point C?
31
 c) Which growth path should the country pursue, if it is interested
in long term rather than short term growth? Explain your
answer.
d) Compare point A and B in terms of current living standards.
(10marks)
B
A monopolist, at present producing an unbranded product for the home
market is faced with the following revenue schedule:
Price 20 18 16 14 12 10 8
Quantity 20 30 40 50 60 70 80
Fixed costs 200 200 200 200 200 200 200
Variable costs 260 370 400 425 460 500 680

a) Determine the monopolist’s equilibrium price and output;

b) Assuming the same cost conditions, what would be the long-run
equilibrium price and output levels if the industry were perfectly
competitive (assuming costs include normal profits)?
c) For what reasons might cost conditions be different under
perfect competition in the long-run?
d) The monopolist is faced by imports which enter at the world
price of 10. What effect would this have on the long-run if?
i) It maintains its present marketing behavior
ii) It changed its marketing of the product in response to the
different circumstance. (8marks)

B – MACRO
QUESTION ONE
a) Discuss 3 causes and 3 remedies of a demand – pull inflation (5
marks)
b) List 5 canons of taxation (5 marks)
c) How may the government use fiscal policy to reduce the level of
unemployment? (5 marks)
32
SECTION THREE: COMPANY LAW (33 Marks)
f) The historical evolution of Company law in Cameroon (8 marks)
g) The formation of a Company under the new OHADA Law (9
marks)
h) The Ultra-vires doctrine (6 marks)
i) The principle of Corporate personality (7 marks)
j) The principle of veil lifting in an incorporation (5 marks)

MARKING GUIDE SET TWO

SECTION ONE: ENTREPRENEURSHIP

QUESTION ONE
a) The sources of capital to a small business includes the
following;
• Bank loans
• Trade credits
• Hire purchase
• Trade bills
• Leasing
• Institutional investors
• Insurance companies
• Government funds etc
b) The role of innovation to a small business includes the
following;
▪ Solve problems easily
▪ Increase productivity
▪ Market the business
▪ Help beat competition
▪ Helps in getting new customers
33
 ▪ Helps in solving consumer problems
▪ Important to manage a talented and skilled
workforce
c) A company’s internal environment is comprising of some
forces outside the marketing management function but which
are within the internal organization, which affects marketing
decision such as organization’s objectives, stakeholders,
resources, culture and structure of the organization. These
factors determine the scope and conduct of an organization’s
marketing activities.

i. Organization Objectives
The overall organization’s objectives are a major influence on her
marketing plans and decisions. Marketing decisions are made in the
context of a specific organization and its objectives. It is for this reason
that one organization may want to grow as quick as possible (market
penetration) while another may not wish to grow at all (market
concentration).
Stakeholder
A company’s stakeholders are groups of people or individuals who are
affected directly or indirectly by the performance of the organization. A
company operates within the context of a network of interest groups,
each of which has a particular relationship with the organization, and
often-conflicting interests and motivations. It should be noted that the
stakeholder system is a negotiated environment in which company
relationships with different parties have to be carefully cultivated and
managed. A company effectively has a series of publics for example,
they may have a direct stakeholder in its fortunes such as shareholders,
employees, directors, employer’s unions etc or they may be external
stakeholders such as suppliers, customers, competitors, intermediaries
etc.

34
 ii. Organizational Resources
The resources that an organization has at her disposal are
another important influence on marketing decision e.g personal,
material and financial resources. The impact of available
resources can be seen from the difference in approach between
large and small firms such as the resources of small firms do not
make it possible for them to run a specialist-marketing depth.
The owner-manager who may have little knowledge or
experience of specialist aspects often takes the responsibility of
marketing. But in large firms, marketing tends to become a
specialist function as company grows because large companies
have the resources to employ specialists.

Organization culture and structure

This culture consists of the underlining values, attitude and
assumptions which an organization adopts. An organization culture and
structure influences the way in which an organization consider new
ideas and adoption, how it reacts to events around it and how it
structures its self. The marketing function is structured taking into
consideration the overall culture and structure. E.g. functional
specialists, product manager structure, marketing manager structure,
etc. since marketing decisions are taking based on the internal culture of
an organization.

QUESTION TWO
a) The steps involve in starting a new business includes the
following;
▪ New business idea
▪ The business plan
▪ Legal form
▪ Financial resources
▪ Tactics
35
 Explain all of them in detail
b) The elements of a business plan includes the following;
• The summary
• The business description segment
• The marketing segment
• The research design and development segment
• The manufacturing segment
• The management segment
• The critical risks segment
• The financial segment
• The milestone schedule segment
Explain all of the above points in details

SECTION TWO: GENERAL ECONOMICS

A – MICRO
Question 1
A
a) The concept of scarcity, choice and opportunity costs
b) i) It is possible to produce at point Y when:
• When there are resources lying idle
• Underutilization of resources
• Inefficient use of resources
• Excess capacity
ii) It is possible to produce at point C when:
• There is an increase in productivity
• There is economic growth
• There is the discovery of natural resources
c) Growth path Y and A
This growth path shows the production of more capital goods that is,
capital accumulation which is an important cause of long term growth.

36
 d) The current standard of living is higher at point B that at point A
because more consumer goods are produced at point B than at
point A.

B
Price quantity TR TC profits AC
20 20 400 460 -60 23
18 30 540 570 -30 19
16 40 640 600 40 15
14 50 700 625 75 12.5
12 60 720 660 60 11
10 70 700 700 0 10
8 80 640 880 -240 11

a) Equilibrium price = 1’
Equilibrium output = 50 that is, where profits are highest
b) Long-run equilibrium price = 10 and quantity = 70
This is where profits are zero or normal profits –firms make only
normal profits in the long-run in perfect competitive market.
c) Costs conditions may be different because of;
• Employment of efficient or inefficient factors
• Economies of scale or diseconomies of scale
• Better techniques of production
d) i) It would lose a large part of its market to the foreign
competitors but not all the market because of consumer loyalty
ii) It would sell at 10 frs and make zero profit or normal profit.

B – MACRO
Question 1
a)
i) Causes:
• Increase in autonomous investment
37
 • Export surplus
• An increase in production of capital goods
• Wars
• Expectation of future price increases
ii) Remedies
• Budget surplus
• A tight monetary policy
• Import surplus
• Increase in income taxes
b)
• The principle of equity
• The principle of convenience
• The principle of certainty
• The principle of economy
• The principle of flexibility
• The principle of effectiveness
• The principle of impartiality
c)
• A reduction in income taxes
• Reduction in taxes on investment
• Reduction in corporation taxes
• An increase in government spending
• Give tax concessions or tax holidays to industries
• Granting of subsidies
• Set up training and retraining schools
• Creation of state enterprises
• Improve on the information system

38
SECTION C: COMPANY LAW
6) Key issues
►Define Company law: Company law” or “Corporations” law is the
study of how shareholders, directors, employees, creditors, and other
stakeholders such as consumers, the community and the environment
interact with one another. (2 marks)
►The history of company law is traced via 04 phases which are: (6
marks)
5. The period before 1922
6. The period between 1922-1961
7. The period between 1961-1998
8. The period after 1998

7) Key issues
►Article 5 of the UA gives opportunity for a single person to also form
a company. The act of company formation is contractual, and this
implies that all the ingredients of a valid contract must be fulfilled.
These include offer and acceptance, intention to create legal relations,
consideration etc. parties to the contract must fulfilled both substantive
and procedural conditions. (1 mark)

Substantive: (4 marks)
- Offer
- Acceptance
- Intention to create legal relations
- Consideration
- Capacity
- Cause and oblect.

Procedural conditions (4 marks)

- Establish the article of association
- Content
39
 - Signing
- Registration
8) Key issues
►State the principle of the doctrine and cases were exceptions
apply.
-Principle: (2 marks) It has to do with the object of the Company
when operating in the field. It must not deviate from that object
found in the registration.
- Exception to the principle: (2marks) It applies in other sectors and
countries.
9) Key issues
► According to art. 98 of the Uniform Act, all companies have
legal personality which takes effect from the date of registration at
the TPPCR.
- Principle: The Separate Entity Principle is a fundamental
principle of Company Law applied on a global basis. Pursuant
to this principle, a company is treated as a distinct entity from its
members.
- Exception: The Solomon case.
10) Key issues
►"a company's property is owned by the company as a separate
person, not by the members; the company's business is conducted
by the company as a separate person, not by the members; it is the
company as a separate person that enters into contracts in relation
to the company's business and property".

40
 SET THREE
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Define an enterprise and give four examples of enterprises in
Cameroon. 6mks
2. Give five characteristics of an enterprise. 5mks
3. Give the role of the following in the functioning of an enterprise
a. Board of Directors
b. Chief executive officer
c. Company secretary 10mks
4. Explain the importance of entrepreneurship to an economy and
five problems faced by entrepreneurs in Cameroon. 13mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1. In your own words, discuss 6 factors that affect the Cameroon
Economy? (12marks)
2. Write short notes on the two types of economics? (10marks)
3. In your own words, what do you understand by economic
growth? (3mks)
4. What indicating factors show that an economy is growing. List
four(8mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. Define a company and trace the historical evolution of Cameroon
Company Law.
2. What are the sources of company law?
3. Discuss the genesis of the OHADA Treaty and its institution.

41
 MARKING GUIDE FOR SET THREE

SECTION ONE: ENTRPRENEURSHIP

1. An enterprise is defined as any undertaking or project entered
into with view of commercial success. Most enterprises are
owned by individuals, others by group of persons and the state
or government. However, majority of enterprises except those
owned by the government have their principal aim profit
making. Examples of enterprises are Fokou, CDC,
Metropolitan Plastics co.., CAMWATER, Brasseries du
Cameroun S.A, Cameroon Airlines, Cimencam, Dangote Co.
Ltd, Cameroon shipping lines, Intelcam etc
2. CHARACTERISTICS OF AN ENTERPRISE
1) Certain elements must constitute an enterprise. In simple terms all
enterprises are composed of production. These elements are human
resources (i.e. labour), man-made resources (i.e. capital), natural
resources (i.e. land), and organization commonly referred to as the
entrepreneur (the decision taker in enterprises).
2) An enterprise is a system and sub-system. This means that an
enterprise is an entity on its own and part of a larger system. It is a
different legal identity different from that of its owners. Enterprises
that interact with their environment are commonly known as open
systems (mainly business organizations); those with no interactions
with their environments are called closed systems (mainly biological
and scientific organizations).
3) An enterprise either produces or manufactures good or provides
services to other enterprises in open market.
4) An enterprise possesses certain objectives. Some have single
objectives and others multiple objectives such as making profit in
addition to maintaining customer goodwill to have a large market share
etc.

42
5) An enterprise must either be organized formally or informally. This
include the method of working in the business enterprises, this will
mean sections such as the accounts department, production
department, marketing, administration, purchasing etc. others
(especially smaller enterprises) may be carrying out these functions
informally.

3. A. Board of Directors (top management or Administrative

Department).
Board of directors are usually appointed to overseas the management of
the business. In a public corporation they are appointed by the
government while in private companies they are appointed by
shareholders. They carry out the following functions.
▪ They set the objectives and policies of the company.
▪ They look after the company’s assets for the benefits of the
shareholders.
▪ They recruit the chief executive officer
▪ They plan activities for the organization
▪ Control and evaluate the other departments including the
managing director.
▪ They approve the budget of each department
▪ They decide the way profits should be distributed to
shareholders

B. The managing Director

This is a member in the board of directors to whom the board
delegates authority to put into effect the decisions taken at the board
level. He is the link between the board of directors and the other
managers. He carries out the following functions
▪ He partakes in the setting up of the policies and objectives of
the company.
▪ He interprets the board’s objectives
43
 ▪ He sees that the departmental managers work according to
the stated objectives
▪ He is responsible for the day-to-day running of the business.
▪ He has wide experience in the business field which he can
apply in the business.

C. The Company Secretary (chief Administrative officer)

He is usually a lawyer or member of the accountant bodies or of the
institute of chartered secretaries and administrators. His responsibilities
depend on the size of the company, but in any case, he:
▪ Organizes all meetings of directors and shareholders.
▪ He acts as secretary in the board of directors meeting.
▪ He prepares annual reports to distribute to shareholders.
▪ He is responsible in preparing important documents of the
company like contracts forms etc.
▪ He is in charge of handling and maintaining the company’s
register.
▪ He issues out all statements regarding the business policy on
behalf of the board.
▪ He is sometimes contacted for approval before a member of
staff is appointed.
▪ He is responsible with administration of pension, insurance,
patent an licenses.

4. Importance of Entrepreneurship
• It leads to employment opportunities both for
the entrepreneur and those who help him
• It contributes a lot to government revenue in
form of taxes.
• Entrepreneurship utilizes those resources that
would otherwise be redundant.

44
 • It helps to maintain constant flow of goods and
services.
• Provision of a variety of commodities to
consumers raises their standards of living
• The excess profits generated by entrepreneurs is
used to finance social services e.g. sport
• It helps in the development of infrastructure e.g.
Bridges, roads.
• It may lead to the inflow of skills and the
development of local skills
• It also helps to increases the export potential of
a country. x) It increases domestic investments
through competition and inflow of foreign
capital

Problems Faced by Entrepreneurs

• Taxation by the government.
• Government intervention by nationalizing and fixing
prices.
• There is political pressure.
• Competition for the market.
• Lack of infrastructure for easy distribution of goods
and services.
• Fluctuating demand and supply situations which in turn
affect planning of what, when, where and how to
produce.
• Insufficient profits.
• High inflationary tendencies.
• Insufficient financial services and loan funds are low.

45
SECTION TWO: GENERAL ECONOMICS
1. The following are the factors the affect Cameroon economy:
• Interest rate: If the interest rate in Cameroon is high, it
will reduce the rate at which individuals and companies
take loans thereby reducing the cash flow in the country
and hence negatively affecting Cameroon economy and
vice versa.
• Tax rate: The tax rate is a crucial part of the economy.
The tax rate affects the prices of goods and services
consequently their sales.
• Inflation: when there is inflation, money supply in the
economy increases and the value of money falls thereby
affecting the economy.
• Unemployment or the supply of labour: Low supply of
labour in Cameroon affects the economic activities since
there is low level of income.
• Political stability: Cameroon economy is affected by
the political instability due to strike in some regions, this
affect the economic activities in those regions of the
country.
• The size of income
• The distribution of income
• Availability of natural resources
• The size of the labour force
• Exchange rate
• The level of investment in the economy
• Capital flight
• Fraud
2. The two types of economics are micro and macro economics
➢ Micro Economics: This economics deals with the separate parts
of the economy. It studies economics in part. It studies the
46
 behaviour of individual decision makers in the economy such as
customers, individual firms, household and prices of particular
commodities. It takes sector view and not the general view of
the economy.
➢ Macro Economics: It is concerned with the economy as a
whole. It deals with a large scale analysis. It is particularly
concerned with the study between broad economic aggregates;
the most important which is national income, the general price
level, economic growth. It studies the government’s actions and
its overall consequence.
NB: If a student approaches from Positive and Normative
economics, he should earn the 10 marks.
3. Economic growth is a sustained increase in Gross Domestic
Product (GDP) accompanied by an increase in the productive
capacity of the economy. It is considered as the persistent
increase in the real national product of the country. It is
illustrated by an outward shift in the PPC curve of a country.
There are two types of growth which are actual economic
growth and potential economic growth. (a good candidate
should draw the PPC to earn all the marks) definition ad
drawing PPC is 3 marks)
4. indicating factors to show that an economy is growing
➢ Fall in the level of unemployment
➢ Increase in the level of investment
➢ Increase in the level of technology
➢ availability and exploitation of natural resources
➢ Re-allocation of resources towards consumption goods
industries
➢ Increase in the population level which increases the labour
force
➢ Political stability
➢ Increase in the stock of capital
47
 ➢ Improvement in education and training
➢ Reduced birth rate and dead rate.

SECTION THREE: COMPANY LAW

1. Definition of company by OHADA
Article 4 of the UACC states that “a commercial company shall be
formed by two or more persons who agree by contract to assign assets
in cash or in kind to an activity for the purpose of sharing profits or
benefiting from savings that may be derived there from…” Article 5
further states that “a commercial company may also be created as
provided by this Uniform Act, by a single person referred to as ‘a sole
proprietor’ on the basis of a written document.
Article 6 also says the commercial nature of a company shall be
determined by its form or object. Private companies, sleeping
partnerships, private limited companies and public limited companies
are commercial companies by virtue of their form, irrespective of their
objects.
The History of Company Law in Cameroon
It should be noted that the reason for tracing a brief history of company
law in Cameroon is to ascertain which law is applicable currently, the
reason for still applying common law principles within certain specific
areas irrespective of the fact that Uniform Act has been enacted. To this
effect, the history of company law in Cameroon is traced in two
principal stages; the period between 1922 and 1961 and the period
between 1961 and 1998 till date.
a) Period Between 1922 and 1961
The period between 1922 and 1961 was characterised by the British
mandate in Cameroon. This mandate gave Britain the responsibility to
maintain peace, order and good governance within this territory as well
as promoting the moral wellbeing of its inhabitants. This was affirmed
by the council of the League of Nations on 20th of July 1922. Britain
therefore had the right to apply their laws to the overseas territories
48
which were merely protectorate under the Foreign Jurisdiction 1843-
1990. The British therefore reacted by putting in place the British
Administrative Order No. 1621 of June 1923. The terms were to the
effect that British Cameroon’s were to be administered as though it was
part of the British Protectorate in Nigeria. This accounts for the
application of the Nigerian legislations in Cameroon such as the
Nigerian Companies Ordinance CAP 37 of the 1958 Laws of Nigeria.
This Ordinance drew much inspiration from the English Companies
Act 1908.
With regards to ‘Received English laws’; British Cameroon became an
autonomous region in Nigeria under the name Southern Cameroons in
1954, thus the British wanted to apply directly the British laws within
the territory of Southern Cameroon but needed to determine the
quantum of English laws to be applied in the territory. The Southern
Cameroon High Court Law (SCHCL) 1955 was enacted. Section 11 of
SCHCL held to the effect that where there is no local enactment or
where there is a lacuna in the local enactment, the Common Law
doctrines of Equity, the Statutes of General Application enforced in
England on the 1st of January 1900 shall apply.
Meanwhile, in former East Cameroon, were laws from the French
overseas territories in Africa. France had set up the civil law system in
her own part of the territory. In 1960, French Cameroon achieved
independence and was known as La Republique du Cameroun’. On
October 1, 1961, British Cameroon reunited with the independent
republic of Cameroon, and so the Federal Republic of Cameroon was
born made up of two federated states; East and West Cameroon, each
maintaining its own legal system. East and West Cameroon were
transformed into the United Republic of Cameroon following the
constitution of 2nd June 1972. On the 4th of February 1984, decree No
82/1 changed the appellation –United republic of Cameroon to Republic
of Cameroon. In Francophone Cameroon before the advent of the
OHADA Uniform Act on companies, the main piece of legislation that
49
governed company law matters was the French received ‘Code du
Commerce’ of 1807. This code was made up of four books. The first
book regulated commerce in general, the second was on marine law, the
third was on insolvency and the fourth was on jurisdiction in
commercial matters.
a) Period between 1961 and 1998 to present
This period was characterised by the unification of Southern
Cameroons and the Republic of Cameroon to form the Federal Republic
of Cameroon. The laws applicable in each region stayed unchanged.
Thus, bringing about the Bi-jural nature of the legal system in
Cameroon today.
Today with the coming of the OHADA treaty, company law regulations
have been changed within the member states, Cameroon is a signatory
to the OHADA treaty and so the Uniform Act relating to Commercial
Companies and Economic Interest Groups entered into force as from
January 1st 1998.
2. An overview of the OHADA institution
In 1993, 16 African countries adopted the Treaty on the Harmonization
of Business Law in Africa (OHADA Treaty), using principles inspired
by French law. The purpose of the OHADA Treaty is to establish legal
and judicial security to economic activities in the member states, with
the aim of gaining investor confidence and facilitating exchanges
between the member countries. The states that currently have adopted
the OHADA Treaty are 17 include Benin, Burkina Faso, Cameroon,
Central African Republic, Chad, the Comoros, Congo, Côte d’Ivoire,
Democratic Republic of Congo, Equatorial Guinea, Gabon, Guinea
Bissau, Guinea, Mali, Niger, Senegal and Togo.
Pursuant to the framework of the OHADA Treaty, the member states
adopted regulations called the Uniform Acts (the Uniform Acts). The
Uniform Acts are directly applicable and mandatory in all member
states.

50
The Uniform Acts covers various areas of business law. The following
Uniform Acts have been adopted by the member states:
- Uniform Act relating to general commercial law, amended on 15
December 2010;
- Uniform Act organizing securities, amended on 15 December
2010;
- Uniform Act relating to commercial companies and economic
interest group, amended on 30 January 2014;
- Uniform Act organizing collective proceedings for wiping off
debts, amended on 10 September 2015;
- Uniform Act on arbitration, adopted on 11 March 1999;
- Uniform Act organizing and harmonizing undertakings’
accounting systems in the member states of the OHADA Treaty,
adopted on 24 March 2000;
- Uniform Act relating to cooperative companies, adopted on 15
December 2010;
- Uniform Act relating to goods road transportation contracts
adopted on 22 March 2003; and
- Uniform Act organizing simplified recovery procedures and
measures of execution, adopted on 10 April 1998.

THE GOVERNING BODIES OF THE OHADA

- A legislative body: The Council of Ministers
• Legislative function: approval of the annual business law
harmonisation program and of the Uniform Acts (instead of the
legislative bodies of the Member States)
• Legal and administrative function: approval of the budgets of
the CCJA and of the Permanent Secretariat, nomination of the
CCJA Judges, approval of the OHADA annual accounts,
approval of implementing decrees, etc.
- An executive body: The Permanent Secretariat

51
• Proposes to the Council of Ministers’ Chairman an agenda for
the Council and the annual business law harmonization
• Drafts the Uniform Acts, present them to the Member States for
examination and request the CCJA’s opinion before their
approval
• Elaborates the final drafts of the Uniform Acts and proposes
them for the agenda of the Council of Ministers
• Publishes the Uniform Acts in the OHADA Official Journal
• Proposes candidates for the nomination of the CCJA judges
• Supervise the ERSUMA (Ecole Régionale Supérieure de la
Magistrature de l'OHADA), the OHADA regional training
centre for judges
- The judicial body of the OHADA: the CCJA (Cour
Commune de Justice et d'Arbitrage), the common court of
justice and arbitration
• Based in Abidjan (Ivory Coast)
• 9 Judges nominated by the Council of Ministers for a non-
renewable seven-year period
• Written and contradictory procedure
• Its judicial decisions are directly binding within the Member
States, without any transposition or exequatur
• Has jurisdiction over final decisions rendered at last instance by
national courts
• Provides opinions for the uniform interpretation and application
of the Treaty, its implementation decrees and the Uniform Acts
• Arbitration Centre: without settling the dispute itself, it
organises and controls the arbitral proceedings and nominates or
confirms the arbitrators

52
 SET FOUR
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. State and explain five advantages of small businesses over big
businesses. 10mks
2. Give the role of the following departments within an enterprise
a. Production
b. Human resource
c. Accounting
d. Purchasing
e. Marketing 15mks
3. Explain the different entrepreneurial traits. 9mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1.a) Distinguish between direct and indirect production activities
(10mks)
b) How has the concept of specialization benefited most countries?
(4mks)
2. A firm producing Yoghurt at a unit price of 300FCFA, has fixed cost
of 1000frs and its variable costs are as follows;
Output (000kg) Total variable cost(TVC)
1 3000
2 4000
3 6000
4 9000
5 14000
6 21000
7 30 000
8 41000
9 54000
i) Insert and complete the columns for TR, TC, MC AC and MR
(where TC is total cost, TR is total revenue, MC is marginal
cost, AC is the average cost and MR the marginal revenue).
(5mks)
53
 ii)What is the profit maximizing output (1mk)
iii)Calculate the maximum profit per unit (1mk)
iv)Calculate the total profit (2mks)
v)Assume that rents increased by 25%, show how this increase
affects the total cost and consequently, how the profit maximizing
output will be affected. (2mks)
3. Assume the following information represents the national income
model for a hypothetical economy (values in millions of FCFA
francs);
C=210+0.8Yd
T= 12 + 0.2Y
Yd=Y-T
I=360; G=260; X= 320
M= 120 + 0.2Yd
Where M and X are imports and exports respectively, C is
consumption, I is investment, G is government spending, T is
taxation, Yd is disposable income.

Calculate the following:

1.The equilibrium level of national income (4mks)
2.The equilibrium level of consumption (3mks)
3.The equilibrium level of imports (3mks)
4.The equilibrium level of taxes (3mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. State and explain the various forms of company recognized by
the OHADA law
2. Critically examine the basic conditions for the formation of
business entities in Cameroon
3. Examine the conditions for becoming a member in a business
entity in Cameroon

54
 MARKING GUIDE FOR SET FOUR

SECTION ONE: ENTRPRENEURSHIP

1. The Bolton committee has listed the advantages of small
businesses over their large counter-parts as follows:
• They perform task for which large-scale industry is ill suited.
For example, where there is only a small market or where the
products do not lend themselves to mass production techniques.
• They are often more efficient than large firms, having lower
overhead costs.
• They can adjust to changing market conditions more rapidly
than their larger counter-parts.
• Many are selling a combination of products and personal
services.
• They are an important source of innovation in product,
processes and services.
• They provide jobs to people whose personality ill suits them for
work in large impersonal organizations.
• The sector is a valuable training ground for “all-round”
managers. Expertise acquired is often attractive to and may very
well be drawn on by larger firms.
• They are a source of competition and thereby stimulate
efficiency throughout the industry.
• They are the traditional breeding-ground for new industries and
the seed-bed from which large firms grow to challenge the
established leaders of industry.
1. Production Department (Work Department)
This is the department that is in charge of production in a
manufacturing company. It is headed by the production manager. This
department performs the following functions:
▪ It transforms raw material into finished products.

55
 ▪ Ensures sufficient availability of labour and material needed for
production.
▪ Determines the process of manufacture or methods of
production
▪ Prepares purchase and store requisitions.
▪ Determines the length of time for production.
▪ Undertakes quality control.
2. Personnel Department or Human Resource Department
This is the most important department in every organization because
without this department other departments cannot function as personnel
are needed in every department. It is headed by the Human Resource
manager. This department performs the following functions:
▪ They advertise jobs vacancies.
▪ They interview those to work in the company.
▪ They recruit workers for the enterprise.
▪ They rain workers for the enterprise.
▪ They promote and demote workers for the enterprise.
▪ They act as negotiators in trade unions and other outside
bodies for the enterprise.
▪ They determine wages and salaries of workers of the
enterprise.
▪ They take care of workers for the enterprise.
▪ They transfer workers for the enterprise.
▪ They carry out job appraisal of workers.
▪ They settle disputes amongst workers.
▪ They keep time record of each employee.

3. Accounting Department or Financial Department

This department is very important in every organization as they control
cost in every enterprise. It is headed by the Financial Manager or Chief
Accountant. This department performs the following functions:
▪ They determine the capital needed by the firm.
56
 ▪ They raise capital and allocate it.
▪ They minimize wastage of financial resources.
▪ They keep record of the transactions of the firm.
▪ They guard against shortage of working capital.
▪ They prepare financial records of the enterprise.
▪ They reveal the value of assets and the rates at which they
are depreciating.
▪ They reveal areas where losses are occurring and how they
can be reduced.
4. Purchasing department:
This is the department that is responsible for the buying of things
needed by the enterprise. It is headed by the purchasing manager or
chief Buyer. Other departments inform this department of the things
needed in their department in a form known as purchase requisition.
This department performs the following functions:
▪ They carry out sourcing i.e. looking for possible suppliers for
items needed by the firm.
▪ They keep supplier’s addresses to facilitate the purchasing task.
▪ They select they supplier from whom to buy.
▪ They prepare and send inquiries to various suppliers.
▪ They place order for goods.
▪ They purchase raw material, stationeries and equipment needed
by the firm.
▪ They ensure the prompt delivery of goods ordered.
▪ They keep product index card to facilitate the purchasing task.
▪ They receive purchase requisition from other department of the
enterprise.
5. Marketing Department
It is needed by the Marketing Manager. The function of the marketing
department can be summarized under four Ps (4ps). The ‘4ps’ stands
for: product, price, place and promotion.
This department performs the following functions.
57
▪ Product: they determine consumer’s needs and communicate
them to the production department to produce the right product.
▪ Price: they determine the prices of products.
▪ Place: they distribute goods to the places where they are needed
(distribution).
▪ Promotion: they advertise the products of the company.

3. Entrepreneurial traits
1. Passionate
Strong and barely controllable emotion. You need to be driven
by a clear sense of purpose and passion. Typically, that passion
comes from one of two sources: the topic of the business, or
the game of business-building itself. Why do you need
passion? Simply because you’re likely to be working too hard,
for too long, for too little pay with no guarantee that it’ll work
out… so you need to be motivated by something intrinsic and
not money-related.

2. Resilient
If you’re going to build a startup, you’ll need a spirit of
determination coupled with a high pain tolerance. You’ll need
to be willing and able to learn from your mistakes – to get
knocked down repeatedly, get up, dust yourself off, and move
forward with renewed motivation.
People will constantly tell you your baby’s ugly, that your
business won’t work. Now, you should listen carefully and be
open to constructive criticism. But after a while, having the
door slammed in your face repeatedly can be withering, and
the best entrepreneurs learn to feed off the negativity and
actually gain strength from it.

58
3. Self-Possessed
You need a strong sense of self. You can’t be threatened by
being surrounded by talented, driven people. To truly succeed,
you’ll need the self-confidence to surround yourself with
people “who don’t look like you” … that is, people with skills,
background and domain knowledge that complement your
own. And check your ego at the door: you shouldn’t be too
proud to make coffee for the team, empty the waste baskets, or
do the bank runs.

4. Decisive
You’ll need to develop a comfort-level with uncertainly and
ambiguity. Entrepreneurs gather as much information as they
can in a short period of time, and then MOVE, MOVE,
MOVE!! The attitude is that it’s not going to be perfect… We
only have 9% or so of the data from which to base our
decision… but if we wait to have all the information, we’ll
never get moving… and be mired in indecision. (Big
organizations are really good at this – the mired thing – saying,
We don’t have enough information, so let’s continue to
study… form a committee or a task force)
5. Fearless
On the sliding scale from “risk-averse” to “risk-seeking,” it
shouldn't surprise anyone that entrepreneurs tend to be closer
to the latter. Smart entrepreneurs develop an intuitive ability
to sniff out and mitigate startup business risk. But you know
you’re going to fall down, and feel comfortable with that fact
and that you’re going to learn from your failures and adjust as
you go.

59
 6. Financially Prepared
You’ll need the right personal financial profile to make the
leap. This doesn’t mean that only the rich can be
entrepreneurs. But unless and until you’ve got the personal
financial ‘runway’ (ability to go without a steady paycheck
and subsidized benefits) of at least 18 to 24 months (ideally
longer), you might hold off on quitting your day job.
Consider launching the startup as a side-business if that’s
possible, while continuing to work the 8-to-5 shift to cover the
bills. Or approach your boss about going part-time. Then, once
your business generating cash flow, you can dial back on your
hours, or submit your resignation and go full-time with your
startup.

7. Flexible
I challenge you to find an entrepreneur running a startup four
or more years old where that business doesn’t differ
dramatically from the vision sketched out in their original
business plan. The point is that the folks who stay on their feet
are the ones who stay flexible and adjust to new information
and changing circumstances.

8. Able to Sell
Whether you’re a born extrovert or introvert, as a founder/CEO,
you’ll find yourself always selling. You’ll be selling your vision
to prospective partners and funding sources. You’ll be selling
prospective recruits on why they should quit their day jobs and
join this startup they’ve never heard of.

60
 SECTION TWO: GENERAL ECONOMICS
1.a) Direct production is the creation of an end product like those in
farming producing food.
On the other hand, indirect production is the creation of goods and
services which are used for further production.
(to get all the marks allocated for this question, the candidate must
explain this difference in detail, with examples)
b) the advantages of specialization are;
-it creates mutual relationship between countries
-it increases productivity in each country
-helps in reducing unit cost of production
-leads to greater peace and corporation.
2.a) present a table where TR = Px Q,; TC = 10 x Q; Profit = TR – TC
Price Qty TR TC Profit
140 320 44800 3200 41600
130 400 52000 4000 48000
100 500 50 000 5000 45 000
150 250 37 500 2500 35 000
120 450 54000 4500 49500
110 480 52 800 4800 48000

The profit maximizing price is 120frs and quantity 450 units and the
maximum profit is 49 500frs.
b) if the fourth producer were to enter the market with the same cost
structure, the supply will increase. This will bring down the price as the
market share of the first three firms will reduce and part of the abnormal
profit will be taken away.
3.a) when 4 workers are employed, a maximum profit of: (128 750 -100
000) x 4 = 115 000frs will be attained.
b) To do this, the following table will be used;

61
No. of Total output TR TC Profit
workers
1 20 100 000 100 000 -
2 46 230 000 200 000 30 000
3 76 380 000 300 000 80 000
4 103 515 000 400 000 115 000
5 122 610 000 500 000 110 000
6 132 660 000 600 000 60 000

Thus the number of workers at the profit maximizing level of output is

4.
4.a) Determination of equilibrium level of income
▪ Y =C+I+G+X-M
▪ Y = 210 + 0.8(Y-12+0.2Y) +360+260+320-(120+0.2(Y-
12+0.2Y))
▪ 0.28Y = 1022.8
▪ Y = 3652.86MFCFA
b) Level of consumption
C= 210+0.8(3652.86-12+(0.2 x 3652.86))
C =3707.15MFCFA
c)Level of imports
M = 120 + 0.2(3652.86-(12+0.2 x 3652.86))
M = 702MFCFA
d)Level of Taxes
T= 12 + 0.2 x3652.86
T = 742.572Mfcfa
e) Value of multiplier
k = 1/1-mpc
k=1/1-0.72
k = 3.57. An increase in injection or a decrease in leakage leads to a
greater final increase in real GDP

62
SECTION THREE: COMPANY LAW
1. The commercial companies recognized by the OHADA Uniform Act
on Commercial Companies and Economic Interest Groups are as
applicable in Cameroon
- Public limited company or joint stock company (SA) art 385
UACCEIG
- Simplified public limited company or simplified joint stock
(SAS) Art 8531-23 UACCEIG
- Partnership or general / ordinary private company (SNC) Art
270 UACCEIG
- Limited partnership or private limited company (SARL) Art
309 UACCEIG
- Sleeping partnership (SCS) Art 293 UACCEIG
- Joint-venture (SEP – Sociétés en participation) Art 854
UACCEIG
- De facto company (SF – Société de fait) Art 864 UACCEIG

1. 2. Conditions relating to the substance of the contract

(basic or substantive requirements)
As mentioned in the earlier chapter a commercial company is defined
by the UACCEIG as a contract. A contract may be defined as an
agreement between two or more parties that is intended to be legally
binding. As a result, its formation should fulfil the various requirements
for the validity of contracts which are: consent, consideration, the
intentions to create legal relations, capacity of the contracting party,
certainty of the terms, and lawful object.
These conditions are not expressly indicated in the Uniform Act but
since the formation of a company involves a contract, the general
principles of contract law apply. Thus, for contracts to be valid, the
parties must agree, have capacity to be partners and must identify the
object of the company.

63
 A. Agreement (consent)
- Consent (offer and acceptance)
The consent of those who agree to form a company must be freely
given. Where a member is compelled to become part of the company,
either through threats or other forceful means, it will not be considered
as consent. They must agree to do so in good faith by binding all legal
ideas together for the better formation of the company.
Consent1 requires each of the parties to freely, honestly and clearly
decide to enter the agreement being aware of its consequences.
B. Capacity
The general rule is that any person is competent to bind himself to any
contract he chooses to make, provided that it is not illegal or void for
reasons of public policy. Exceptions to this rule include, minors,
mentally incompetent and intoxicated persons. Article 6 of UAGCL
states that:
i. Minors
In England and those countries having the common legal system,
minors are those below the age of 18 years and lack the capacity to
enter into a contract, in the exception of contract of necessities and for
the beneficial contracts of services. A minor therefore cannot form or
register a company for lack of legal capacity to do so.
The Uniform Act has adopted this view in article 7. Para 1 of UAGCL
by stating that minors, unless they are declared competent, shall neither
have the status of merchant nor engage in commercial acts. Yet the
Uniform Act has not defined for commercial purposes who a minor is.
By purported implication of commercial law, to be a trader, one must be
at least 21 years of age. Thus, implying majority to be 21 in regards to
the formation of companies.
Minors and legal incapacitated persons may not be partners in a
company where their liability for the company debt exceeds their

64
contributions as per article 8 of same law. More so is the fact that a
husband and wife may not be partners in a company in which they may
be indefinitely or jointly and severally liable for the company’s debt.
ii. Insane Persons
Generally, an individual may have an inherent physical condition which
prevents him from achieving the nominal level of performance expected
from persons of comparable age group, whatever the case, if the
resulting condition is such that the individual cannot care for
themselves or may act in ways that are against their interest. In this
case, the party concern lacks the understanding of his act and thus
cannot enter into any legal obligation.
iii. Husband and Wife (Spouses)
A husband and wife are barred from involving into a commercial
transaction under the uniform act. By implication they cannot form a
company together. They can be involved in commercial transaction
separately and not jointly. Article 7. Para 2 of UAGCL is to the effect
that “Spouses of merchants shall be deemed to be merchants only if they
carry out commercial acts referred to in Articles 3 and 4 above as a
profession and separately from their spouses.”
iv. Prohibition by Law or Incompatibility
Article 8 of UAGCL states that: No-one shall engage in a commercial
activity when subject to a special status of incompatibility. Para. 4
further states that “all acts carried out by an individual in a situation of
incompatibility shall nonetheless be valid as to third parties who acted
in good faith.”
The U.A provides in its book 1 chapter 2, the rules governing capacity
to trade. It states that nobody can engage in trading regularly as a
profession unless he has the legal capacity to trade (article 6). Article
9 UAGCL clearly states activities or professions that are incompatible
with commercial activities.

65
 v. Persons under Imprisonment Term (ex-convicts)
The Uniform Act bars those who are sanctioned by an imprisonment
term from creating a company. Should this be done fraudulently, the
company shall be a mere sham or façade and such persons shall be
further liable for an imprisonment term.
C. Lawful Object
The object of a company is the activity that the company is carrying out
to share in its profit and share in it loses. The object of each company is
contained in the object clause of the Article of Association of the
company. The object of each company must be lawful.
D. Consideration Law
The mere fact of agreement alone does not make a contract. Both
parties to the contract must provide consideration if they wish to sue on
the contract. This means that each side must promise to give or do
something for the other.
E. Contractual/legal relationship
There must be the intention to create a legal or contractual relation, this
means the parties must intend for their agreement to have effect in law
or simply be enforceable in law.
3. A person may become a member in a company by acquiring shares in
a company in the following ways;
a. By Subscription
At the point of incorporation of the company, the company is required
to have at least two shareholders who will sign the articles of
association and undertake to contribute to share capital by taking up
shares. These are subscribers of the shares of the company. The names
of the subscribers shall have their names in the register of subscriber or
members as the first shareholders or founding shareholders.
b. By Allotment
Allotment is the process of acquiring shares directly from the company
whenever it issues or offers shares to the general public. In this case,
when a person applies and is given certain number of shares, he is said
66
to be allotted the shares. When he pays for the shares and names entered
in the register of members of the company, he becomes a member of the
company as per article 144 of the UACC.
c. By Transfer
Shares are properties whose ownership could be transferred from one
person to another. A person may therefore become a member or a
shareholder if a former owner transfers his ownership of shares to him.
This could be by sale or by way of gift. It therefore requires that the
name of the new owner must be entered in the membership register in
replacement of the former owner, to become a member of the company.

d. By transmission
When the previous owner of shares dies and his shares are inherited by
his personal representative or heirs, this is called transmission of shares.
Shares may only be inherited by production or presentation of a probate
of a will of the deceased owner or letters of administration of his estate
granted by the High Court. The beneficiaries of the shares by
transmission must have their names entered in the register of members
of the company or elect a nominee to hold the shares on their behalf. In
this case the nominee’s name shall be entered in the register of
members of the company to become a member of the company.

67
 SET FIVE
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Explain some of the assistance given by the government to assist
small businesses in Cameroon. 10mks
2. Explain five differences between an entrepreneur and a
manager. 10mks
3. Explain some of the role of entrepreneurship to economic
development. 14mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1.Given that C= 100 + 0.75Yd, I= 75, G=80, T=20, Tr = 10, X= 60 and
M= 10+ 0.01Y
a) Calculate the equilibrium income using the aggregate demand and
aggregate supply approach and the injection and leakage
approach(10mks)
b) If the government wishes to boost the economy through a balance
budget and resorted to increasing both tax and government spending by
100, what will be the new equilibrium income? (4mks)
c)What is the meaning of; i) balance budget ii) surplus budget? (4mks)
d)What are the implications of each of the above budgeting policy on
the equilibrium income? (2mks)
2.Below is the market demand and supply schedule for commodity in
the Buea central market:
Prices(frs) 100 90 80 60 50 40 30 20 10
Qty 10 20 30 40 50 60 70 80 90
demanded
Qty 110 100 90 80 70 60 50 40 30
supplied
Required:
a) What is the equilibrium price and quantity? (2mks)

68
b) Calculate the elasticity of demand around the equilibrium price and
state the nature of the elasticity. (4mks)
c)If a tax of 20frs is imposed on producers, with the aid of diagram,
illustrate the effect of such policy on the equilibrium situation. Clearly
state what will happen to the revenue of the suppliers. (10mks)
d) Outline the importance of the elasticity concept to the government
and to the business community. (4mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. Explain the specific conditions for the formation of companies in
Cameroon.
2. What is a company’s Object and how does the ultra-vires doctrine
operate in company law?
3. Discuss the ultra vires doctrine in company law
4. What are the requirements for the registration of companies and
other business entities in Cameroon?

MARKING GUIDE FOR SET FIVE

SECTION ONE: ENTRPRENEURSHIP
1. The government has created industrial free zones for enterprises to
establish there. E.g. the Bonaberi industrial free zone.
• They are free from all taxes levied on company tax, taxes
levied on credit distribution, taxes on industrial and
commercial profits for eight years from the period of
establishment.
• The government has created the national assistance to
small and medium size enterprises (CAPME) which
offers material, expertise, and financial assistance only
to those that have registered with the Cameroon
chambers of commerce and industries.
2. The terms Entrepreneur and Manager are considered one
and the same. But the two terms have differences.
69
The following are some of the differences between a manager
and an entrepreneur.
• The main reason for an entrepreneur to start a business
enterprise is because he comprehends the venture for
his individual satisfaction and has personal stake in it
where as a manager provides his services in an
enterprise established by someone.
• An entrepreneur and a manager differ in their
standing, an entrepreneur is the owner of the
organization and he bears all the risk and uncertainties
involved in running an organization where as a
manager is an employee and does not accept any risk.
• An entrepreneur and a manager differ in their
objectives. Entrepreneur’s objective is to innovate and
create and he acts as a change agent where as a
manager’s objective is to supervise and create
routines. He implements the entrepreneur’s plans and
ideas.
• An entrepreneur is faced with more income
uncertainties as his income is contingent on the
performance of the firm where as a manager’s
compensation is less dependent on the performance of
the organization.
3. (1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilizing the
idle savings of public. They employ their own as well as
borrowed resources for setting up their enterprises.
Such types of entrepreneurial activities lead to value addition
and creation of wealth, which is very essential for the
industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:

70
Entrepreneurs provide immediate large-scale employment to
the unemployed which is a chronic problem of underdeveloped
nations. With the setting up.of more and more units by
entrepreneurs, both on small and large-scale numerous job
opportunities are created for others. As time passes, these
enterprises grow, providing direct and indirect employment
opportunities to many more. In this way, entrepreneurs play an
effective role in reducing the problem of unemployment in the
country which in turn clears the path towards economic
development of the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through
setting up of industries in less developed and backward areas.
The growth of industries and business in these areas lead to a
large number of public benefits like road transport, health,
education, entertainment, etc. Setting up of more industries
lead to more development of backward regions and thereby
promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and
business activity. Industrial developments normally lead to
concentration of economic power in the hands of a few
individuals which results in the growth of monopolies. In order
to redress this problem a large number of entrepreneurs need to
be developed, which will help reduce the concentration of
economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in
the interest of the country to more people and geographic
areas, thus giving benefit to larger sections of the society.
Entrepreneurial activities also generate more activities and
give a multiplier effect in the economy.
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 (6) Increasing Gross National Product and Per Capita
Income:
Entrepreneurs are always on the lookout for opportunities.
They explore and exploit opportunities, encourage effective
resource mobilization of capital and skill, bring in new
products and services and develops markets for growth of the
economy. In this way, they help increasing gross national
product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the
people in a country, is a sign of economic growth.

SECTION TWO: GENERAL ECONOMICS

1.a) Calculation of equilibrium using both methods
❖ Aggregate demand method
Y = C+I+G+X-M ; Yd =Y-Tx+Tr
Y= 100+0.75(Y-20+10) +75+80+60-10+0.01Y
0.24Y = 297.5
Y= 1239.58
❖ S+Tx+M=I+G+X; but S=Yd-C
(Y-20+10-100+0.75(Y-20+10)) +20+10+0.01Y
1.76Y = 302.5
Y = 171.875(this question had an error right from setting)
b) Calculation of new equilibrium
using aggregate demand; new tax = 120; gov = 180
Y = C+I+G+X-M
Yd = Y-Tx+Tr
0.24Y = 324.5
Y = 1427.08
c)Balanced budget is a situation in financial planning or budgeting
process where total revenue is equal to total expenditures while budget
72
surplus is a situation where total revenue is greater than total
expenditures
2.a) equilibrium price = 40 and equilibrium quantity = 60
b) PED around the equilibrium the equilibrium price is either before or
after
using before, new price = 50 and new quantity = 60
PED = change in quantity /change in price x Po/Qo
PED = 40 – 60/50-40 x 40/60; PED = -1.33. This implies that the
product is a normal good and it is fairly elastic in demand
c)After imposition of tax of 20frs.
Price Qd Qs Qs 1
100 10 110 90
90 20 100 85
80 30 90 80
60 40 80 60
50 50 70 50
40 60 60 40
30 70 50 30
20 80 40 0
10 90 30 -
The user should present the curve on the graph paper.
❖ Equilibrium price = 50 and equilibrium quantity = 50
The total revenue of the supplier will reduce since the
commodity is considered to be elastic
d)Importance of PED
❖ To the business man
-it helps in raising revenue where goods are inelastic
-sharing the burden of taxation
-it facilitates price discrimination
-it helps to assess the success of advertising campaign
❖ To the government
-to raise funds
-control consumption
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 -correction of BOP deficit
-subsidization

SECTION THREE: COMPANY LAW

1. The creation of commercial companies is subject to the fulfilment of
some other specific requirements. These are: the contributions, the
sharing of the resulting benefit or savings and the affectio societatis. In
some cases, additional conditions related to shareholders can be
required.

a. The contributions
Each shareholder or partner contributes to the registered capital. The
contribution can be defined as the asset or amount of money that the
partner puts or promise to put at the disposal of the company for a
common exploitation. Contributions are done through two main actions:
the subscription of shares or stocks, and the payment of their value.

b. The sharing of the profits or loses

The shares issued by the company as the result of contribution made by
shareholders, grant to their owners the right to receive part of the
company’s profits. It also imposes upon them the obligation to share the
burden of the company’s losses.
Shares also impose upon their holders the obligation to share the burden
of the company’s losses. In limited liability companies, this burden is
limited to the amount of each shareholder’s shareholding, whereas in
other types of companies it is unlimited. This contribution may be
unequal, if so provided by the articles of association.

c. The affectio societatis

The affectio societatis is not expressly required by the Uniform Act.
However, customs have requested this element as a fundamental item of
the contract of association. The affectio societatis or the will of
74
association is the criterion which shows the existence of a company, the
regulator of relationship between partners, and the means of distinction
between the quality of shareholder and neighbouring concepts. This
concept is usually brought up in case of a doubt about the existence of a
company. Thus, when a company is apparently well created, it is the
affectio societatis which will allow to detect his non-existence.

d. Number and status of owners

The creation of some type of company is in addition subjected to some
conditions relating to the number and the quality of shareholders.
Number of owners
The company is mainly created by two or several people. But in some
cases, one shareholder will be sufficient. Some companies legally
created by several people can be in reality sole proprietor companies,
considering their domination by a sole shareholder. Such companies can
be declared fictitious because of the absence of the affectio societatis
Legal status of owners
Any physical person or legal entity may be a partner in a commercial
company, on condition that he is not subject to any prohibition,
incapacity or incompatibility as defined notably in the Uniform Act
Relating to General Commercial Law.
Thus, minors and legally incapacitated persons may not be partners in a
company where their liability for the company's debts exceeds their
contributions. The nationality of the shareholder is not important.
Before the entry into force of the Uniform Act, company created by
spouses was not formally authorized by the law. But from now, the
article 9 of the Uniform Act solve the matter by implicitly admitting
that a wife and husband may be partners in a company in which their
liability toward company’s debts shall be limited to their contribution
(Limited companies and Sleeping Partnership where one of spouses are
‘active partner’ and the other ‘sleeping partner’.

75
2. The object of a company consists of the main activity for which a
company was created. It must be identified and described in the articles
of association. And where a company is involved in an activity
regulated, it must comply with the special regulations governing the
activity. Such as forestry, as per article 21 of the UACC. Articles 20 of
the UACC states that the object of the company must be lawful. An
illegal act shall not therefore constitute a valid object.
It should be noted that a company’s object may be changed under the
conditions stipulated for amending the Articles of Association. If a
company enters into a transaction which is not indicated in its clause,
that transaction will at common law be ultra vires (beyond its power)
and void (of no effect). This object clause indicates the capacity of the
company. The ultra vires rule was brought to protect shareholders.

3. The Ultra Vires Doctrine

The doctrine is a weapon of protection for both investors and creditors.
It was first formulated to prevent directors of limited liability
companies from departing from the object, which the company was
formed to achieve. By this doctrine, members of a company could in
theory be assured that their investments will not be spent on activities
which they did not have in mind when they invested their money in the
company. Concerning creditors, the ultra-vires doctrine could also be
justified as a safeguard for them. It is in their interest as well that of the
property of the company on which they look upon as a guarantee for
repayment of monies lent to the company, it should be noted here that,
the ultra-vires doctrine forbids a company from engaging in activities,
which are not spelt out in the object clause or incidental thereto.

76
 SET SIX
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Give five social and five economic roles of an enterprise to an
economy. 10mks
2. Explain five types of entrepreneurs 10mks
3. State and explain the steps in the entrepreneurial process. 14mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1.The table below shows the national income data of an imaginary
country for a given year. The figures are in millions of francs CFA.
Income from self-employment 1050
Income from employment 750
Gross trading profit of companies 300
Gross trading surplus of public corporations 200
Rents 70
Imputed charge for the consumption of non- 20
traded capital
Stock appreciation 40
Residual error -60
Property income from abroad 40
Property income paid abroad 30
Capital consumption 30

Calculation:
a) Total income (6mks)
b) Gross domestic income at factor cost (6mks)
c) Gross national income at factor cost (4mks)
d)The net national income (4mks)
2.A firm hires a machine costing 500frs per day. It employs labor at
current wage of 20F per day. There are no other cost of production.
Output and average revenue are estimated to be as follows:

77
Number of 10 20 30 40 50 60 70 80 90 1001
men
Output(units) 1 5 10 20 45 70 90 110 125 130
per day
Average 70 65 60 55 50 45 40 35 30 25
revenue
(FCFA)

a) i) set out a schedule of total revenue(TR), total cost(TC) and

profit. (8mks)
ii) Determine the profit maximizing level of output. (2mks)
iii) Determine the level of revenue at the output. (2mks)
b) If wage rate rises to 30F per day, calculate the new:
i)Profit maximizing level of output. (4mks)
ii)Level of profits at that output. (4mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. Discuss the Principle of corporate personality.
4. Explain the Lifting of the veil of incorporation and its
consequences
2. What are the Organs of a company?

MARKING GUIDE FOR SET SIX

SECTION ONE: ENTRPRENEURSHIP

1. A. THE ECONOMIC ROLE
1) The enterprise provides goods and services to the community
therefore improving the living standard of the community.
2) Enterprises like the CDC (i.e. government enterprises) provide
certain important social services like health (its hospitals),

78
 education, water and electricity to raise the standard of living of
its citizens.
3) Enterprises provide employment to relieve the society of social
costs of unemployment.
4) Enterprises complete the process of production by bringing the
goods produced to the consumers to satisfy their demand.
5) It creates employment opportunities in the country.
6) It increases government income or revenue from taxes paid by
different firms.
7) It increases savings and investments in the country.
8) It pays taxes to the state which is used to expand the economy.
9) It trains workers making them to be more efficient and
productive.
10) It provides goods and services.
11) It increases economic development in different sectors of the
country.
12) It gives profit to the business owners in the country.

B. THE SOCIAL ROLES OF AN ENTERPRISE

• It provides recreational activities like swimming pool to
workers.
• It provides employment to relieve the society of the social cost
of unemployment.
• It covers the social security scheme of workers.
• Some enterprises especially those owned by the government
provide social services like education, water, hospitals etc.
• It reduces starvation as it carries goods from areas of surplus to
areas of scarcity.
• It carries out sporting activities in the country.
• It provides varieties that go to increase the standard of living in
the society.

79
• It provides goods and services in the society needed to satisfy
demand.
• The enterprise completes the process of production by bringing
goods to the place where consumers are located.
2. Motivation to Engage in Entrepreneurial Activity Push (Forced):
• Push entrepreneurs: are those whose dissatisfaction with their
current position for reasons unrelated to their entrepreneurial
characteristics, pushes them to start a venture.
• Pull Entrepreneurs: Are those who are lured by their new
venture idea and initiate venture activity because of the
attractiveness of the business idea and its personal implications.
• “Push” and ‘pull’ Entrepreneurs: Are combinations of the
above two. They are normally more motivated and thus
outperform other types of entrepreneurs. However, “push”
entrepreneurs were found to be more successful than ‘pull’
entrepreneurs. They are more determined and persistent
because they normally have nothing to fall back to.
3. Levels of Creativity and Innovation
• Innovative Entrepreneur: Assemble a large variety of
information and combine a range of factors experimentally to
produce new possibilities in terms of markets, techniques, or
products. Countries with a very underdeveloped industrial base
hardly produce this type of entrepreneur, because of lack of the
necessary infrastructure.
• Imitative (Adoptive) Entrepreneurs: They imitate and adopt
the technology and techniques innovated by others. They are
particularly important in underdeveloped countries although
not highly regarded in more developed economies. However,
imitative entrepreneurs also need to be creative in order to
modify innovations to suit their special conditions.
Opportunistic

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• Opportunistic Entrepreneurs: They constantly look for and
exploit serial opportunities because of their wide skills and
knowledge accumulated from a wider educational background,
experience or exposure. They start by exploiting small
opportunities seeking and exploiting a series of, often varied,
opportunities as they grow. They ambition involve building
large organizations and are not afraid of borrowing to achieve
this growth. They usually find it easy to delegate and hire
competence.
• Visionary Entrepreneurs: They have almost similar
characteristics to the opportunistic Entrepreneurs however,
while “opportunistic” entrepreneurs pursue, serial business
opportunities, the “Visionary” entrepreneurs, concentrate on
the unwavering pursuit of a single, powerful opportunity. In
Practice, this fixation may represent a false opportunity’ that is
ahead of its time or falls to consider significant obstacles to
implementation.
• Craftsman entrepreneurs: They own the businesses in which
they operate, but tend to restrict their business to their
individual skills and experiences usually accumulated from
limited education and exposure. They have minimal growth
ambitions, keeping their enterprises small as a means of
maintaining control. Control is normally autocratic, with little
delegation and strong paternalistic attitudes towards their
workers. They avoid risk and the use of loan money. Normally,
they are not marketing oriented preferring to build very strong
with their existing customer.
• Drone Entrepreneurs:
At some instant in their business, craftsman entrepreneurs are
so comfortable with their achievements that they decide not to
tamper with what they consider a winning formula. Those
entrepreneurs that will not change under any circumstances are
81
 referred to as drone entrepreneurs. Slowly but surely, this
entrepreneur will be forced to close.
• Fabian Entrepreneurs: Are also reluctant to change, but are
sometimes forced by circumstances to change. They respond
very slowly to changes in the market, and this affects their
growth and competitiveness. However, by following a proven
path, these entrepreneurs are protected from the uncertainty of
new innovations; they are therefore likely to survive for a long
time. They however grow very slowly or do not grow at all
because they fail to exploit new innovations that are normally
more profitable.
• Solo Entrepreneurs: At the level of organization these are
entrepreneurs who developed their business ideas on their own.
The solo entrepreneur is limited to his means and capabilities.
• Network Entrepreneurs: These are entrepreneurs who get
their ideas from the social networks, and develop them suing
the networks are found. These network entrepreneurs can draw
from the means and capabilities within the network to
supplement his individual means and capabilities. The network
entrepreneur is therefore more likely to grow better and faster.
3. The process of starting a new venture is embodied in the
entrepreneurial process, which involves more than just problem
solving in a typical management position. An entrepreneur must
find, evaluate, and develop an opportunity by overcoming the
forces that resist the creation of something new. The process has
five distinct phases.
i) Identification of opportunity – idea
generation.
ii) Evaluation of the opportunity.
iii) Development of the business plan.
iv) Determination of the required resource, and
v) Management of the resulting enterprise.
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SECTION TWO: GENERAL ECONOMICS
1. To answer the question above, we use the table below;
Output TR TC 1 Profits 1 TC 2 Profits 2
1 70 700 -630 800 -730
5 325 900 -575 1100 -775
10 600 1100 -500 1400 -800
20 1100 1300 -200 1700 -600
45 2250 1500 750 2000 250
70 3150 1700 1450 2300 850
90 3600 1900 1700 2600 1000
110 3850 2100 1750 2900 950
125 3750 2300 1450 3200 550
130 3250 2500 750 3500 -250

a) i)the profit maximization level of output is 110 units

ii)the level of profits is 1750frs
b) Add a new column for total costs(TCI) and calculate new profit
column (profits
2. Here, TR has not changed and the:
i) profit maximizing level of output is 90 units
ii)Level of profits is 1000Frs

SECTION THREE: COMPANY LAW

1. The legal personality is the state or quality of being a legal person. A
legal person is any human or non-human entity, in other words, any
human being, firm, or government agency that is recognized as having
legal rights and obligations, such as having the ability to enter into
contracts, to sue, and to be sued.
The Uniform Act provides that “All companies shall have a legal
personality with effect from the date of registration in the Trade and
Personal Property Credit Register”. The creation of a legal entity may

83
allow the shareholders to practice commercial activity with lower risks,
limiting their personal liability. Indeed, by creating a different entity
with distinct assets, the creditors of that entity may not seize their
personal assets for the payment of the entity’s debts. Their liability is
then limited to the amount of their contribution in that entity’s assets.

84
 SET SEVEN
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Explain five problems faced by entrepreneurs in Cameroon.
10mks
2. List and explain the documents needed for the formation of a
limited liability company. 14mks
3. Explain five sources of finance to an entrepreneur. 10mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

3.During world war II, auto production was cut drastically. The
resources available could be used to produce jeeps or passenger cars.
The resources could be used in the following ways:
No of Jeeps (1000) No of cars (1000)
A 0 500
B 125 375
C 250 250
D 375 125
E 500 0

a) Graph the above information. (3mks)

b) What technical term can be used to describe the resulting curve?
(3mks)
c) Why is it that the production of cars cannot be increased without
decreasing the production of jeeps? (3mks)
d)If the economy is currently producing 125 jeeps and 375 cars, what is
the opportunity cost of increasing the production of jeeps to 250 jeeps?
(4mks)
e) State the assumptions used in drawing the curves (3mks)
f) State two factors that can cause the curve to shift outward. (4mks)
4.The number of people in Yaoundé who buy plantain every week is
2000.The demand function for each individual buyer is Qd = 12-P. At

85
the same time, every week, there are 200 sellers of plantain. The supply
function for each individual seller is Qs = 20P
a) Find the market demand and market supply functions for plantain in
Yaoundé. (6mks)
b) Construct the market demand and supply schedule for plantain for a
price range of 1frs to 5frs per cup. (4mks)
c)Determine the equilibrium price:
i)From the schedule (3mks)
ii) Through mathematical calculations. (3mks)
d)If the government fixed a minimum price of 5frs per cup:
i)What quantity of plantain must the government buy in Yaoundé to
maintain this price? (2mks)
ii)Calculate the price elasticity of demand as price changes from the
original equilibrium to the minimum price.

SECTION THREE: COMPANY LAW (33 Marks)

1. Examine the concept of auditing a company
2. Discuss the principle of majority rule
3. Carefully defines and explain the following:
a. Winding-up,
b. liquidation and
c. dissolution
4. Explain the various contributions made by shareholders during the
creation of a company.

MARKING GUIDE FOR SET SEVEN

SECTION ONE: ENTRPRENEURSHIP
1. Problems Faced by Entrepreneurs
• Taxation by the government.
• Government intervention by nationalizing and fixing
prices.
86
 • There is political pressure.
• Competition for the market.
• Lack of infrastructure for easy distribution of goods
and services.
• Fluctuating demand and supply situations which in turn
affect planning of what, when, where and how to
produce.
• Insufficient profits.
• High inflationary tendencies.
• Insufficient financial services and loan funds are low.
2. A business person who wishes to convert his or her firm
into a company does so by submitting certain documents to
the registrar of companies. The documents are examined
and if they comply with the requirements of the companies
Act, the formation of the company will be registered. The
major documents required by the registrar or Ministry of
commerce are:
a. The memorandum of Association
This document gives basic information of interest to shareholders and
other people who may deal with the proposed company, it contains six
clauses:
g. The name of the company followed by the word ‘Limited’ at the
end.
h. The address and location of its registered office.
i. The limited liability clause
j. The ‘objects’ clause – this clause indicates the purpose for
which the company is formed.
k. The amount of share capital that the company can raise must be
stated together with the values of shares it is to be divided into.

87
 l. The association clause. This is a declaration made by those
signing it that they wish to form a company and will accept the
shares allocated to their names.

b. The Article of Association

This document refers to the internal constitutions of the company. It
gives information on such issues as the right of the shareholder, the
power of directors and the holding of meetings. Every company has to
draw an article to suits them and there is no necessity that article of
association must be uniform.

c. Statement of nominal capital

Should the registrar of companies be satisfied with the documents
presented to him he will issue a certificate of incorporation making
the business a separate legal entity with a life quite separate from that of
its shareholders. At this stage, a private company may commerce
business and enter into any contract allowed by its ‘objects’ clause.
There is however, a further requirement before a public limited
company can start business. It must be issued a certificate of trading
by the registrar of companies on receipt of the document indicating that
the company has the necessary financial stability to start business.
Where the company is raising capital by issuing shares to the
public, the company must submit a prospectus (i.e. the document
inviting the public to buy shares in the business) to the registrar and
statements that the minimum capital necessary to run the business has
been subscribed (this is stated in the prospectus) and that directors have
paid for their shares.
Where the promoters and directors can raise sufficient finance
without appealing to the public, a statement in lieu of a prospectus
(containing much the same information as the prospectus) will be
submitted to the registrar in addition to the statement mentioned above.

88
 3. INTERNAL SOURCE
Retained Profit : Profit earned by entrepreneur may be used to
finance the future needs of firm.
Reducing Working Capital : By judging the exact requirement,
part of working capital may be used For financing the enterprise.
Sale of Assets : By selling fixed assets which are of little use, fund
may obtained.
Personal Savings of the Owner : Like PF, insurance policy,
investment, building may be used for fund.
Deferred Credit : goods, machine, plant may be\ taken on credit
basis for a particular time period by giving bank security to
supplier.

EXTERNAL SOURCES
With your new business plan, financial projections and financing
knowledge, you are now ready to secure outside capital for your
new venture. The following types of financing sources are ranked
according to amount of preparation required and ease of securing
the outside capital. Less preparation to secure a loan does not mean
it is the best source, nor the least expensive source of capital. Of
course, there will be exceptions to these general statements about
each financial source.
1. Trade or supplier credit ; Payment terms offered by your
suppliers are a potential source of credit. Study the discounts for
early payment and the penalty for late payment to determine the
true cost of the credit. While some suppliers will extend credit only
to well-established, proven firms, many will extend limited credit to
new businesses to encourage another outlet for their merchandise.
Planning for use of trade credit is essential. To establish good trade
credit, a new business must make timely payments as agreed. Trade
credit is effectively used by large businesses to buy products at
lower cost than small firms. Do not depend too much on trade credit
89
from one supplier. If repayment problems arise, you may find your
major source for supplies cut off when you need it the most.
2. Life insurance policies ; A standard feature of most life
insurance policies (except term insurance) is the owner’s ability to
borrow against the cash value of the policy. The money can be used
for any business or personal need. It normally takes two years for a
policy to accumulate sufficient cash value. You may borrow up to
95 percent of the cash value of the policy for an indefinite period of
time. As long as you continue to pay the insurance premiums, the
interest can frequently be deferred indefinitely. The policy loan will
reduce the dollar value of the policy and, in case of death, the loan
is repaid first and then the beneficiaries receive the remainder.
Some older life insurance policies guarantee very favorable interest
rates.
3. Friends and relatives ; It is best not to borrow from friends and
relatives, but many people do. If you must borrow from a friend or
relative, do it on a business basis by putting the agreement in
writing. Check with a lawyer if you want a binding, legal
agreement. You may also get a sample business loan contract form
from a bank or lending institution. Use it as a basis for a written
agreement that both parties find acceptable. Unrealistic and/or naive
investment expectations have ruined many friendships and family
relationships.
4. Customers ; When customers pay for work in installments as it
is completed or provide some of the materials, they are, in effect,
financing the business. For example, a carpenter reduces capital
requirements when the customer purchases the building materials
for a remodeling project. In addition, it is not uncommon to request
a deposit from customers when ordering items, particularly special
items.
5. Leasing companies ; Leasing business equipment is another way
to reduce capital needs. Everything from office furniture to food
90
 processing equipment can be obtained from leasing companies or
commercial finance companies. Leasing is generally more
expensive than bank financing and is limited to items that have a
long serviceable life, widespread use, and are easily repossessed in
the event of default. In many cases, you have the option to buy the
equipment for an agreed upon amount at the end of the lease period.
6. Commercial finance companies ; Commercial finance
companies are generally seen as the place to go when you are
unable to secure financing from a bank. Commercial finance
companies, like banks, are concerned with your ability to repay the
loan; however, they are more willing to rely on the quality of the
collateral rather than your track record or profit projections. If you
do not have substantial personal assets or collateral, a commercial
finance company may not be the best place to secure start-up capital
for a business. Commercial finance company capital is usually
several percentage points higher than bank financing.
7. Commercial banks ; Commercial banks are by far the most
visible lenders and make the greatest number and variety of loans.
However, banks are generally conservative lenders. Although they
accept collateral for business loans, loan approval rests on your
ability to repay the loan as shown by your profit projections,
management skills and your personal record. Strive to establish and
keep a good working relationship with your banker. It may help to
involve the banker in the planning process for your new business.
Avoiding the banker until you need money may make a loan harder
to get because the banker is unfamiliar with the business and its
history.
8. Product pre-sales
Product presales can be an effective method to finance your business,
since it doesn't require you to take out a loan or pay back any debt. And
just like with crowdfunding, it can validate your business idea.

91
 SECTION TWO: GENERAL ECONOMICS
3.a) NB: the user should draw the PPC curve
b) The production possibility curve (PPC) or a production possibility
Frontier(PPF)
c)This is because all the resources are fully employed.i.e it is
producing on its PPC
d)125 cars
e) the assumptions are as follows;
• The economy produces only two goods
•
• The state of technology is assumed constant
• The quantity of resources available remains unchanged
• All resources are fully employed
• The resources are mobile
f)-Discovery of new resources
-Improvement in technology
4.a)i)The market demand function Qd = (12-P) x 2000
Qd = 24000 – 2000P
The market supply function Qs = 20P x 200 ; Qs = 4000P
b) Market demand and supply schedule:
Price(frs per cup) Qty Demanded Qty supplied (cups)
1 22000 4000
2 20 000 8000
3 18 000 12 000
4 16 000 16000
5 14 000 20 000
c)i) From the schedule, equilibrium price = 4frs
ii) From mathematical calculation, equilibrium price is determined as
follows:
Qd = Qs
24 000 – 2000P = 4000P

92
6000P = 24 000
P = 4frs
d)i) the government must buy the excess supply which is given as 20
000 – 14000 = 6000
ii)PED = 0.5

SECTION THREE: COMPANY LAW

1. The Uniform Act has instituted several means of audit of the
company, the main being: the alert procedure, the management
evaluation, and in some cases the intervention of an external auditor.
a. The alert procedure and the management evaluation
The auditor may ask for explanations from the executives who shall be
bound to respond, in accordance with the conditions laid down by the
Uniform Act, in respect of any matter likely to jeopardize the
continuation of the company’s activities. Any partner may also do it
twice per year. The manager shall reply within one month after
receiving the request. In his reply, the manager shall give an analysis of
the situation and specify, where necessary the measures envisaged.
b. The management evaluation
One or more partners holding at least one-fifth of the company's
authorized capital may, either individually or as a group formed in any
manner, petition to the president of the competent court of the
registered office of the company to designate one or more experts to
make a report on one or more management operations. Besides these
general provisions, the main task of audit of the company is done by the
auditors, in form of company which their appointment is compulsory. In
addition, the auditors have the obligation to reveal to the shareholders
any management irregularity discovered during their mission, and when
the said irregularity is an infraction, to reveal it to the public prosecutor.
c. The intervention of an external auditor
The appointment of an external auditor is compulsory in Public Limited
Companies. Their appointment is also compulsory in Simplified forms
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of Public Limited Companies, and Limited Partnerships fulfilling some
requirements related to the amount of their turn over, and the number of
employees.
External auditors play a critical role in validating company financial
information. Potential lenders and investors often require externally
audited financial statements before doing business with a company. If a
party discovers that an auditor failed to detect material misstatements, it
reflects poorly on the firm and the profession in general. For that
reason, various accounting bodies release auditing standards and
expectations to define the role of external audit firms. Their role as
provided by the OHADA law can be summarized in five points: the
verification and certification of the company’s financial information,
the monitoring of the equal treatment of all the shareholders, the
identification and denunciation of cases of fraud, and offences
committed by the executives during the exercise of their duties.
2. The Meriam Webster Dictionary defined majority rule as a political
principle providing that a majority usually constituted by fifty percent
plus one of an organized group will have the power to take decision
binding on the whole.
Majority rule is a principle that means in a group the majority has the
power to make decisions that is binding on other group and individuals.
It can also be defined as the system of political cum organizational
procedure that allows the majority to dictate the pace of things within
the political setup or organizational strata all geared towards the
advancement of the objects of the organization.
The general rule in company law is that the wishes of the majority will
prevail.
1. The Rule in Foss v Harbottle
When a wrong is done to a company, it is for the company to decide
what action to take.
The courts will not usually hear an action brought by a member or
members of the company.
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a) Reasons for the Rule
(i) The Proper Plaintiff Principle
The company is the proper plaintiff (pursuer) in any action to right a
wrong against it.
(ii) The Internal Management Principle
The courts will not interfere with the internal management of a
company. It is for the company to decide whether it is being properly
managed.
(iii) Irregularity Principle
A member cannot sue to rectify a mere informality where the act would
be within the company’s powers if done properly and the wishes of the
majority are clear.
(b) Problems with the Rule
The majority of shares often belong to directors. The majority are in the
best position to prejudice the company - then decide that the company
will not bring an action against them.
There is thus a need for minority protection - enforcement of minority
rights fall into three main categories.
3.
➢ Winding Up
Winding up sometimes referred to as liquidation is a way of dissolving
a company or partnership by selling off all its asset. It also involves
collecting any outstanding income, making sure that the creditors are
paid from the proceeds and distributing whatever is left over (net
assets). Whatever is leftover may be distributed in cash or in kind,
initially to the preferred shareholders and then to the remaining
stockholders.
Winding up a company is a legal process governed by the business and
corporate laws of each state and the company’s governing documents
such as the article of association. It is a process involved in dissolving
the company and before liquidation is on the horizon. While winding
up, a company ceases to do business as usual. Once the winding up
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process starts, a company can no longer pursue business as usual. The
only action a company may attempt to take is to complete the
liquidation and distribution of its assets. At the end of the process the
company is dissolved and ceases to exist.

Types of Winding Up
The three most common ways of winding up accompany are:
1) Members voluntary winding up used by solvent companies to
shut down their business
2) Creditors voluntary winding up used by insolvent companies to
close down their business. This solution is appropriate when
winding up the company is the only option. This route is only
appropriate if your company is insolvent.
3) Compulsory liquidation which is where the court orders the
company to wind up. The court’s ruling follows a petition,
usually because the business is insolvent. At the end of the
liquidation, the business is dissolved.

➢ Liquidation
It is the process of bringing a business to an end and distributing its
assets to the claimant. It is an event that usually occurs when a company
is insolvent. That is, it cannot pay up its obligations when they fall due.
Most companies that go into liquidation are insolvent, apart from those
who are placed into member’s voluntary liquidation. It is probably
easiest if you start by looking at the definition of insolvency
Insolvency is the ability to discharge your liabilities as and when they
fall due for payment. The key point in determining whether an entity is
insolvent or not is whether that entity can pay its debt when they fall
due for payment. This is determined by the date when one’s debts are
due for payment according to the terms imposed upon by the suppliers.
Liquidation is the legal ending of a limited company by an appointed
insolvency practitioner(liquidator). The company’s assets are then
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sold(liquidated) and any realization on revenues are distributed in order
of priority.
Types of Liquidation
There exist three main types of liquidation, which ae as follows:

Creditors Members Compulsory

voluntary voluntary liquidation
liquidation liquidation

▪ Creditor’s Voluntary Liquidation (CVL)

It is the most common form of liquidation. A CVL is instigated where
the directors have concluded that because of its debt, the company can
no longer continue to trade and they need to take the steps to place the
company into liquidation. An insolvency practitioner will be appointed
as a liquidator and it is his responsibility to realize the assets, and where
possible if the funds allow to pay a dividend to the creditors.

▪ Member’s Voluntary Liquidation (MVL)

MVL is a solvent form of liquidation, where the assets of a company
are greater than its liabilities. The process is usually used, when
shareholders decide simply to cease trading and convert their assets into
cash for distribution to the shareholders, or in some cases for obtaining
tax relief for shareholders on capital distribution. One common example
is a family business where the directors is to retire or where a business
owner wishes to free up assets from an existing company or fund a new
venture.

▪ Compulsory Liquidation
This is where a company is wound up by the court. This usually
happens when one of the company’s creditors losses patience with the
company, and applies to court for a winding up order to be issued. Once
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the winding up order is made, the company is then placed into
liquidation with the official receiver, usually being the appointed
liquidator. It is often the case that asset realization in compulsory
liquidation are minimal, with little or no return to the creditors.

➢ Dissolution
Also known as striking off is a way of closing down a limited company
by removing its name from the official register held at company’s
house. Once the name is removed from the register, the company no
longer legally exists. Dissolution is also an act by which a company
finds death. Article 200 of the Uniform act on Commercial companies
provides the causes of dissolution of commercial companies;

3.2) Causes of Dissolution

• By expiration of time for which it was incorporated or formed.
However, Article 28 of the uniform act states that any company
has a period to be mentioned in its articles.
• On the realization or extinction of its objective
• The cancellation or annulment of the company’s Articles of
Associations,
• By the dissolution pronounced by the competent court in the
request of a partner the important reasons especially is of non-
performance by a partner
• By the effects of a judgment ordering the liquidation of the
company’s assets
• Any other cause provided by the statute
• By the decision of members under the conditions laid down in
article 877 of the Uniform Act.

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 SET EIGHT
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Explain some of the internal environmental factors a business
needs to take into consideration before going international.
10mks
2. Differentiate between creativity and innovation. 4mks
3. Explain the creativity process. 10mks
4. Explain the innovation process. 10mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1. The table below shows output of two goods, A and B which can be
produced in an economy. The only value input is labor which is equally
skillful at producing each of the goods. The economy has a labor force
of 700 men.
Labour 0 100 200 300 400 500 600 700
Good A 0 8 18 30 40 48 52 54
Labour 0 100 200 300 400 500 600 700
Good B 0 20 50 70 85 95 100 102
Work required:
a. Establish the production possibilities and construct the production
possibility curve of this economy. (7mks)
b. i)If good A is a capital good and good B is a consumer good, what
will be the consequences of choosing a combination of 30A + 85B
instead of 40A+70B.(4mks)
ii)Calculate the opportunity cost of making the choice in question bi)
2mks
c)By what means might the household in the economy be able to
consume 40A + 85B 4mks
d)With the aid of a sketch diagram, demonstrate the effects of foreign
aid which increases the fixed inputs into the production of goods (but
have no alternative uses). 3mks

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2.In a pure market economy, the state would play no part in deciding
what is to be produced, how it is to be produced, how it is to produced
who is to receive it when it is produced. Consumers would decide what
they want, vote their purchases and producers would respond by
increasing the output of goods and services which are increasing
demand demand and reducing the output of those which are declining in
popularity. The price mechanism will facilitate this process. However,
in practice, even societies which are described as market economies
have some government intervention.
a) i) Define the term price mechanism 2mks
ii) Give two functions of price mechanism in a market economy.
4mks
a) Which phrase in the passage makes reference to the concept of
consumer’s sovereignty? 2mks
b) Identify three reasons why a government may intervene in an
economy 6mks

SECTION THREE: COMPANY LAW (33 Marks)

1. Identify the six (6) types of companies provided for by the
OHADA Uniform Act on commercial companies and economic
interest groups.
2.What is the importance of registering a company?
3. Explain the documents needed for the formation of a company.

MARKING GUIDE FOR SET EIGHT

SECTION ONE: ENTRPRENEURSHIP
1. A company’s internal environment is comprising of some forces
outside the marketing management function but which are within the
internal organization, which affects marketing decision such as
organization’s objectives, stakeholders, resources, culture and structure
of the organization. These factors determine the scope and conduct of
an organization’s marketing activities.
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 - Organization Objectives
The overall organization’s objectives are a major influence on her
marketing plans and decisions. Marketing decisions are made in the
context of a specific organization and its objectives. It is for this reason
that one organization may want to grow as quick as possible (market
penetration) while another may not wish to grow at all (market
concentration).
- Stakeholder
A company’s stakeholders are groups of people or individuals who are
affected directly or indirectly by the performance of the organization. A
company operates within the context of a network of interest groups,
each of which has a particular relationship with the organization, and
often-conflicting interests and motivations. A company effectively has a
series of publics for example, they may have a direct stakeholder in its
fortunes such as shareholders, employees, directors, employers unions
etc or they may be external stakeholders such as suppliers, customers,
competitors, intermediaries etc. thus, a company must maintain contact
and ensure mutually productive relations, since it can exert a powerful
influence on success criteria such as brand, image, product,
acceptability, customer service, trade relations and company reputation.
- Organizational Resources
The resources that an organization has at her disposal are another
important influence on marketing decision e.g personal, material and
financial resources. The impact of available resources can be seen from
the difference in approach between large and small firms such as the
resources of small firms do not make it possible for them to run a
specialist-marketing depth. The owner-manager who may have little
knowledge or experience of specialist aspects often takes the
responsibility of marketing. But in large firms, marketing tends to
become a specialist function as company grows because large
companies have the resources to employ specialists.

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 - Organization culture and structure
This culture consists of the underlining values, attitude and
assumptions which an organization adopts. An organization culture and
structure influences the way in which an organization consider new
ideas and adoption, how it reacts to events around it and how it
structures its self. The marketing function is structured taking into
consideration the overall culture and structure. E.g. functional
specialists, product manager structure, marketing manager structure,
etc. since marketing decisions are taking based on the internal culture of
an organization.
2. Creativity is therefore the generation of ideas that results in
improved efficiency and effectiveness of a system while
Innovation is a process of developing an idea into a new product
or service that adds value, creates market and increases
customer satisfaction
3. Creativity is a process which is influenced by many external
factors such as the business environment, social forces and
individual attributes. One of the earliest models of the creative
process is attributed to Graham Walles. In 1926 Graham
identified four stages of the creative process as preparation,
incubation, insight and evaluation.
The Stages are Below

- Preparation
This refers to the base of experience and knowledge that precedes
the creative ideals. such preparation is typically a conscious effort base
on one’s Interest and curiosity abort a given area of knowledge or
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activity.it includes perception of idea and development of interest.
During this phase one becomes immersed and develops sensitivity to
the issues and problems in a field of interest
- Incubation
This refers to that part of the opportunity recognitions process in
which an individual is contemplating an idea or a specific problem. it’s
the part of the process that occurs when a person is thinking about a
problem as considering an idea. Discussions of the incubation phase
often make reference to a specific problem that someone is trying to
solve.
- Insight
This is also called the illumination stage. Whereas incubation refers
to an ongoing process; insight refers to a moment of recognition. It’s
the point at which the whole answer or core solution springs into
awareness suddenly and spontaneously. The experience, however is not
necessarily one that pushes the process forward, but instead may feed
back to the incubation and preparation stages for further consideration.it
should be noted that creativity is not a linear process.one may move
back and forth though the various stage of consciousness as the process
continues.
- Evaluation
Not all ideas are good business opportunity and what seems to be a
good entrepreneurial idea may not be a real or legal business
opportunity. Thus evaluation is the phase in the creativity process when
insights are analyzed for them viability. This stage is also referred to as
the verification or confirmation stage since it involves deeper analysis
into whether a concept is workable, whether the creator has the skills
necessary to accomplish it, and whether it’s truly profitable enough to
undertake.
4. The process of innovation, according to Balunywa begins with
perception of a new idea, conceptualizing the idea by thinking
about it and refining it. The next stage is the development stage
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 where for big organization experience are undertaken and finally
the implementation stage where the innovation is
operationalized. The stages of innovation are illustrated below:
Innovation Process

1) Perception
At the first stage the entrepreneur perceives on idea, on opportunity
or need for innovation. At this stage the idea is a mere feeling. The
entrepreneur thinks about the idea and may necessitate going through
the creativity process.
1) Conceptualization
Usually at the perception stage the idea is still vague. Therefore it’s
of the conceptualization stage when the idea is refined, thought about
and made more explicit. This is a stage for providing answers to such
question like how will the product or service be produced? Who are the
users? How is the organization to be structured?
2) Development Stage
This is the stage when full conditions for the innovation are how
defined and experiments undertaken to see if the product or service or
product will work.

104
 At time the idea may be taken back to the drawing board to allow
gathering of more information. At this stage a strategy to implement the
innovation is evolved if it works.
3) Operation stage
This is the implementation stage decision are taken on investment,
the production team marketing mix decision and the structure to
implement the innovation. For small entrepreneurs, the development
stage is combined with the operation stage.

SECTION TWO: GENERAL ECONOMICS

1.a) the production possibilities will be as follows;
Good 0 8 18 30 40 48 52 54
A
Good 102 100 95 85 70 50 20 0
B
NB: draw the PPc and place good A on the Y-axis and good B on the
X-axis
b)i)-it will lead to rise in the standard of living due to increase rise in
the production of consumer goods
-slow rate of economic growth in future due to decrease in the
production of capital goods.
ii)the opportunity cost is 10 of good A forgone (40-30)
c)the combination 40A + 85B cannot be produced with the existing
resources given that it falls outside the PPc of the economy. This
combination can only be produced and consumed by means of:
-Economic growth
-The discovery and exploitation of natural resources
-Aids from other countries and international organizations
d)It will lead to an increase in the production of good A.
2a) i) Price mechanism is a system where by the prices of goods and
services are determined by free forces of demand and supply without
government intervention.
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ii)-it allocates scarce resources to different uses
-it rewards factors of production
-it rations fixed goods to many competing buyers.
b) Consumers would decide what they want, vote their purchases and
producers respond by increasing the output of goods and services which
are in increasing demand
c)-to stabilize prices
-to reduce the gap between the rice and the poor
-to take care of social cost
-to supply public and merit goods
d)-it encourages efficiency due to competition
-it gives rise to consumer’s sovereignty
-it leads to high standard of living due the production of high quality of
goods
-it encourages hard work

SECTION THREE: COMPANY LAW

1. Public limited company or joint stock company (SA) art 385
UACCEIG
- Simplified public limited company or simplified joint stock
(SAS) Art 8531-23 UACCEIG
- Partnership or general / ordinary private company (SNC) Art
270 UACCEIG
- Limited partnership or private limited company (SARL) Art
309 UACCEIG
- Sleeping partnership (SCS) Art 293 UACCEIG
- Joint-venture ( SEP – Sociétés en participation) Art 854
UACCEIG
- De facto company (SF – Société de fait) Art 864 UACCEIG

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3.
1. The Memorandum of Association (MA)
Per Lord Cairns in Ashbury Railway Carriage Co. Ltd v. Richie [1875]
LR 7HL653. The memorandum of association is a legal document
setting up the company or corporation and regulates the external affairs
of the company with the general public.
It is the company’s constitution.
It enables the shareholders and the outsiders who deal with the
company to know the kind of business they are permitted to undertake,
limits of such business, share capital, company name and relationship
with the outside world.
Principally, the MA contains five basic components: company name,
registered head office, object clause, liability clause and share capital.
It should be noted that the OHADA law does not recognise the MA as
part of company documents; rather it incorporated it into the articles of
associations. MA is a purely common law concept.

1. The Articles of Associations (AA)

Unlike the MA, the AA constitutes the regulation of the internal affairs
of the company. It deals with issues of shares, alteration of capital,
general meetings, voting, directors and secretaries, accounting and
audits as well as winding up the company.
At common law it is held that MA is the dominant instrument thus
where provisions of MA conflict with AA, the MA prevails as seen in
the case of Re Duncan Gilmour & Co. Ltd [1950] 2 ALL ER 871.
The OHADA Uniform Act has not made mention of MA, but has rather
provided for AA only and has merged the content of MA and made it
mandatory content of AA. In articles 13 UACC (old) the content of
AA under the OHADA is clearly stated. The confusion orchestrated by
OHADA is that both the constitution and rules of internal management
of the company are embodied in the AA.

107
 a. Content of the AA
Article 13 of UACC (old) states that “the Articles of Association shall
contain the following information:
1. The form of the company
2. The name of the company, followed by its acronym where
necessary
3. The nature and field of the company’s activity which constitute
its object
4. The company’s registered office
5. Its duration
6. The identity of contributors in cash and, for each of them, the
amount of their contribution and the number and value of the
shares handed over in exchange for each contribution
7. The identity of contributors in kind, the nature and value of the
contribution made by each of them, the number and value of the
shares handed over in exchange for contribution
8. The identity of persons enjoying special benefits and nature of
such benefits
9. The amount of registered capital
10. The number and value of shares issued, stating where necessary,
the various classes of shares
11. The provisions relating to the distribution of profits, constitution
of reserves and the distribution of the bonus after liquidation
12. The rules governing the functioning of the company.

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 SET NINE
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Define the micro environment and explain the elements that
made up the micro environment. 10mks
2. Explain the different type of innovation. 10mks
3. Explain some of the factors leading to innovation. 8mks
4. Define a business plan and give its uses. 6mk

SECTION TWO: GENERAL ECONOMICS (33 marks)

4. You are given the following on an economy (figures are in millions
FCFA)
A Consumer expenditure 30100
B Gross trading profits of companies 5400
C Gross domestic fixed capital formation 13200
D Public authorities current expenditures on goods and 12600
services
E Export of goods and services 10700
F Value of physical increase in stock and work in -800
progress
G Tax on expenditure 7300
H Imports of goods and services 12200
I Net property income from abroad +650
J Subsidies 1300
K Capital consumption 4700

a) Calculate :
i) GDP at factor cost
ii) GDP at market price
iii) GNP
iv) NI (3+3+2+2mrks)

109
b) Enumerate three reasons why the national income calculated may
notg reflect the welfare of the people (3mks)
c) Define briefly:
i) Gross domestic fixed capital formation.
ii) Capital consumption (2+2marks)
d)List three problems encountered when calculating national income.
(3mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. Discuss the causes and consequences of dissolution of companies.
2. Explain the differences between winding up and dissolution of a
company?
3. What are the different rights the shareholders / partners or owners of
a company?

MARKING GUIDE FOR SET NINE

SECTION ONE: ENTRPRENEURSHIP

1. Micro Environment
These are external forces, which operates close to an organization that
specifically affects its ability to serve its customers. They are also called
“stakeholders” of an organization. They include suppliers,
intermediaries, customers and competitors.
a) Marketing intermediaries
Organizations do not always deal directly with the customers of their
products o services, instead they deal with intermediaries. “Marketing
intermediaries are all firms that help the company to promote sales and
produce it goods to final buyers
a) Customers
These consist of those who actually consume or buy a firms’ product.
There is a need for marker to study its customer market so as to be
aware of any changes taken place, this can help firms to target their
110
marketing strategies on end-users by pulling the products through the
trade or alternatively the product can be pushed into the distribution
channel
a) Competitors: competitors are firms who produce rival
products or substitutes that satisfy the same need differently.
In today’s modern market, organizations usually have to compete with
other organizations for customers. The success or failure of private
sector businesses depends on the ability to satisfy customers’ needs
better than competitors. In many markets, competition comes not only
from direct rivals but also from substitute, which performs the same
task in a different way.

C. Supplier
2. i) Incremental Innovation
This is the most common and features the introduction of a product
involving some level of newness and some value creation an example is
the introduction of Mobile telephone facilities
ii) Substantial Innovation
This is where there is a significant degree of product newness and
important value creation for the customer for example introduction of
carried soft drinks, carried beer changing of the packaging design of
castle breweries products.
iii) Transformational Innovation This is the least common and
involves radical new products that create substantial value creation
from the customer, for instance World Wide Web (www) Moving
from incremental to trains formational types of innovation, the
degree of product newness and value delivered to customer’s
increases and so does the potential to earn high profits.
Concurrently, the degree of business risk can also rise as one move
up the innovation ladder.

111
3. Factors Leading to Innovations in Organizations
- Customers are more Sophisticated and Expect More
Customers today tend to be more segmented demeaning. They are
looking for products that are better designed to meet their individual
needs customers expect high quality and better price products for
instance a TV set cars. In respects the customer is the driving force to
innovation.
- Customers have more choice
As the number of suppliers to the end market is generally rising
customer loyalty to particular suppliers is disappearing education are
the beauty product. There are several company loyalty to brand win be
guided be the satisfaction derived from consuming a particular product.
- Ideas Make up More of the Value Chain
In today’s production process, physical inputs are being Asigly
substituted by intellectual input. Wealth creation is increasingly about
capturing and applying new ideas to create new products that exploit
identified opportunities.
- Shorter Product Life Cycles
Before the test two decades, most motor vehicle manufacturing
companies were developing vehicles with an estimated life span of
more than 10years.Today, this has drastically reduced. With tastes and
technology rapidly changing and good ideas being quickly and
superseded, there is continual pressure to devise new and better
products at a faster rate, for instance the use of fiber car body instead of
steal.
- Target Market Strategy
Most firms and organization in the current business word have
focused targeted markets for their products. To be able to enter, survive
and win the market, often new or better product package is required to
win against entrenched competition.
4. A Business Plan is like a road map that helps individuals gain
financial and other support for their enterprise or project. A business
112
plan also enables Businessmen to handle the opportunities and obstacles
they will inevitably encounter as they move forward with their dream.
A business Plan Is Important Because
➢ It guides the owner in running the business.
➢ It is a way of selling yourself and your business to possible
partners.
➢ It shows that the business owner is organized and knows his or
her business.
➢ It provides information about the business and the market one is
to operate in.
➢ A well-prepared business plan will increase your chances, of
obtaining financial assistance from financial institutions e.g.
banks.

SECTION TWO: GENERAL ECONOMICS

4.a) i) GDPfc = C+I+G+X-M-indirect taxes + subsidies
= 30100+(13200-800) + 12600+10700 – 7300 +1300 = 47600MFCFA
ii)GDPmp = GDPfc + indirect taxes – subsidies
= 47600 + 7300 -1300 = 53600Mfcfa
iii)GNP = GDPfc + Net property income from abroad
= 47600 + 650 = 54250MFCFA
iv)NI = GNP –capital consumption
= 54250 -4700 = 49550MFCFA
b) National income calculated may not reflect the welfare of the people
because of the following reasons:
-inadequate statistical information
-self provided commodities
-heavy social cost
-unstable political climate
-the output of the hidden economy
c) i) it refers to the process of adding to stock of real capital or the
creation of capital goods
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 ii)it refers to a fall in a countrys capital stock incurred in producing the
GDP or depreciation or worn out capital or obsolete capital stock.
d)The problems encountered in calculating national income are;
- Double counting
- Depreciation
- stock appreciation
- self provided goods and services
- inadequate statistical information
- Government goods and services
- Expenditures are measured at market price

SECTION THREE: COMPANY LAW

1. The dissolution of a commercial companies have an effect on third
parties only from the date of its publication in the Trade and Personal
Property Credit Register. It shall also be published through a notice in a
newspaper empowered to publish legal notices. The dissolution entails
the liquidation of the company. The legal personality of the company
continue to exist for liquidation purposes until the liquidation procedure
is completed.
i. The liquidation of the company’s assets
The Dean RIPERT defines the liquidation as “the set of operations
which consist, after the payment of the debt with the assets available, in
converting in money the remaining assets for the purpose of its sharing
among the shareholders”. If the assets available cannot cover the debts,
eventually, the proportion of the debt to be supported personally by
each shareholder should be determined. Thus, the liquidation involves a
number of operations carried out by the liquidator under his own
liability.
a. Operations of liquidation
The liquidator has to carry out 3 main operations. The realization of the
company’s assets, the payment of the company’s debt and the
accomplishment of the account between shareholders. The liquidator
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shall first of all recover the debts and sell the assets owned by the
company. From the amounts collected, the liquidator shall pay the
creditors of the company, according to their different ranks. If the assets
available cannot cover the whole debts owe by the company, eventually
the debt unpaid will be covered by the shareholders personally liable.
After that, the liquidator shall establish for each partner, a global
account showing the amount to be paid or to receive.
b. The person in charge of the liquidation: the liquidator
Unlike the case of judicial liquidation, the private liquidation of the
company as the result of it dissolution is carried out by a liquidator
chosen by the partners, among them or third parties. The liquidator may
be a corporate body. In the case of a misunderstanding between partners
about the designation of the liquidator, the later may be appointed by a
court decision, at the request of any interested party. Generally, the
liquidator has wide powers for his missions. His appointment ends the
duties of the top management of the company, but the company shall
continue to exist as a corporate body for the purpose of liquidation until
publication of completion of the liquidation process. The fees of the
liquidator shall be fixed by decision of the partners or of the court
designating him. The liquidator may be dismissed and replaced in
accordance with the conditions provided for his appointment, or at the
request of any partner. The liquidator is personally liable for any fault
committed during his mission toward the company and third parties.
ii. The sharing of the remaining assets
When after the payment of the debts of the creditors of the company
there are some assets remaining, the liquidator will first of all give back
the contribution of each shareholder. Then, the amount remaining so
called “boni de liquidation” shall be shared, either according to the
clauses of the articles of association, or proportionally to the
contributions. If on the contrary the company has losses, its distribution
shall be done following the same rules.

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The partners shall be convened at the end of the liquidation to take a
decision on the final accounts, the discharge of the liquidator in respect
of the performance of his duties and of the terms of reference and to
record the close of the liquidation. Where the meeting to close
liquidation fails to take decision or where it refuses to approve the
liquidator's accounts, the competent court shall rule on the accounts
and, where necessary, on the close of the liquidation in place of the
meeting or partners, at the request of the liquidator or any interested
party.

2. Differences Between Winding Up and Dissolution

WINDING UP DISSOLUTION
It is a process whereby the It is the stage of the company when
dissolution of a company is business affairs of the company
brought about have been completely wound up
Company still exists Company existence comes to an
end
Assets of the company is realized It occurs after when all the process
and debts are paid out of the of winding up is complete
amount so realized. If anything
remains it is distributed among
the members of the company
During winding up a company No business affairs remain to be
may carry on its affairs carried out
Process is carried out by The term of appointment of
liquidator liquidator comes to an end on
dissolution of the company.
During the process of winding up After dissolution by a tribunal a
any person can bring a claim for debtor cannot get his claim
debt and the liquidator has to pay certified
it

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Company can be sued The company cannot be sued

3. The shareholders or partners, as the owners of the company,

enjoy some privileges within the company. Those privileges can
be classified in two main categories: political rights and
economic rights.
a. Political rights of the owners
The following are the political rights of the company’s owners: the right
of information and communication of documents, the right to
participate in the decision-making process, and the right to participate
to the audit process.
The right of information: The shareholders or partners have the right
to consult the documents of the next general meeting at the registered
office of the company 15 days before the holding of that meeting. They
may also consult twice per years any accounting document, just as
minutes of collective decisions, and take a copy of these documents.
Taking into consideration of the increase of the use of ICT in our
environment, the Uniform Act, since the reform of January 2014 now
admit the modern transmission of information (e.g., electronic mail,
video-conferencing, simultaneous telephone conversation) for notices,
representations, collective decisions and votes, organization of boards
and assemblies and formalities.
Right to participate in the decision making process: The
shareholders of commercial companies also have the right to participate
in the decision making process. Decisions are taken in commercial
companies through vote organized either through written consultations
(for those of little importance), or during general meetings of
shareholders. Unless otherwise provided by the articles of association,
one share is equivalent to one vote.
Right to participate to the audit process: The partners of commercial
companies also have the right to initiate some procedures related to the

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audit of the company, especially the alert procedure and the
management evaluation.

b. Economic rights of the owners

The shareholders of OHADA commercial companies enjoy some rights
of economic nature, namely: the right to dividend, the preferential
subscription right, and the right to the settlement quota.
Dividend right: the dividend is that part of the profits which the
company decides to distribute among its shareholders, and represents
the ordinary return on the stock. The dividend distribution is a decision
of the Annual General Meeting provided that a series of legal
requirements are met. A company can generate a profit but the
Shareholders’ Meeting can still decide not to distribute it. In this case
and theoretically, the dividend should be reflected in its market price
and the shareholder receives this return on selling the stock (capital
gains).
Preferential subscription right: when a company decides to increase
its capital by issuing new shares or bonds convertible into shares, old
shareholders have preference in the subscription. However, these
shareholders have two options: they can either exercise this right
(subscribing new shares or convertible bonds) or sell these rights on the
market.
Right to the settlement quota: If the company is dissolved or wound
up, shareholders have the right to receive their proportional part of the
result of the settlement.

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 SET TEN
SECTION ONE: ENTRPRENEURSHIP (34 marks)
1. Explain the uncontrollable or the macro environmental factors.
10mks
2. Explain some of the sources of innovation 10mks
3. State and explain the content of a business plan. 14mks

SECTION TWO: GENERAL ECONOMICS (33 marks)

1.The table below shows the cost behavior of a particular firm whose
unit price is 90frs:

Output(kg) Total variable cost Total fixed

(TVC)(000) cost(TFC)
(000frs)
1 25 25
2 45 25
3 60 25
4 80 25
5 110 25
6 155 25
7 170 25
8 260 25
9 280 25
10 535 25

Required:
a) Under what market structure is this firm operating? (2mks)
b) What will be the firm’s equilibrium output and the amount of
maximum profit?
c) If the firm price were to decline from 90frs, below which price will
you expect the firm to close down in?

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i)The short run ii) the long run (8mks)
4. Cameroon in its quest to attain emergency by 2035, requires certain
policy changes. State and explain five;
a) Policy measures and structural changes, Cameroon needs to
implement so as to attain this emergence. (10mks)
b) Qualities the tax system of Cameroon needs to uphold so as to make
it efficient as stipulated by Adam Smith. (10mks)

SECTION THREE: COMPANY LAW (33 Marks)

1. How may a person become a member in a company?
2. What are the effects of non-compliance with the formalities of
registration of a company?
3. Define the article of association, and explain its legal effects.
Differentiate an article of association from a memorandum of
association.
4. Examine the causes of dissolution of companies.

MARKING GUIDE FOR SET TEN

SECTION ONE: ENTRPRENEURSHIP
1. The Macro Environment or Wider Environment
Macro environment are forces in the external environment, which have
more general impact on organizations. They consist of large social
forces that affect the whole microenvironment. Here the company is
faced by a complex set of uncontrollable variables that collectively
shape its market, its resources and the competitive climate and that pose
challenges and opportunities that may determine the success or failure
of the company as a whole. There are six major sets of influence
normally identified within the macro environment summarized by the
acronym STEPEL or PESTEL, representing the following forces:
➢ Socio-cultural
➢ Technological
➢ Economic
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 ➢ Political
➢ Environmental / Ecological
➢ Legal
2. Sources of Innovation In Business Enterprises
- The Unexpected Occurrence
This is a system of fundamental change in behavior, expectation of
a great number of customers, which requires relegation understanding
analysis, support and exploitation to the value and yield. It’s the
diversion from the normal business trend happening in an organization.
It/s the urge for change from the ordinary way of doing things.
In many organizations, the management fails to exploit such
opportunities because they believe that anything which has lasted for a
fair amount of time must be normal and go on forever. Anything that
contradicts it is considered unhealthy. Unexpected success is challenge
to management‘s judgments.
- Unexpected Failure
Failures like success cannot be rejected and rarely go unnoticed.
Many failures arise out of mistakes, negligence, greed, stupidity
thoughtless band wagon –climbing or incompetence whether in design
or expectation. It may arise out of assumptions on which a product or
service, its design or its marketing strategy were based or may no
longer fit reality. For instance, changes in perception or value to a
particular product to customers, changes in income in which customers
demand something quite different. Any change like this is an
opportunity for innovation.
- Unexpected Outside Event
These are events that come from outside the organization or
enterprise and significantly affect the operation of the organization.
Unexpected outside e3vent, may be above all an opportunity to apply
already existing expertise to a new application that does not change the
nature of the “business” the organization is in. It may be an extension
rather than diversification.
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 - Incongruous Economic Realities
Economically, if the demand for a product or service from a
particular organization is growing steadily its economic performance
should improve thus increasing profitability. A lack of profitability and
good results in such an industry brings about incongruity between
economic rarities.
- Incongruity between Reality of an Industry and the
Assumption About it
Situations may occur in an industry or service where people
misconceive reality. They will concentrate their efforts on the area
where results do exist. This is incongruity between reality and behavior.
This incongruity offers opportunity for successful innovation to
whoever can perceive and exploit it.
- Incongruity between Perceived and Actual Customer Values
and Expectations
Producers and suppliers at times misconceive what it is the customer
actually buys. They assume that what represents” value” to the producer
is the same to the consumer. Variations in expectations and values
occur. The reaction of the typical producer and supplier is then to
complain that customers are irrational or unwilling to pay for quality.
Whenever such a complaint isheard, there is reason to assume that the
values and expectations the producers holds to be real are incongruous
with the actual values and expectations of customers and clients. Then
there is reason to for an opportunity for innovation that is highly
specific, and carries a good chance for success.
- Incongruity within the Rhythm or Logic or Process
This is an internal incongruity with in a process rhythm or logic that
upset the customer. Customers are aware of it. It occurs where
customers feel uncomfortable with the product or service so that the
product or service can be redesigned to remove the discomfort. He
users or customers talks about it,but what lacks however is somebody

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willing to listen somebody to take seriously the customers concerns, so
that the product orservice can satisfy the customers.

SECTION TWO: GENERAL ECONOMICS

3.a) Perfect competition
b) to answer b, the following table is used;
Output TR(MFCFA) TC PROFIT AVC ATC
1 90 50 40 25 50
2 180 70 110 22.5 35
3 270 85 185 20 28.33
4 360 105 255 20 26.25
5 450 135 315 22 27
6 540 180 360 25.80 30
7 630 195 435 24.285 27.857
8 720 285 435 32.5 35.629
9 810 405 405 42.222 45
10 900 560 340 53.5 56
The profit maximizing output will be 8kgs and the maximum profits is
435Frs
c)i) It will wind up in the short run for any price below the minimum
AVC that is 20mfrs
ii)In the long run, the firms price must be equal to or more than the
ATC. Answer 26.25mfcfa
d)-They are price takers
-large number of buyers and sellers
-free entry and exit
-Perfect mobility of factors
-Homogenous product
-Perfect knowledge

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4)a) this question requires you to give the various objectives needed to
be attained in Cameroon in order to attain emergency in 2035. The
measures and structural changes include; (each point well explained)
• Stepping up energy supply
• Developing infrastructures
• Accelerating the policy of revival of the agricultural sector
• Improving the business climate and competitiveness of the
country
• Increasing the diversification of external trades
• Boosting youth employment etc
b) Five qualities of the tax system of Cameroon need to upload so as to
make it efficient include;
o Certainty
o Convenience
o Equality
o Economy
o Fairness (each point briefly explained)

SECTION THREE: COMPANY LAW

1. A person may become a member in a company by acquiring shares in
a company in the following ways;

a. By Subscription
At the point of incorporation of the company, the company is required
to have at least two shareholders who will sign the articles of
association and undertake to contribute to share capital by taking up
shares. These are subscribers of the shares of the company. The names
of the subscribers shall have their names in the register of subscriber or
members as the first shareholders or founding shareholders.

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 b. By Allotment
Allotment is the process of acquiring shares directly from the company
whenever it issues or offers shares to the general public. In this case,
when a person applies and is given certain number of shares, he is said
to be allotted the shares. When he pays for the shares and names entered
in the register of members of the company, he becomes a member of the
company as per article 144 of the UACC.
c. By Transfer
Shares are properties whose ownership could be transferred from one
person to another. A person may therefore become a member or a
shareholder if a former owner transfers his ownership of shares to him.
This could be by sale or by way of gift. It therefore requires that the
name of the new owner must be entered in the membership register in
replacement of the former owner, to become a member of the company.

d. By transmission
When the previous owner of shares dies and his shares are inherited by
his personal representative or heirs, this is called transmission of shares.
Shares may only be inherited by production or presentation of a probate
of a will of the deceased owner or letters of administration of his estate
granted by the High Court. The beneficiaries of the shares by
transmission must have their names entered in the register of members
of the company or elect a nominee to hold the shares on their behalf. In
this case the nominee’s name shall be entered in the register of
members of the company to become a member of the company.

2. Unlike in pure contract law where non-compliance with

conditions/formalities is a ground for nullity, company law addresses
this from a different perspective. Under company law, non-compliance
with formalities/conditions does not render contract automatically void.
This is because the law maker gives room for regularization.

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The idea behind this is to protect third parties dealing with the company
and the economy as a whole. The legislator tries not to impose
sanctions on companies since such as nullity has a non-retrospective
effect. This is particularly important since a company is a powerful tool
of investment in the society.

a. Non-compliance with Substantive Conditions

i. Consent and Capacity
Unlike in ordinary contract, where lack of consent and capacity renders
a contract null and void, it does not automatically lead to nullity in
company law this is clearly explained in article 243 of the UACC which
states that nullity may not arise from lack of consent or capacity in
private limited companies (Ltd) and Public Limited Companies (Plc)
unless incapacity affects all the founding members. This equally applies
to sleeping partnership companies, especially with members who have
the status a sleeping partners lack of consent in private companies and
with active members of sleeping partners automatically leads to a
nullity.
It should be noted further that there is always a possibility for
regularization of consent and capacity in limited liability companies
(intuitus pecuniae companies). For intuitus personae companies, lack of
consent and capacity is a good ground for nullity. Article 248 stipulates
that any interested party may call or apply for regularization in case of
non-compliance.

ii. Cause & Object of the Company (Article 246 of

UACCEIG)
As concerns the cause of the contract, we shall focus on the objective
cause, which deals with the reason or motive or intention for entering
into the business, non-compliance with the cause can be regularised.
As concerns the sub-stratum or the principal object or subject matter,
non-compliance with the object of the company is a ground for a
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complete nullity. Article 19 of the UACC says every company must
have an object. Article 20 further states that the object of the company
must be lawful. Thus, an unlawful object will also lead to a nullity of
the company. The Uniform Act does not give room for regularisation
for matters that concerns the company object.
The reason behind regularization is to ensure a continuation of the
company in order to protect the general economy as per article 248 of
the UACC. Therefore relative nullity applies when there is non-
compliance with consent and capacity or cause, as this can be
regularised. Absolute nullity deals with non-compliance with regards to
the object of the company and it occurs automatically and also if the
object is illegal as per article 20 of the UACCEIG.

b. Non-Compliance with Formalities

This is regulated by article 75 and 245 of the UACCEIG. Formalities
have to do with the procedures and issues of publication under the
articles of association. Article 75 holds that non-compliance with the
articles of association (absent of AA or important elements in the
content) shall not automatically lead to nullity. It gives powers to any
interested party to petition to competent court with the area of
jurisdiction of the company’s head office for an action for
regularisation. The rationale behind this section is to keep the company
in existence as a nullity of the company may cause serious economic
issues.
However, article 77 of the UACC states that action for regularization
shall lapse after three (3) years from the date of registration of the
company or from the date of publication of the deed amending its
articles of association. Any interested party may petition to the court for
the regularization under financial compulsion, especially issues
concerning the content of the articles of association.

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The Non-Retrospective Effects on a pronounced Nullity
When the founders or shareholders of a company fail to comply with
conditions and formalities of the Uniform Act, a possibility is however
given for regularization to protect the company.
However, when no action is been taken within 3 years for regularization
as provided in article 77 of the UACC, the company becomes null and
void ab initio. This occurs once a judgement of nullity has been
pronounced. Nullity does not have a retrospective effect in company
law, unlike in law of contract where nullity renders all previous
transaction unrecognized and unenforceable. With company law, it is
non-retrospective in nature since the acts done by the company in the
past is legal in order to protect third parties who carried out transactions
with the company. This view is supported by article 253 of the UACC
which states that where nullity of a company is pronounced, it shall put
an end to execution of the company’s contract and the company
dissolved, but shall have not retrospective effect.
Article 255 of the UACC goes further to state that neither the company
nor its members may rely on nullity against third parties who acted in
good faith. This simply elucidate on how company law treats nullity
with respect to company matters than in ordinary contracts. Article
255(2) states that third parties who acted in good faith can still claim
the company for damages for nullity.
The Responsibilities of Members/Founder on Non-Compliance
In the case of non-compliance with formalities or conditions, it renders
promoters liable in damages, as stipulated in section 78 and 256 of the
UACCEIG.
Article 78 provides that the founders or promoters as well as the
members of the management organ of the company shall be jointly and
severally liable for tort derived either from such omission of mandatory
detail in the articles of association or from omission or improper
fulfillment of a prescribed formality in the formation of a company. The
law maker established this liability to encourage partners or members as
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well as founders not to be negligent especially for the founders of
companies.
Article 256 (1) on its part provides that members and company
executives to whom a nullity has been attributed may be declared
jointly and severally liable for any damage suffered by a third party for
the nullity of a company.
3. Unlike the MA, the AA constitutes the regulation of the internal
affairs of the company. It deals with issues of shares, alteration of
capital, general meetings, voting, directors and secretaries, accounting
and audits as well as winding up the company.
At common law it is held that MA is the dominant instrument thus
where provisions of MA conflict with AA, the MA prevails as seen in
the case of Re Duncan Gilmour & Co. Ltd [1950] 2 ALL ER 871.

The Legal Effects of the Articles of Association

The articles of association when registered at the TPPCR binds its
members as this document has been signed by each member and
contain a covenant on the part of each member to observe the
provisions therein. The result of such a statutory contract is as follows;
• The article of association forms a contract between the company
and each member in his capacity as a member, is bound to the
company by the provisions found in the articles. Each member
is bound by contract to pay the amount as shares.
• The article also has effect as contract between the members
themselves which may be enforced directly by one member
against another without the aid of the company.
• It is an evidence of an existing contract between members
themselves, and also between the members and the company.
4. Causes of Dissolution
• By expiration of time for which it was incorporated or formed.
However, Article 28 of the uniform act states that any company
has a period to be mentioned in its articles.
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 • On the realization or extinction of its objective
• The cancellation or annulment of the company’s Articles of
Associations,
• By the dissolution pronounced by the competent court in the
request of a partner the important reasons especially is of non-
performance by a partner
• By the effects of a judgment ordering the liquidation of the
company’s assets
• Any other cause provided by the statute
• By the decision of members under the conditions laid down in
article 877 of the Uniform Act.

Effects of Dissolution
Article 201 of the Act on Commercial companies’ states that;
• Dissolution of a company shall have an effect on third parties
only with effect from its publication in the Trade and Personal
Property Rights Register.
• Dissolution of a company with several members shall as of right
entail liquidation of the company.
• The legal personality of the company shall continue to exist for
liquidation purposes until the liquidation procedure is
completed.
• Dissolution of a company in which shares are held by one
person shall entail a total transmission of the assets and
liabilities of the company to such person without resorting to
liquidation. Creditors may object to liquidation before the
competent court within a period of thirty days following its
publication. The court shall reject the objection or order the
settlement of debts or the provision of guarantees if the
company offers any and if they are deemed sufficient.

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 GENERAL QUESTIONS AND ANSWERS ON
ENTREPRENEURSHIP.

1.What are the major differences between

a) An innovative and an imitative entrepreneur?
b) Entrepreneurs and social entrepreneurs?
c) Entrepreneur and intrapreneur?
d) Corporate social responsibility and social entrepreneurship?
e) An entrepreneur and creative person
f) An entrepreneur and an enterprising person
g) An entrepreneur and an innovative person
h) An entrepreneur and a leader
i) An entrepreneur and a business manager
a) Innovating Entrepreneurs: Prevalent in developed countries, an
innovating entrepreneur is the one who introduces new goods
and services, new methods of production, experiments with
new processes, discovers new market and restructures the
enterprise. It is important to note that such entrepreneurs can
work only when certain level of development is already
achieved, and people look forward to change and
improvement
. Imitative Entrepreneurs: Mostly found in
developing/underdeveloped countries, this class of
entrepreneurs is characterized by their readiness to adopt
successful innovations already inaugurated. They enjoy the
existing innovations originated by innovating entrepreneurs,
maybe in developed economies. Imitative entrepreneurs do
not innovate the changes themselves, they only imitate
techniques and technology innovated by others.
b) The differences between entrepreneurs and social
entrepreneurs

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 - Entrepreneurs are typically driven to enhance
their personal wealth.
- Entrepreneurs do not give primacy to social
mission.
- Social entrepreneurs do not seek to grow their
personal wealth through adventure.
- The success of social entrepreneurship is
measured in terms of social impact.
– Social entrepreneurs do not have harvest or exit
strategies.
c) An entrepreneur is an economic agent who unites all means of
production, -land of one, labour of another and capital of yet
another and thus produces a product. By selling the product in
the market he pays rent of land, wages to labour, interest on
capital and what remains is his profit while An Intrapreneur
may be defined as a person within a large organization who
takes direct responsibility for turning an idea into a profitable
finished product through has sertive risk taking and
innovation. Intrapreneurs possess entrepreneurial skills
blended with managerial skills but operate within the
boundaries of an organization.
d)The differences between CSR and SE
Social mission is paramount to social entrepreneurship, as it is a
strategic choice for the majority of managed organizations. SE
entails primacy of social mission.
The success of social entrepreneurship is measured according to
social value creation, whereas the CSR can be measured across a
variety of attributes, many of which are non-social value related
(creating of awareness, strengthening of brand and return on
investment).
e) An entrepreneur and creative person
A creative person generates new general ideas while
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 An entrepreneur generates new risky ideas
e) An entrepreneur and an enterprising person
An enterprising person solves challenging problems while
An entrepreneur is a person who invest in the solution of
challenging problems which are beneficial.
f) An entrepreneur and an innovative person
An innovative person makes and applied his inventions while
An entrepreneur invests in such inventions
g) An entrepreneur and a leader
A leader is a person who can influence a group to follow his
ideas to achieve an objective while an entrepreneur extent his
leadership role to other functions of planning, organizing and
controlling the use of materials.
h) An entrepreneur and a business manager
A manager is any person who carries out the management
functions of an enterprise such as leading, planning,
coordinating, communicating in the enterprise while an
entrepreneur is a risk bearer, owner, and promoter of the
business
2.Outline any eight factors that can MOTIVATE someone to
become an entrepreneur
AND
Outline any six problems that can PUSH someone to become
a social entrepreneur
OR
Why do entrepreneurs decide to undertake the risk of going
it alone?
In general, the factors for business formation can be divided between
"PULL “and" PUSH" influences.
Some individuals are attracted (PULL) towards
business ownership by positive motives: (Factors that
can MOTIVATE someone to become an entrepreneur)
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 Discontinuity Challenge The desire for
Independence:
Craftsmanship
Creativity
Curiosity and the desire to discover new ideas
Desire to Change current situation
Desire to be in control
Economic motive–desire to be rich Support from the
environment Market opportunity:
Financial incentives:
Outline any six problems that can PUSH someone to become a social
entrepreneur
(Factors that can PUSH someone to become an entrepreneur)
Community service
Unemployment
Disagreement with previous employers
Poverty
Entrepreneurial training
Inheritance

3. Describe the eight key components of a business plan

Executive summary
Business decription
Market analyses
Market strategy
Product and service offered
Operations plan
Ownership and management
Financial plan

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4. Describe in the right order any six stage of the process of
entrepreneurship that one must undergo to become and
entrepreneur
OR
Explain the stages of creating an enterprise in Cameroon
Research
Planning
Finance preparation
Chose the business structure
Register the business
License and permit
Chose the accounting system
Chose the location
Choose your human resource-recruitment
Promotion
5.Explain six challenges faced by entrepreneurs in Cameroon
Limited capital due to insufficient collateral security for large
loans
Mismanagement due to limited training
Competition from already existing firms
Rules and regulations such as the complex procedures and rules
pose by the government on certain activities which
entrepreneurs are involved in.
Limited source of raw materials
Limited market for final output due to low purchasing power
Limited skills and experience due to the high level of illiteracy
prevailing in the country
6.What are the business opportunities entrepreneurs could
exploit from the African Nations Cup that took place in
Cameroon
Sale of food items
Offer tour guide
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 Accommodation
Transport services
Entertainment services
Interpretation and translation
Sale of match tickets
7.Give reasons why entrepreneurship should be promoted in
Cameroon
OR
Development requires resources but resources themselves can’t
ensure development. Discuss the statement in the light of role of
entrepreneur in the economic development of the country.
Entrepreneurs initiate and sustain the process of economic
development in the following ways:
Capital formation:
Create job opportunities
Improvement in per capita income:
Generation of technological avancements
Create inventions
Create innovations to already existing business
Balanced regional development :
Improvement in living standards :
Economic independence :
Increase national income
Creative solutions to economic and social problems
Provide merit and public goods
Redistribute income in the economy through its balance
development
Increase governments revenue
Social responsibility
8. Entrepreneurs are born, not made. DISCUSS
Alternative question – ‘Discuss the myths on entrepreneurship’

136
 This question intends to question the characteristics of entrepreneurs.
A common stereotype of the entrepreneur emphasizes such
characteristics as a high need for achievement, willingness to take
moderate risk, and strong self-confidence.
Risk Tolerance:
Vision:
Mental ability and Creativity:
Good Communication Skills
Human and tactfulness.
Ability to plan:
Basic management skills Leadership skills: The ability to
develop a vision for the company and to inspire employees to
pursue it is imperative for success – Need for Achievement:
- Willingness to take risk:
- Self-Confidence:
- Innovation and creativity
- Total commitment:
- Effective time management:
- An Ability of leadership:
- An ability of decision making:
- Desire for Independency:
9.State 5 ways an entrepreneur can prevent business failure.
An entrepreneur can consider the following ways to prevent business
failure
Business plan and Adequate Capital
Do not start your business in a down economy
Close relationships with creditors
Good account receivables
Good recordkeeping
Diverse customer base
• Developing management skills before starting
• Consider use of partners
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 • Grow slowly
• Financial control
9. Is there a best source of finance for entrepreneurs in
Cameroon?
Sources of finance are the ways or methods used by firms to obtain
money (capital). It is the provision of any amount of money needed
by a business at a particular point in time and at a particular cost. A
firm can raise capital either internally or externally. Firms cannot
employ all the sources at any given point in time, they therefore have
to choose One source against another from time to time. The
particular choice of source of finance must match with the firm's
objective for financing; in other words, sources of finance must
match with their uses.
Choosing sources of finance, the following factors are taken in to
consideration:
- The cost of the source of finance: Since profit is the prime
objective of business, businessmen would want to cut down cost
at as much as possible. Some sources of finance are free but a
good number of them carry interest payments. Even those that
carry cost vary in rates. Firms will
wanttochoosethecheapestsourceoffinancefromamongstavailableso
urces.
- The duration of the source of finance: Businesses will want to
choose the source of finance that will give a time allowance to
enable them effect their project ie. Matching the duration of the
source of finance to their uses. Long term projects are thus best
financed by long term sources and working capital by short term
sources of finance.
- The capacity of the source of finance: Sources of finance vary in
maximum amount they can provide as capital. Firms will want to
choose those sources that will provide them with the sufficient
amount needed for investment. Internal sources of finance can
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 handle small projects while acquisitions and expansions may
require issue of shares, debentures, bank loans etc.
- Involvement of assets: Sources of finance usually demand
collateral securities, particularly debt sources. Assets of firms are
staked to be used in settling the source of finance in due default.
Firms 'asset collateral are thus at risk. Firms will prefer those
sources that require little or no asset collateral.
- General availability: At the end of the day, firms will have to
choose from among the sources of finance they are exposed to.
Irrespective of their advantages, some sources of finance are not
available for use for given firms. For example, affirm without a
current account cannot go in for an overdraft even if it would have
been the best option.
11.Examine the internal and external source of financing of
entrepreneurs in Cameroon
OR
Explain the sources of financing entrepreneurs in Cameroon
Bank loans
Retained earnings
Financing–shares, debentures and contributions
Business grants–from NGO and Government sectors
Business angels–philanthropist
Trade credits–from suppliers
Hire purchase–buying resources in instalments
Leasing–using business assets on credit bases
12.What are the warning signs of an entrepreneur becoming
bankrupt
• Delay to pay credit or on time
• Change in credit policy from credit bases to cash on delivery
• Key personnel leave the company
• Selling of fixed assets to pay creditors
Customers are given large discounts to enhance cash flows
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 Failure to pay payroll taxes
Poor customer service
Ways through which an entrepreneur can survive bankruptcy
Sale of tangible assets to increase cash flow
Negotiate for loan rescheduling
Factoring of debts
Liquidation and thus closing down
Transfer the management to a more competent person(s)
13.Write down seven questions using the SCAMPER technique
which the entrepreneur can develop when solving the problem
of excess demand
S: substitutes selling
C: combine selling
A: Adapt the selling process of rivals
M: Magnify the key selling product
P: Putting other uses
E: Eliminating constraints in selling
R: Reverse the selling
14.What are the globalization factors and motivations influencing
on the emergence of early internationalizing firms or global
start-ups?
The answer should cover the following points with elaboration and
examples:
- Advances in international communication, information technology
- Pace of technological change in production and transportation
- Advances in international transport
- Integration of world’s financial markets
- Market-oriented and globalization polices
- Limited home market
- International nature of industry
- Homogeneity of international market
- International competition
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