Company Law:
1. One
of these is an artificial person as per law
a.
Firm
b.
Proprietorship
c.
Company
d.
Joint venture
Answer:
c
2. ABC
Company Ltd issued a notification to NSE it was witnessed by MD’s signature, 2
directors and also with the seal of the company affixed on the document.
Which is
the company’s signature from among them?
a.
Official seal of the company
b.
MD’s signature
c.
Directors signature
d.
None
Answer:
a
A
company’s seal, with name engraved on it, is the legal signature of the
company, however at least two directors have to witness it .
3. The
death of a shareholder dissolves a company.
a.
True
b.
False
Answer –
B
Explanation:
Only in partnership (as per the terms in deed) the death/insolvency of a
partner dissolves a firm.
4. There
are two members in a company. When they went to a town they became victims of a
Tsunami. What is the status of the company
a.
Company is to be dissolved
b.
Company is separate person so it can continue
c.
Company to be nationalized
d.
None of the above
Ans –B
Explanation:
The Company is separate from members. The nominees or legal heirs take steps to
change the shares to their name in the company’s records by producing death
certificates and legal heir certificates with KYC IDs.
5. One
of these is true.
a.
All shareholders are agents to others
b.
If all shareholders become insolvent then the company
will be dissolved
c.
Company is a separate, independent ,legal
artificial person
d.
Company is not registered ,It is optional
Ans –C
6. Which
one is true.
a.
A Partnership Firm owns a car. It belongs to its
members too. They can use it on consent of all members.
b.
A company owns a car. It belongs to its members
too. They can use it after a resolution in AGM.
c.
A company owns a car. It does not to its members
too because company as a legal person is the registered owner. Members cannot
use it and no resolution is possible in AGM.
d.
a & c
e.
a & b
f.
None of the above
Answer-d
Explanation:/partnership
and partners are the same. So ownership is also the same. Company can own
assets in its name but shareholders will have no right on it.
7. Which
is false?
a.
A transferee in the case of a firm becomes a
partner
b.
A transferee in case of a company becomes a
shareholder
Answer: A
Explanation:
When entire share of a partner is transferred by him to another person, the
transferee/receiver can not be a partner. As per deed partners are already
fixed. The transferee/the receiver of share in partnership has rights to
benefits of partnership only.
But a
share holder in a company can transfer his shares officially and the
receiver/buyer becomes owner of the shares; and becomes shareholder/member.
8. Which
one is a statutory company
a.
SBI
b.
Tata Motors
a.
ICICI Bank Ltd.
b.
Federal bank
Ans A
On the
basis of incorporation ( formation) companies are divided into 2 groups: 1)
incorporated under company law and 2)incorporated under special statutory law.
SBI, RBI and NABARD are formed nder special laws.
9. Match
the following. ( options can be repeated from second column)
a.TMB e. Public Ltd
b. Reliance Communications f. Private Ltd
c. Canara bank g. Ltd by guarantees
d. SBI life h. Unlimited liability
Select
the right combinations from below:
a.
A-f, b-e, c-e, d-f
b.
A-e, b-f, c-f, d-e
Ans- A
Explanation:
Public limited is to be listed in stock exchanges; shares are owned by by
public too.
Private
limited has minimum 2 members to maximum 200
10. Match
the following.
a. BOB e.
Public Ltd
b. HDFC f.
Private Ltd
c. TMB g.
Government
d. Citi Bank h.
Foreign
Select
answer from correct match below.
a.
A-e, b-g, c-f, d-h
b.
A-g, b-e, c-f, d-h
Answer- B
Explanation:
The segregation is on the basis of ownership.
BOB is owned by government called public sector. When government owns more than
50% ( =>51%) it is called public sector. Citi bank is foreign based.
11. Bank
of Baroda is called government bank because government share is
a.
Graeter than 50%
b.
Greater than 51%
c.
Is equal to 50%
d.
Is 100%
Answer – a
12. One
of these features relate to Public Limited .
a.
Share transferring is restricted
b.
Min 2 members to max 200 members
c.
Min paid up capital of 1 lac
d.
Min paid up capital of 5 lacs
Answer-d
Explanation:
Public Ltd can have unlimited members or has to be listed in any of the
exchanges such as NSE or BSE
13. True
or false
A
foreign company is a company incorporated abroad
a.
True
b.
False
Answer: a
14. Which
one is not a feature of a one person company
a.
One member
b.
Has another nominated member to run the company
c.
File MOA lie all other companies
d.
Registration into ROC required
e.
a b d
f.
a b c d
Answer: f
15. SBI
life is _____ Company of SBI.
a.
Holding, subsidiary
b.
Subsidiary, holding
c.
Owner, sister
d.
Sister, parent
Answer:
B
16. Which
one is not a complete feature of One Person Company
a.
One member only
b.
One member plus another nominated member to run
the company in the event of death of the one member
c.
Registration with ROC required.
d.
File MOA and AOA with ROC.
Answer: a.
Explanation:
Though it has only one member, it needs one nominated member to run the company
in case of emergency like death of the promoter-member.
17. SBI
General Insurance Ltd is ___________ of SBI. SBI is ___________ Company.
a.
Holding, subsidiary
b.
Subsidiary, holding
c.
Parent, sister
d.
Sister, parent.
Answer: b
18. MOA
does not have one of these clauses
a.
Name
b.
Registered office and address
c.
Objective clause
d.
Transfer clause
e.
Capital clause and financial clause
Ans - D
19. MOA
need not mention
a.
Authorized capital
b.
Number of shares & face value
c.
Subscription to share capital by promoters
d.
Main objective
e.
Rules and regulations of internal management
Ans: e
20. Articles
of association Should be presented for
registration with the main document for Private Limited company, guarantee
company and company with unlimited liability
a.
True
b.
False
Answer:
a
21. Restricted
clauses for transfer of shares by Private Limited are found in
a.
MOU
b.
MOA
c.
AOA
d.
Company Law
Answer:
c
22. The
MOA of a power company states that power company can buy and sell ‘wind power’,
but the power company proposed to start a power generation unit and got a loan
from a bank, suddenly power company withdrew from the construction and bank filed a suit for loan payment. Which one
is true?
a.
Power company is liable
b.
Not liable because the power production is
beyond the objective of the company
c.
Charges on asset were created by company in ROC,
so bank has no problem for recovery
d.
Bank officials to sell the loan to SRC
Answer:
b
Explanation:
Any action of the company which is not mentioned in MOA is not considered as an
act of the company. It is called ‘Ultra wires’ ACT.
23. ABC
Ltd acquired a property of 5 acres of industrial land in a city for
construction of a factory. Later it is found out that the action was ultra
wires.
a.
Purchase is invalid.
b.
Property to be resold.
c.
MOA can be amended for purchase.
d.
Property was bought out of capital of the
company. So, company can hold it in its name.
Answer: d.
Explanation: In case of property purchases, company as a
legal entity/person has right of ownership. So, it can retain any property.
24. ABC
Ltd bought 5 acres of land using services of a consultancy company. Directors
signed the contractual document with the consultancy. Suddenly ABC refused
payment of service charges to the consultancy saying purchase of land is ultra
wires. Remedy is
a.
ABC not liable
b.
Consultancy to file a suit against ABC
c.
Consultancy has an option to file a sit against
directors personally
d.
None
Answer:
c.
25. Doctrine
of constructive notice means that the third party who enters in to a contract
is expected to have read MOA and AOA; clearly knows about the objectives of the
company.
a.
True
b.
False
Answer: A
Explanation:
Bankers need to ask for MOA before opening of account or appraisal and sanction
of credit. all the parties, who propose to contract with companies, must go
through MOA and AOA
26. Doctrine
of ultra-wires and construction notice have one thing in common that it
protects the company and it releases company from liability to the other party.
a.
True
b.
False
Answer:
A
27. Doctrine
of indoor management does not have one of the features below
a.
Protects company from liability to outsiders
b.
Outsiders must know the internal rules of the company to enter in
to a contract with the company
c.
Gives protection to outsider for all actions of
the company
d.
Outsiders
need to have knowledge on the MOA and AOA of the company
Answer: c
Explanation:
In general doctrine of indoor management is about internal management.
Outsiders are not expected to know about the internal rules of the company. So,
outsiders are protected from company’s actions.
If the
outsider and the officials get involved in any fraudulent activities using
internal management procedures, company is again protected. It is a punishable
crime.
28. Red
herring prospectus
a.
Indicates Highly risky venture
b.
Means all letters are printed in red
c.
Quantum of shares or price per share not given
in prospectus
d.
Quantum of capital or net profit not given in
prospectus
Ans: C
Explanation:
A prospectus is like a handbook that gives all the details about capital,
objectives, future prospects and requires funds from the public.
If
total number of shares issued or price per share is not reported in prospectus,
it is called Red herring Prospectus.
29. A
shelf prospectus is a
a.
previous
prospectus without any change in
security/details reissued again
b.
Old prospects kept in a shelf of the registered
office of the company reissued
c.
A document where date of shelf life is printed on
it
d.
None of the above
Answer:
a
30. One of these is not a feature of a company.
a.
Perpetual and artificialperson
b.
Legal person
c.
Limited liability to members
d.
Registration with ROC is optional.
Answer:
e.
Explanation:
Registration
is a legal necessity.
Shareholders,
promoters and members may change but company remains perpetual, (continuing
without change for ever).
In a
partnership partners and their personal assets are liable for all debts and
loss of firm unlimitedly.
But in
a company shareholders are not responsible for debt of a firm because company
itself is a legal artificial entity.
31. Issue of
fresh prospectus is a must in one of the following situations:
a. when underwriting is made capital market
intermediaries like merchant bankers, brokers etc..
b. when rights
issue is made to existing shareholders
c. when FPO is
made to existing shareholders/debenture holders
d. when IPO is
made first time to public.
Answer: d
Explanation:
underwriting is an assurance by a banker/merchant banker to buy the shortfall if
any after selling the shares to public and institutions. Companies need not
issue prospectus to underwriters.
FPO: Follow up
or further public offer; all the offers made after initial public offer.
Rights Issue:
Existing share holders have a first right for specific proportion of shares in
the further issues. This is called rights issue.
32. A
prospectus is to be prepared after obtaining ______________ .
a. Certificate
of commencement
b. Certificate
of incorporation
c. MOA
c. AOA
Answer: b.
33. Prospectus
does not need the signatures of all directors of the company.
a. True
b. False
Answer: b
Explanation: A prospectus must be signed by
all directors including proposed (designate) directors and experts.
34. A prospectus
must have signatures of experts witnessing the truth of all details in the
prospectus. One of the following is not true about experts signature in
Prospectus.
a. Experts have
to certify the technicalities and financials of the project.
b. They cannot
withdraw their witness during the period of issue.
c. If any wrong
statements are present in the prospectus, they are not responsible.
d. all of the
above
Answer: c.
Explanation:
Expert director is liable for any misstatement to public in the prospectus. It
is a punishable crime with fine and cost of damages.
35. The owners
/promoters/subscribers to the capital of the company can be called ___________
.
a. members
b. subscribers
c. shareholders
d. owners
e. a or c
f. All of the
above.
Answer: e.
Explanation:
Members and shareholders mean the same in company law parlance. So, they can be
called Members or shareholders.
However, a
member is the right word in a company limited by guarantees or in a company
where there is no capital.
36. Who is not
a member of the company?
a. A subscriber
to capital
b. A member
whose name is in register of members
c. A transferee
who bought the shares from secondary market
d. A nominee
who holds the share after the death of the original shareholder.
e. A confirmed
senior most employee in the position of GM.
Answer: e
37. ‘A and B’
jointly own shares in a company. They are treated as ________ .
a. Joint members.
b. Single
member
c. Two members
d. Any of two
Answer: b.
Explanations:
Joint members are treated as single member only. The first member receives
dividend, statements and reports. When first member dies, second member on
production of proof enjoys ownership.
38. Who cannot
be admitted as member of a company?
a. Another company
b. Partnership
firm
c. Registered
society
d. NRI with
permission under FEMA
e. Fictious
person
Select correct
answer:
A.
a b
B.
b e
C.
c e
D.
c d
Answer: B
Explanation:
Partnership is not legal person like a company. Fictious person is completely
imaginary person. If any one uses fictious names and ID to become a member of a
company, it is severely punishable.
39. A member
ceases to be a member (becomes a non-member) in the following situation.
a. On his death
b on becoming
insolvent
c. Cancellation
of contract by him on misstatement in prospectus or forfeiture of shares by
company
d. On sale of
his share to another person
e. All of the
above.
Answer: e.
40. Which is
not true about the register of members?
a. It contains name,
address, number shares, when sold, when bought, price, date of transfer etc..
b. Kept open
for public inspection in Registrar of companies and registered office of the
company.
c. Outsiders
not connected with company can inspect it free of cost.
Answer: d
Explanation:
Outsiders other than members have to fill in prescribed form and pay fee for
inspection.
41. Every member
is endowed with three types of rights.
1 Statutory right
2 Documentary rights
3 Proprietary rights
Match the
following rights of a member under each above:
a.
MOA and AOA
rights
b.
To receive
dividend
c.
No personal
liability to pay the debts of the company
d.
To transfer
shares
e.
To apply to
Company Law Board to call for AGM.
Choose right
combo:
A.
1-d, e; 2-a;
3-b, c
B.
1-c, e; 2-a;
3-b, d
Answer: A.
Statutory right is given by Company law to transfer shares, to
apply for AGM, to file a petition for dissolution, rights issue etc.
Documentary rights are as
per terms in MOA and AOA.
Proprietary rights are to participate in distribution of assets,
to have no liability more than the nominal value of share etc.
42. Which one is
odd in the following statements?
a. Society
b. Partnership
c. Proprietorship
d. Company.
Answer: d
Explanation:
Company is different because ownership and management are separate and bifurcated.
Management and ownership in other entities are same.
43. Which is not
correct about Number of directors below?
a. In a Public
Ltd Minimum 3 and maximum 15 directors
b. In a Private
Ltd minimum 2 and maximum 200 directors
c. In a One Man
Company- one director
d. One man
company- one director plus one non-member director.
Answer: d.
44. Restrictive
clauses on transfer of shares for private limited company are available in
a. MOA of the company
b. AOA of the
company
c. Register of
members of the company
d. Company law
1954
Answer: b
45. Tamilnad
Mercantile Bank is a private limited because
a. shares are
not listed in any stock exchanges
b. has maximum
200 members
c. Transfer of
shares is restricted within a maximum of 200 members only; not to public.
d. All of the
above.
Answer: d.
46. Read the
following statements about the directorship in accompany.
1. A director
can be reappointed after retirement from a company.
2. In the
absence of retirement clause, 2/3rds of directors have to retire every year in
annual general meeting for replacement.
3. Junior most
of directors are the first to be replaced.
4. A
director-candidate has to get minimum 25% or more of the votes polled.
5. A refundable
Rs2 lakhs is the security deposit for election of a director.
6. Maximum
number of directors in a public limited is more than 15.
Select which of
these are true:
a.
1 2 5
b.
3 5 6
c.
1 2 4
d.
2 4 5
Answer: c.
Explanation:
Senior most directors are retired in AGMs.
Security
deposit is Rs.1 lakhs.
Maximum number
of directors are15 only unless PERMITTED BY GOI.
47. Additional
directors and casual directors are appointed by board temporarily till next
AGM.
a. True
b. false
Answer: a
48. Term of
office for a whole time director is ________
a. 5 years
b. 4 years
c. 3 years
d. 6 years
answer: a
49. Usually
directors should have minimum qualification shares to be elected as directors.
Bt one of these does not require qualification shares for directorship
a.
Public Limited
b.
Private Limited
c.
One Man Company
d.
Subsidiary of a
Public Limited
Answer: b
50. In how many
companies a person can be a director simultaneously at the same time?
a. 10 companies
including 5 public Ltd companies
b. 15 companies
including 8 public Ltd companies
c. 20 companies
including 10 public Ltd companies
d. 25 companies
including 15 public Ltd companies
Answer: c
51. Powers of
board does not include one of the following
a. to make
calls for payment share-money
b. to avail
loan on own debentures
c. to borrow
from other sources
d. to invest
funds and to give loans
e. to buy back
shares.
Answer: B
Explanation: Board
has powers to call for payment from subscribers for shares, to issue
debentures, to borrow from banks and other sources for running the company and
to buy back shares.
52. Some
statements are given below. Read them carefully.
1. AGM is to
approve sale of subsidiaries.
2. Board can
approve proposal of a company to pay the personal dues of any director.
3. Board has
powers to borrow more than the aggregate of capital and reserves.
4. No loans are
permitted to directors from the company.
Choose which are true from the
combinations below:
a.
1, 3
b.
2, 3
c.
1, 4
d.
2, 4.
Answer: c
Explanation:
1.
Personal dues
of directors can be paid by company only after the approval of in AGM.
2.
No loans from
company to directors or to entities in which directors have interest.
53. No contracts are awarded to
directors or their relatives or business in which directors have interest.
a. true
b. false
answer: a.
54. Which is not true about alternate directors?
a. Alternate directors are
appointed temporarily in the place of directors who are going to be absent more
than 90 days.
b. Their term of office is till
the original director comes back from absence.
c. term is renewed every 3 months
d. None.
Answer: c.
Explanation:
Alternate directors are like proxies who work only in the absence of originals;
term is temporary till the absence. Absence should be more than 90 days.
55. A small
company is
a. not a public
Ltd
b. share
capital less than 50 lakhs.
c. Turn over 2
crores.
d. All of the
above.
Answer: d
