1. What is known as a charter of a Company?
[A] Memorandum of Association
[B] Bye laws
[C] Articles of Association
[D] Prospectus
Answer: Option [A]
2. Minimum paid up capital for a public company
[A] 500000
[B] 400000
[C] 300000
[D] 200000
Answer: Option [A]
3. The name of a company can be changed by__________.
[A] an ordinary resolution
[B] a special resolution
[C] the approval of the union government
[D] a special resolution and with the approval of the central government
Answer: Option [D]
4. The __________defines a companys relations with the outside world.
[A] prospectus
[B] memorandum of association
[C] articles of association .
[D] statement in lieu of prospectus .
Answer: Option [B]
5. The most important document of a company is its__________.
[A] prospectus
[B] annual report.
[C] memorandum of association
[D] articles of association
Answer: Option [C]
6. Mark out the type of alteration that is permitted in the articles of association____.
[A] that may not be in the companys interest .
[B] that is contrary to the provisions of the companies act.
[C] that increases a members liability without his written consent .
[D] that is consistent with the memorandum of association .
Answer: Option [D]
7. Mark out the document that need not be prepared and registered with the registrar of companies in public limited companies.
[A] statutory declaration
[B] memorandum of association .
[C] articles of association .
[D] directors undertakings to take up and pay for qualification shares
Answer: Option [C]
8. The share capital of a company may be reduced by __________.
[A] an ordinary resolution
[B] a special resolution
[C] a resolution of the board of directors
[D] obtaining permission from the company law board
Answer: Option [B]
9. The ___________ on equity shares is not cumulative.
[A] dividend
[B] profit
[C] loss
[D] reserve
Answer: Option [A]
10. The ___________ constitute the top administrative organ of the company. .
[A] general manager .
[B] shareholders.
[C] board of directors.
[D] advisory panel.
Answer: Option [C]
11. A directors election takes place in a general meeting through a separated Resolution passed by a _______ majority
[A] single
[B] two-thirds
[C] three-fourths.
[D] five-sixths .
Answer: Option [A]
12. The total managerial remuneration to the directors and the manager in respect of any financial year must not exceed _________ percent of the net profit.
[A] one
[B] three
[C] eleven
[D] ten
Answer: Option [C]
13. Where a company has three directors, the maximum remuneration payable to all of them is ________% of the annual net profit
[A] 5.
[B] 10.
[C] 20.
[D] 25.
Answer: Option [B]
14. A person cannot act as managing director of more than _______company /companies at a time
[A] one
[B] two
[C] four
[D] five
Answer: Option [B]
15. The partnership entity may be regarded as ____________.
[A] a legal entity .
[B] an accountable entity .
[C] both a legal and accountable entity .
[D] neither a legal nor an accountable entity
Answer: Option [D]
16. The amount of minimum subscription may be learnt from the ______________.
[A] prospectus
[B] memorandum of association
[C] articles of association .
[D] records of general meetings
Answer: Option [A]
17. When can a private company commence business ?
[A] at any time
[B] after applying for registration.
[C] after obtaining the certificate of incorporation.
[D] after obtaining the certificate of commencement of business .
Answer: Option [C]
18. An exception to the doctrine of constructive notice is____________.
[A] the doctrine of ultra vires .
[B] the doctrine of indoor management .
[C] lifting the corporate veil
[D] the doctrine of ultra vires in Articles of Association.
Answer: Option [B]
19. A prospectus is to be issued within _______days of registration.
[A] 30
[B] 60
[C] 90
[D] 180
Answer: Option [C]
20. All monies received with the application of shares are to be deposited_______.
[A] with the controller of capital issues .
[B] in the companys bank account
[C] in a special account opened in a scheduled bank for the purpose
[D] with the registrar of companies
Answer: Option [C]
21. The minimum subscription is to be received within ______days of the offer.
[A] 30
[B] 60
[C] 120
[D] 150
Answer: Option [C]
22. The charter of a company refers to its ________________.
[A] prospectus
[B] memorandum of association
[C] articles of association
[D] statement in lieu of a prospectus
Answer: Option [B]
23. An association of 30 persons not registered under the companies Act but carrying on a business is a/an ___________.
[A] illegal association
[B] partnership
[C] private company
[D] public company.
Answer: Option [A]
24. A company is a juristic person with a perpetual succession _____________
[A] as such it dies.
[B] its life depends on the life of its members.
[C] it is created by a process of law and can be put to an end only by a process of law
[D] none
Answer: Option [C]
25. On a share of Rs. 100 of a company, a shareholder has already paid Rs. 30.His Liability is now limited to ___________
[A] Rs. 100.
[B] Rs. 30
[C] Rs. 70.
[D] Rs.10
Answer: Option [C]
26. The Reserve Bank of India is an example of a _____________.
[A] registered company.
[B] statutory company.
[C] chartered company.
[D] unlimited company.
Answer: Option [B]
27. The liability of a shareholder in a company limited by shares is ____________.
[A] unlimited
[B] limited by guarantee.
[C] limited to the unpaid value of shares subscribed by him.
[D] none of the above
Answer: Option [C]
28. An act is said to be ultra vires a company when it is beyond the powers ___________.
[A] of the company
[B] of the directors .
[C] of the directors but not the company
[D] conferred on the company by the Articles.
Answer: Option [A]
29. Which of the following companies need not have their own articles of Association?
[A] unlimited companies.
[B] companies limited by guarantee
[C] private companies limited by shares.
[D] public companies limited by shares.
Answer: Option [D]
30. The Articles of a company conflict with the Memorandum _______________.
[A] the Articles shall prevail.
[B] the Memorandum shall prevail
[C] the directors will resolve the conflict.
[D] the court will resolve the conflict.
Answer: Option [A]
31. A shareholder purchased in the open market shares of a company whose prospectus contained some misstatements. He ____________.
[A] can rescind the contract only but cannot claim damages
[B] can claim damages only but cannot rescind the contract
[C] has no remedy against the company.
[D] has remedy against the directors responsible for the issue of the prospectus
Answer: Option [C]
32. Underwriting means ___________.
[A] selling shares at a discount .
[B] purchasing property at less than market price.
[C] agreeing to purchase shortfall of shares in a company in case of under subscription
[D] offering new shares to outsiders
Answer: Option [C]
33. Share capital of a company means ______________.
[A] equity share capital .
[B] preference share capital
[C] equity and preference share capital .
[D] equity and preference share capital and debentures
Answer: Option [C]
34. The dividend on preference capital is paid _____________
[A] whenever there are profits
[B] only if there are profits.
[C] even if there are no profits.
[D] only when the directors recommend it
Answer: Option [D]
35. Shares can be issued ____________.
[A] at par.
[B] at discount.
[C] at premium.
[D] all of the above.
Answer: Option [D]
36. The debenture holders of a company are companys__________.
[A] owners
[B] creditors
[C] customers
[D] all of these.
Answer: Option [B]
37. A share certificate is required to be signed by_____________
[A] company secretary.
[B] two directors.
[C] two directors and company secretary
[D] all directors and company secretary
Answer: Option [C]
38. A secretary should have sound knowledge of_______________.
[A] company law.
[B] tax laws.
[C] labour laws.
[D] all of these.
Answer: Option [A]
39. Transmission of shares takes place in the following case_____________.
[A] sale of shares.
[B] theft of shares.
[C] operation of any law.
[D] all of these.
Answer: Option [C]
40. The dividend on preference capital is paid___________.
[A] whenever there are profits
[B] only if there are profits
[C] even if there are no profits.
[D] only when the directors recommend it
Answer: Option [D]
41. A private company ________issue deferred shares with disproportionatevoting rights
[A] can ony
[B] can
[C] cannot
[D] can with the prior approval of the government
Answer: Option [A]
42. When is a company said to have been registered?
[A] when it files the memorandum of association with the registrar if companies
[B] when it gets the certificate of incorporation
[C] when it gets the certificate of commencement of business
[D] when it actually starts its business
Answer: Option [A]
43. how many types of preference shares
[A] 8
[B] 7
[C] 6
[D] 5
Answer: Option [A]
44. The debenture holders of a company are companys____________.
[A] owners
[B] creditors
[C] customers
[D] all of these
Answer: Option [B]
45. A share certificate is required to be signed by__________.
[A] company secretary
[B] two directors
[C] two directors and company secretary
[D] all directors and company secretary.
Answer: Option [C]
46. Transmission of shares takes place in the following case
[A] sale of shares.
[B] theft of shares
[C] operation of any law.
[D] all of these
Answer: Option [C]
47. To enable a company to pay dividends, a special authority is ___________.
[A] not needed either in the memorandum or in the articles
[B] needed either in the memorandum or in the articles
[C] needed only in the memorandum
[D] needed only in the articles
Answer: Option [A]
48. According to the companies act, which one of the following companies can commence allotment of shares even before the minimum subscription is subscribed or paid?
[A] Charted company
[B] Private company
[C] Government company
[D] Public limited company
Answer: Option [B]
49. Share premium received by issuing shares can be used for ___________.
[A] payment of dividend
[B] issue of bonus share
[C] remuneration to management
[D] any business purpose
Answer: Option [B]
50. Under the companies act, which of the following powers can be exercised by the board of directors?
[A] Power to sell any of the companies undertaking
[B] Power to make call.
[C] Power to borrow money in excess of the paid up capital.
[D] Power to reappoint on auditor
Answer: Option [B]
51. The liability of shareholders of a public company is limited to the _________.
[A] paid up value of shares
[B] nominal value of shares
[C] extent of their private assets
[D] amounts called up.
Answer: Option [D]
52. Under the Indian Companies Act, 1956, a person can be a Director in ___________.
[A] 7 companies.
[B] 10 companies
[C] 20 companies
[D] 25 companies.
Answer: Option [C]
53. Investment in which of the following is most risky?
[A] equity shares
[B] preference shares
[C] debenture
[D] Land
Answer: Option [A]
54. Which of the following is not an ownership security?
[A] equity shares.
[B] debentures.
[C] preference shares.
[D] None of the above
Answer: Option [B]
55. In which of the following, interest and dividend is payable even if the company does not earn profit?
[A] equity capital
[B] preference capital.
[C] debentures
[D] bonds
Answer: Option [C]
56. Debentures cannot be _____________
[A] irredemable debentures.
[B] participating debentures
[C] registered debentures
[D] earear debbentures
Answer: Option [B]
57. The existence of a joint stock company is interrupted by ______________.
[A] the death of its members
[B] the death of its directors.
[C] the death or insolvency of its manigins; director
[D] none of these
Answer: Option [C]
58. When an existing company offers its shares for sale to the existing shareholders, it is known as_____________.
[A] private placing
[B] bonus issue
[C] rights issue
[D] offer for sale.
Answer: Option [C]
59. A ___________ is a combination of two companies to form a new company.
[A] merger
[B] public
[C] private
[D] private
Answer: Option [A]
60. Promoter is a person who__________.
[A] takes part in the incorporation of a company.
[B] is a director.
[C] is a relative of the managing director.
[D] works to siva publicity to the co.
Answer: Option [A]
Company Law MCQs
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Legal Prudentia 