Company Law MCQ Notes

CS Executive New Syllabus Company Law MCQ
1] Introduction to Company Law
1.Company Law in India has been influenced by which country's legal framework?
a. United States
b. England
c. China
d. India
Answer: b. England
2.Which was the first Companies Act passed in India?

a. Companies Act, 1866
b. Companies Act, 1956
c. Companies Act, 1913
d. Companies Act, 2013
Answer: a. Companies Act, 1866
3.What was the objective of the Companies Act, 2013 in India?

a. Promoting secrecy in corporate governance
b. Encouraging transparency and high standards of corporate governance
c. Reducing the number of companies in India
d. Eliminating the concept of corporate social responsibility
Answer: b. Encouraging transparency and high standards of corporate governance
4.Who chaired the Expert Committee on Company Law in India in 2004?

a. Dr. J.J. Irani
b. Dr. Manmohan Singh
c. Dr. A.P.J. Abdul Kalam
d. Dr. Raghuram Rajan
Answer: a. Dr. J.J. Irani
5.The Companies Act, 2013 introduced new concepts in India, including all of the
following except:
a. Independent director
b. Secretarial audit
c. Internal/secretarial audit based on threshold limits
d. Joint Stock Company Act, 1850
Answer: d. Joint Stock Company Act, 1850
6.What is the primary objective of the Companies Act, 2013?

a. Restricting corporate governance
b. Enhancing corporate secrecy
c. Promoting ease of doing business and corporate governance
d. Encouraging corporate fraud
Answer: c. Promoting ease of doing business and corporate governance
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7.Ultra vires acts refer to activities performed by a company that are:

a. Within the authority granted by the law
b. In accordance with the Memorandum of Association
c. Beyond the authority or scope of activity of the company
d. Approved by the government
Answer: c. Beyond the authority or scope of activity of the company
8.Which section of the Companies Act, 2013 emphasizes the supremacy of the Act over
company documents?
a. Section 6
b. Section 10
c. Section 15
d. Section 20
Answer: a. Section 6
9.What is the purpose of the Doctrine of Ultra Vires?

a. To restrict the power of the government
b. To prevent companies from going bankrupt
c. To ensure companies operate within their legal authority
d. To encourage corporate secrecy
Answer: c. To ensure companies operate within their legal authority
10.The Companies Act, 2013 received the assent of the President on:
a. August 29, 2013
b. August 30, 2013
c. August 4, 2004
d. May 31, 2005
Answer: a. August 29, 2013
11.Which committee submitted a report recommending a significant shift from the

"Government Approval Regime" to a "Shareholder Approval and Disclosure Regime"?
a. Dr. J.J. Irani Committee
b. Dr. Manmohan Singh Committee
c. Dr. Raghuram Rajan Committee
d. Dr. A.P.J. Abdul Kalam Committee
Answer: a. Dr. J.J. Irani Committee
12.What is the purpose of the Companies (Amendment) Act, 2015?

a. To increase corporate secrecy
b. To simplify company incorporation procedures
c. To promote corporate fraud
d. To impose stricter regulations on small companies
Answer: b. To simplify company incorporation procedures
13.Which term is NOT associated with the Companies Act, 2013?

a. Corporate social responsibility
b. E-voting

c. Joint Stock Company Act, 1850

d. Independent director
Answer: c. Joint Stock Company Act, 1850
14.The Companies Act, 2013 aims to enhance:

a. Corporate secrecy
b. Shareholder activism
c. Government control over companies
d. Corporate fraud
Answer: b. Shareholder activism
15.What is the primary objective of the Companies Act, 2013, in terms of corporate
governance?
a. Promoting secrecy in corporate governance
b. Encouraging transparency and high standards of corporate governance
c. Reducing the number of companies in India
d. Eliminating the concept of corporate social responsibility
Answer: b. Encouraging transparency and high standards of corporate governance
16.Which document did the Companies Act, 2013 emphasize the supremacy of?
a. Memorandum of Association
b. Articles of Association
c. Government resolutions
d. Official Gazette
Answer: a. Memorandum of Association
17.The Doctrine of Ultra Vires relates to actions that:

a. Align with the company's objectives
b. Go beyond the company's legal authority
c. Are approved by shareholders
d. Are subject to government regulation
Answer: b. Go beyond the company's legal authority
18.Which committee was responsible for advising the government on revisions to the
Companies Act, 1956?
a. Dr. Manmohan Singh Committee
b. Dr. Raghuram Rajan Committee
c. Dr. A.P.J. Abdul Kalam Committee
d. Dr. J.J. Irani Committee
Answer: d. Dr. J.J. Irani Committee
19.The Companies Act, 2013 empowers the Central Government to bring into force
various sections from such date(s) as may be notified in the:
a. Ministry of Company Affairs website
b. Memorandum of Association
c. Official Gazette
d. Dr. J.J. Irani Committee report

Answer: c. Official Gazette
20.What was the primary objective of the Expert Committee on Company Law chaired
by Dr. J.J. Irani?
a. To make the Companies Act, 2013 more complex
b. To simplify and update the Companies Act, 1956
c. To eliminate the need for corporate governance
d. To increase government control over companies
Answer: b. To simplify and update the Companies Act, 1956
21.Ultra vires activities can be categorized into three divisions based on their violation of
which legal document?
a. The Companies Act, 2013
b. The Memorandum of Association
c. Government regulations
d. Shareholders' resolutions
Answer: b. The Memorandum of Association
22.What is the primary objective of the Companies Act, 2013 in relation to corporate
governance?
a. To reduce transparency in corporate governance
b. To promote corporate fraud
c. To enhance corporate secrecy
d. To encourage transparency and high standards of corporate governance
Answer: d. To encourage transparency and high standards of corporate governance
23.Which act amended the Companies Act, 2013 to extend relief to business entities in
India?
a. The Companies (Amendment) Act, 2015
b. The Companies (Amendment) Act, 2017
c. The Companies (Amendment) Act, 2019
d. The Companies (Amendment) Act, 2020
Answer: a. The Companies (Amendment) Act, 2015
24.What does the Latin term "ultra vires" mean?

a. Beyond government control
b. Beyond corporate secrecy
c. Beyond the authority or power
d. Beyond shareholder approval
Answer: c. Beyond the authority or power
25.Which section of the Companies Act, 2013 states that the Act's provisions prevail over
the memorandum or articles of a company?
a. Section 6
b. Section 10
c. Section 15
d. Section 20

Answer: a. Section 6
26.What is the main purpose of the Doctrine of Ultra Vires?

a. To limit the power of the government
b. To ensure companies operate within their legal authority
c. To encourage corporate secrecy
d. To promote corporate fraud
Answer: b. To ensure companies operate within their legal authority
27.When did the Companies Act, 2013 receive the President's assent?
a. August 29, 2013
b. August 30, 2013
c. August 4, 2004
d. May 31, 2005
Answer: a. August 29, 2013
28.What was the primary objective of the Expert Committee on Company Law chaired
by Dr. J.J. Irani?
a. To make the Companies Act, 2013 more complex
b. To simplify and update the Companies Act, 1956
c. To eliminate the need for corporate governance
d. To increase government control over companies
Answer: b. To simplify and update the Companies Act, 1956
29.Ultra vires activities can be categorized into three divisions based on their violation of
which legal document?
a. The Companies Act, 2013
b. The Memorandum of Association
c. Government regulations
d. Shareholders' resolutions
Answer: b. The Memorandum of Association
30.What is the primary objective of the Companies Act, 2013 in relation to corporate
governance?
a. To reduce transparency in corporate governance
b. To promote corporate fraud
c. To enhance corporate secrecy
d. To encourage transparency and high standards of corporate governance
Answer: d. To encourage transparency and high standards of corporate governance
31)What is the significance of Section 6 of the Companies Act, 2013?

a. It defines the powers of a company.
b. It emphasizes the supremacy of the memorandum of association.
c. It restricts the authority of the board of directors.
d. It states that the Companies Act prevails over other company documents.
Answer: d. It states that the Companies Act prevails over other company documents.

32) An act that goes beyond the scope of activity defined by the Companies Act is
considered:
a. Intra vires
b. Ultra vires the Companies Act
c. Ultra vires the Articles of Association
d. Valid and binding
Answer: b. Ultra vires the Companies Act
33) Which document represents the foundation stone on which the structure of a
company is built and contains the company's objects and boundaries of activities?
a. Articles of Association
b. Resolution
c. Memorandum of Association
d. Shareholder Agreement
Answer: c. Memorandum of Association
34) What is the primary role of the "objects clause" in the Memorandum of Association?
a. It defines the rights of the company's members.
b. It outlines the powers of the board of directors.
c. It specifies the boundaries of the company's activities.
d. It regulates the company's internal affairs.
Answer: c. It specifies the boundaries of the company's activities.
35) If a company takes actions that are beyond the scope of its "objects clause," what is
the legal consequence?
a. Such actions are valid and binding.
b. Such actions are ultra vires the Articles of Association.
c. Such actions are ultra vires the Memorandum of Association.
d. Such actions are ratified by unanimous shareholder resolution.
Answer: c. Such actions are ultra vires the Memorandum of Association.
36) Which document primarily governs the internal affairs of a company and defines the
rights of its members?
c. Shareholders' Agreement
d. Resolution
Answer: b. Articles of Association
37. If a company's actions are ultra vires the Articles of Association but intra vires the
Memorandum of Association, what is the legal status of these actions?
a. Valid and binding
b. Void and unenforceable
c. Subject to government approval
d. Automatically ratified by the shareholders
Answer: b. Void and unenforceable

38.In the case of a conflict between the Memorandum and Articles of Association, how
are they interpreted?
a. Memorandum prevails over Articles.
b. Articles prevail over Memorandum.
c. They are interpreted together to resolve ambiguities.
d. The government's decision prevails.
Answer: c. They are interpreted together to resolve ambiguities.
39.The doctrine of ultra vires is primarily intended to:

a. Protect shareholders and creditors.
b. Increase government control over companies.
c. Encourage corporate secrecy.
d. Promote corporate fraud.
Answer: a. Protect shareholders and creditors.
40.In which famous case was the doctrine of ultra vires first enunciated by the House of
Lords?
a. Ashbury Railway Carriage and Iron Co. Ltd. v. Riche
b. South Durham Brewery Company
c. A. Lakshmanaswami Mudaliar v. L.I.C.
d. Bell Houses Ltd. v. City Wall Properties Limited
Answer: a. Ashbury Railway Carriage and Iron Co. Ltd. v. Riche
41.What did the House of Lords conclude in the Ashbury Railway Carriage case
regarding the contract in question?
a. The contract was valid and enforceable.
b. The contract was ultra vires the company and null and void.
c. The contract required government approval.
d. The contract was outside the scope of the Articles of Association.
Answer: b. The contract was ultra vires the company and null and void.
42.According to Justice Shah in A. Lakshmanaswami Mudaliar v. L.I.C., when can a

company make charitable contributions?
a. At any time without restriction
b. Only with the unanimous consent of shareholders
c. When the contributions are related to the company's business interests
d. When it is expressly prohibited by the Memorandum of Association
Answer: c. When the contributions are related to the company's business interests
43.What does Section 181 of the Companies Act, 2013 authorize the Board of Directors to
do?
a. Make charitable contributions without limit
b. Borrow money for any purpose
c. Contribute to bona fide charitable and other funds
d. Alter the Memorandum of Association
Answer: c. Contribute to bona fide charitable and other funds

44.How can a company ratify an act that is ultra vires the Articles of Association?
a. By unanimous shareholder resolution
b. By altering the Articles through a special resolution
c. By obtaining government approval
d. By amending the Memorandum of Association
Answer: b. By altering the Articles through a special resolution
45.In Re. South Durham Brewery Company, what was the outcome regarding the
interpretation of the memorandum and articles?
a. The memorandum prevailed over the articles.
b. The articles prevailed over the memorandum.
c. Both were declared null and void.
d. The court provided a new interpretation of both documents.
Answer: a. The memorandum prevailed over the articles.
46.Which document specifies the boundaries of a company's activities and its relations
with the outside world?
c. Resolution
47.What is the primary role of the "objects clause" in the Memorandum of Association?
48.If a company takes actions that are beyond the scope of its "objects clause," what is
the legal consequence?
a. Such actions are valid and binding.
b. Such actions are ultra vires the Articles of Association.
c. Such actions are ultra vires the Memorandum of Association.
d. Such actions are ratified by unanimous shareholder resolution.
Answer: c. Such actions are ultra vires the Memorandum of Association.
49.Which document primarily governs the internal affairs of a company and defines the
rights of its members?
c. Shareholders' Agreement
d. Resolution
Answer: b. Articles of Association

50.If a company's actions are ultra vires the Articles of Association but intra vires the
Memorandum of Association, what is the legal status of these actions?
a. Valid and binding
b. Void and unenforceable
c. Subject to government approval
d. Automatically ratified by the shareholders
Answer: b. Void and unenforceable
51.In the case of a conflict between the Memorandum and Articles of Association, how
are they interpreted?
a. Memorandum prevails over Articles.
b. Articles prevail over Memorandum.
c. They are interpreted together to resolve ambiguities.
d. The government's decision prevails.
Answer: c. They are interpreted together to resolve ambiguities.
52.The doctrine of ultra vires is primarily intended to:

a. Protect shareholders and creditors.
b. Increase government control over companies.
c. Encourage corporate secrecy.
d. Promote corporate fraud.
Answer: a. Protect shareholders and creditors.
53.In which famous case was the doctrine of ultra vires first enunciated by the House of
Lords?
a. Ashbury Railway Carriage and Iron Co. Ltd. v. Riche
b. South Durham Brewery Company
c. A. Lakshmanaswami Mudaliar v. L.I.C.
d. Bell Houses Ltd. v. City Wall Properties Limited
Answer: a. Ashbury Railway Carriage and Iron Co. Ltd. v. Riche
53.What did the House of Lords conclude in the Ashbury Railway Carriage case
regarding the contract in question?
a. The contract was valid and enforceable.
b. The contract was ultra vires the company and null and void.
c. The contract required government approval.
d. The contract was outside the scope of the Articles of Association.
Answer: b. The contract was ultra vires the company and null and void.
54.According to Justice Shah in A. Lakshmanaswami Mudaliar v. L.I.C., when can a

company make charitable contributions?
a. At any time without restriction
b. Only with the unanimous consent of shareholders
c. When the contributions are related to the company's business interests
d. When it is expressly prohibited by the Memorandum of Association
Answer: c. When the contributions are related to the company's business interests

55.What does Section 181 of the Companies Act, 2013 authorize the Board of Directors to
do?
a. Make charitable contributions without limit
b. Borrow money for any purpose
c. Contribute to bona fide charitable and other funds
d. Alter the Memorandum of Association
Answer: c. Contribute to bona fide charitable and other funds
56.How can a company ratify an act that is ultra vires the Articles of Association?
a. By unanimous shareholder resolution
b. By altering the Articles through a special resolution
c. By obtaining government approval
d. By amending the Memorandum of Association
Answer: b. By altering the Articles through a special resolution
57.In Re. South Durham Brewery Company, what was the outcome regarding the
interpretation of the memorandum and articles?
a. The memorandum prevailed over the articles.
b. The articles prevailed over the memorandum.
c. Both were declared null and void.
d. The court provided a new interpretation of both documents.
Answer: a. The memorandum prevailed over the articles.
58.Which document specifies the boundaries of a company's activities and its relations
with the outside world?
c. Resolution
59.What is the primary role of the "objects clause" in the Memorandum of Association?
60.What is the primary concern regarding an ultra vires borrowing by a company?

a. It creates a debtor-creditor relationship
b. It establishes the company's authority
c. It indicates sound financial management
d. It questions the legality of the borrowing
Answer: a. It creates a debtor-creditor relationship

61.In a case where a company accepted deposits outside the scope of its Memorandum,
what was the legal outcome regarding the relationship with depositors?
a. Depositors were considered creditors.
b. Depositors were considered shareholders.
c. Depositors had no legal standing.
d. Depositors could demand ownership shares.
Answer: a. Depositors were considered creditors.
62.How can the validity of a transaction with a company be determined with respect to
the doctrine of ultra vires?
a. It depends on the profit potential of the transaction.
b. It depends on the approval of the shareholders.
c. It depends on whether the transaction falls within the objects clause.
d. It depends on the company's financial stability.
Answer: c. It depends on whether the transaction falls within the objects clause.
63.What is the significance of implied powers in a company's operations?

a. Implied powers are explicitly stated in the Memorandum of Association.
b. Implied powers are irrelevant in company operations.
c. Implied powers are necessary for conducting routine business.
d. Implied powers are only relevant in trading companies.
Answer: c. Implied powers are necessary for conducting routine business.
64.Which powers are not implied in a company's operations and should be expressly
included in the objects clauses?
a. Powers to appoint agents
b. Powers to sell and dispose of assets
c. Powers to borrow and provide security
d. Powers to promote other companies
Answer: d. Powers to promote other companies
65.When can a company be held liable for torts or crimes committed by its employees?
a. When the company's Memorandum explicitly allows it
b. When the actions are within the scope of the company's business
c. When the employees are acting without authorization
d. When the company is aware of the torts or crimes
Answer: b. When the actions are within the scope of the company's business
66.Which act can shareholders take if directors divert corporate capital for purposes
beyond the company's memorandum?
a. They can sue the directors for mismanagement.
b. They can compel the directors to restore the funds.
c. They can amend the Memorandum of Association.
d. They can dissolve the company.
Answer: b. They can compel the directors to restore the funds.

67.In what scenario does ultra vires borrowing not create a debtor-creditor relationship?
a. When the borrowing is within the objects of the company
b. When the borrowing is ratified by shareholders
c. When the borrowing is for discharging lawful expenses
d. When the borrowing is for political purposes
Answer: c. When the borrowing is for discharging lawful expenses
68.What is the primary purpose of the doctrine of "constructive notice" in relation to a

company?
a. To protect the company from outsiders
b. To protect outsiders dealing with the company
c. To provide internal regulation for the company
d. To prevent shareholders from accessing company information
Answer: a. To protect the company from outsiders
69.When can the doctrine of "indoor management" be invoked by a person dealing with
the company?
a. Only when the memorandum and articles are fully read and understood
b. When the person has no knowledge of the company's internal affairs
c. When the person is aware of the company's internal irregularities
d. When the company has exercised its authority correctly
Answer: b. When the person has no knowledge of the company's internal affairs
70.What is a crucial exception to the doctrine of indoor management?

a. When the outsider had no knowledge of irregularities
b. When the transaction involves forgery or is void ab initio
c. When the outsider relies on a certified copy of a resolution
d. When the transaction is within the scope of the company's powers
Answer: b. When the transaction involves forgery or is void ab initio
71.What is the effect of Section 6 of the Companies Act, 2013, in relation to the
memorandum and articles of a company?
a. It gives overriding force to the memorandum and articles.
b. It renders the memorandum and articles void.
c. It requires government approval for any amendment.
d. It validates any provision in the memorandum and articles.
Answer: a. It gives overriding force to the memorandum and articles.
72.What is the primary purpose of a company, organization, or entity set up to provide a

legal shield for the person controlling the operation?
a. To ensure transparency in business operations
b. To separate personal assets from business liabilities
c. To increase taxation on the controlling person
d. To maximize shareholder dividends
Answer: b. To separate personal assets from business liabilities

73.In the case of ultra vires borrowing, what relationship does it establish?
a. Debtor and shareholder
b. Debtor and creditor
c. Shareholder and creditor
d. Shareholder and company
Answer: b. Debtor and creditor
74.How can a shareholder recover money paid to a company under an ultra vires
allotment of shares?
a. By transferring the shares to another shareholder
b. By suing the company for a refund
c. By seeking approval from the company's board
d. By demanding additional shares in exchange
Answer: b. By suing the company for a refund
75.In what situation can a transaction be considered ultra vires according to the
doctrine?
a. When it falls within the objects of the company
b. When it exceeds the company's financial capacity
c. When it is approved by a majority of shareholders
d. When it is outside the capacity of the company
Answer: d. When it is outside the capacity of the company
75.What is the primary purpose of implied powers in a company's operations?

a. To ensure that all powers are explicitly mentioned in the memorandum
b. To restrict the company from engaging in certain activities
c. To allow the company to pursue incidental business activities
d. To create confusion regarding the company's authority
Answer: c. To allow the company to pursue incidental business activities
76.Which of the following is NOT among the powers that are implied and can be
inferred from the memorandum?
a. Power to appoint and act through agents
b. Power to borrow and give security for business purposes
c. Power to sell company shares
d. Power to engage in political activities
Answer: d. Power to engage in political activities
77.In what scenario is the doctrine of "indoor management" not applicable?

a. When the outsider has no knowledge of the company's internal affairs
b. When the outsider relies on a certified copy of a resolution
c. When the transaction involves forgery or is void ab initio
d. When the transaction is within the scope of the company's powers
Answer: c. When the transaction involves forgery or is void ab initio

78.What must an outsider do to avoid being estopped from relying on the Rule of Indoor
Management?
a. Consult the company's memorandum and articles
b. Make proper inquiries and satisfy themselves about authority
c. Request the company's board to ratify the transaction
d. Seek approval from the company's shareholders
Answer: b. Make proper inquiries and satisfy themselves about authority
79.In what scenario can shareholders ratify the actions of de facto directors with mala
fide intentions?
a. When the actions are within the scope of the company's business
b. When the company is aware of the actions
c. When the actions are outside the company's objects
d. When the actions are forgery
Answer: a. When the actions are within the scope of the company's business
80.What is the main purpose of Section 176 of the Companies Act, 2013?
a. To provide immunity to directors from legal actions
b. To protect shareholders from fraudulent activities
c. To validate any act done by a director, regardless of defects
d. To allow directors to amend the memorandum at any time
Answer: c. To validate any act done by a director, regardless of defects
81.Which doctrine protects outsiders against actions taken by a company?

a. Doctrine of constructive notice
b. Doctrine of ultra vires
c. Doctrine of indoor management
d. Doctrine of estoppel
Answer: c. Doctrine of indoor management
82.When can an outsider invoke the doctrine of "indoor management"?

a. When they have full knowledge of the company's internal affairs
b. When the company has acted in bad faith
c. When the transaction is beyond the company's capacity
d. When they are dealing with the company in good faith
Answer: d. When they are dealing with the company in good faith
83.In what scenario does the doctrine of "constructive notice" operate?

a. To protect outsiders dealing with the company
b. To protect shareholders from the company
c. To protect the company from outsiders
d. To protect directors from legal actions
Answer: c. To protect the company from outsiders

84.When can the doctrine of "indoor management" not be invoked by a person dealing
with the company?
a. When the person has no knowledge of the company's internal affairs
b. When the person relies on a certified copy of a resolution
c. When the transaction is within the scope of the company's powers
d. When the person has full knowledge of irregularities
Answer: d. When the person has full knowledge of irregularities
85.What is the effect of Section 6 of the Companies Act, 2013, in relation to the
memorandum and articles of a company?
a. It makes the memorandum and articles void.
b. It validates any provision in the memorandum and articles.
c. It allows the government to amend the memorandum and articles.
d. It gives overriding force to the provisions of the Act.
Answer: d. It gives overriding force to the provisions of the Act.
86.Which type of power is NOT implied in a company's operations and should be

expressly included in the objects clauses?
a. Power to appoint and act through agents
b. Power to sell and dispose of assets
c. Power to borrow and give security for business purposes
d. Power to promote other companies
Answer: d. Power to promote other companies
87.In what scenario does ultra vires borrowing not create a debtor-creditor relationship?
a. When the borrowing is within the objects of the company
b. When the borrowing is ratified by shareholders
c. When the borrowing is for discharging lawful expenses
d. When the borrowing is for political purposes
Answer: c. When the borrowing is for discharging lawful expenses
88.What is the primary purpose of the doctrine of "constructive notice" in relation to a

company?
a. To protect the company from outsiders
b. To protect shareholders from fraudulent activities
c. To provide immunity to directors from legal actions
d. To ensure that all company actions are ratified by shareholders
Answer: a. To protect the company from outsiders
DOCTRINE OF CONSTRUCTIVE NOTICE
89.What does the doctrine of constructive notice entail in companies law?

a. It presumes that everyone is unaware of a company's internal documents.
b. It assumes that everyone knows a company's Memorandum and Articles of Association.
c. It prevents access to a company's public documents.
d. It grants immunity to directors from legal actions.

Answer: b. It assumes that everyone knows a company's Memorandum and Articles of

Association.
90.Why are the Memorandum and Articles of a company considered public documents?
a. They are freely accessible without any fees.
b. They can only be accessed by shareholders.
c. They contain confidential information.
d. They are never disclosed to the public.
Answer: a. They are freely accessible without any fees.
91.What happens if a person enters into a contract with a company that goes beyond the
company's powers?
a. They can always acquire rights under the contract.
b. They are presumed to know the contents of the Memorandum and Articles.
c. They have no legal recourse against the company.
d. They can claim damages from the directors.
Answer: c. They have no legal recourse against the company.
92.Under what conditions can an outsider claim rights under a contract with a company?
a. When the company has concealed its Memorandum and Articles.
b. When the company's directors have not read the documents.
c. When the contract is beyond the powers of the company.
d. When the contract involves fraud.
Answer: d. When the contract involves fraud.
93.What does the doctrine of indoor management protect?

a. Insiders dealing with the company.
b. Shareholders' interests.
c. Third parties who ensure procedural aspects are followed.
d. Directors from legal actions.
Answer: c. Third parties who ensure procedural aspects are followed.
94.What does the doctrine of constructive notice mean for outsiders dealing with a
company?
a. They are presumed to have read and understood the company's documents.
b. They are exempt from any legal obligations.
c. They can ignore the company's internal regulations.
d. They cannot rely on the company's documents.
Answer: a. They are presumed to have read and understood the company's documents.
95.What is the consequence of an outsider deliberately refraining from making inquiries

about a company's affairs?
a. They will be treated as having notice of the company's documents.
b. They will be granted immunity from legal actions.
c. They can claim damages from the company.
d. They will be given the benefit of the doubt.

Answer: a. They will be treated as having notice of the company's documents.
96.What does the term "Alter Ego" mean in the context of the doctrine?
a. A person's clone.
b. A separate legal entity.
c. The managing director of a company.
d. Shareholders' liability.
Answer: a. A person's clone.
97.What does the common law principle grant to shareholders and directors in relation to
a company?
a. Immunity from liability.
b. Exemption from taxation.
c. Control over the company's assets.
d. Power to amend the company's documents.
Answer: a. Immunity from liability.
98.When does the doctrine of alter ego provide an exception to the common law
principle?
a. When shareholders and directors act in the company's best interests.
b. When there is a clear distinction between the company and its stakeholders.
c. When shareholders and directors have thin connections to the company.
d. When shareholders and directors act fraudulently or unjustly.
Answer: d. When shareholders and directors act fraudulently or unjustly.
99.How is the doctrine of alter ego applied when there is a thin line of distinction
between shareholders/directors and the corporation?
a. It strengthens the separate legal entity concept.
b. It treats both as one entity.
c. It grants immunity to shareholders/directors.
d. It exempts shareholders/directors from taxation.
Answer: b. It treats both as one entity.
100.What is the primary purpose of the doctrine of alter ego?

a. To promote the concept of separate legal entities.
b. To prevent shareholders from liability.
c. To lift the corporate veil between shareholders/directors and the corporation.
d. To grant immunity to directors.
Answer: c. To lift the corporate veil between shareholders/directors and the corporation.
101. In the case of Sunil Bharti Mittal v. Central Bureau of Investigation, what did the
Supreme Court of India clarify?
a. The concept of alter ego.
b. The doctrine of constructive notice.
c. The role of shareholders in a company.
d. The liability of directors.
Answer: a. The concept of alter ego.

103. When can the corporate veil be lifted according to the doctrine?
a. Whenever shareholders request it.
b. When the company is formed for legitimate business purposes only.
c. In cases of fraudulent and dishonest use of the corporate entity.
d. In any legal proceeding.
Answer: c. In cases of fraudulent and dishonest use of the corporate entity.
104.What does the doctrine of lifting or piercing the corporate veil involve?
a. Protecting the corporate entity at all costs.
b. Treating the individuals concerned as separate entities.
c. Ignoring the corporate entity in cases of wrongdoing.
d. Ensuring shareholders' interests are prioritized.
Answer: c. Ignoring the corporate entity in cases of wrongdoing.
105.What is the statutory recognition of the doctrine of lifting the corporate veil in the
a. Sections 7(7), 251(1), and 339.
b. Sections 1(1), 5(5), and 10(10).
c. Sections 3(3), 7(7), and 9(9).
d. Sections 4(4), 6(6), and 8(8).
Answer: a. Sections 7(7), 251(1), and 339.
106.When are courts generally reluctant to lift the corporate veil?

a. When there is any suspicion of fraudulent activity.
b. When the corporate facade is merely an agency instrumentality.
c. When the company's shareholders are involved in public policy conflicts.
d. When the corporate personality is used to evade taxes.
Answer: b. When the corporate facade is merely an agency instrumentality.
107.In what situations have courts found it necessary to disregard the separate
personality of a company?
a. Whenever shareholders request it.
b. When shareholders are residents of an enemy country.
c. When the company is used for tax evasion.
d. In cases of any wrongdoing by the company.
Answer: c. When the company is used for tax evasion.
108.In the Vodafone case, what amount of withholding tax was initially demanded by
Indian income tax authorities?
a. INR 11.2 billion
b. INR 100 million
c. INR 1 billion
d. INR 10 billion
Answer: a. INR 11.2 billion

109.Which court initially ruled in favor of the income tax authorities in the Vodafone
case?
a. Supreme Court of India
b. Bombay High Court
c. Delhi High Court
d. Calcutta High Court
Answer: b. Bombay High Court
110.Why did Vodafone challenge the tax demand in court?

a. To avoid paying any taxes in India
b. To seek clarity on offshore transactions
c. To reduce its liability to a lower amount
d. To gain control of Hutchison-Essar Limited
Answer: c. To reduce its liability to a lower amount
111.What was the Supreme Court's decision regarding Vodafone's tax liability?
a. Vodafone had to pay the full amount demanded by the tax authorities.
b. Vodafone was not liable to pay any withholding tax.
c. The case was referred back to the Bombay High Court for further review.
d. Vodafone had to pay a reduced amount of withholding tax.
Answer: b. Vodafone was not liable to pay any withholding tax.
112.Besides taxation, what other corporate law issues did the Vodafone case address?
a. Intellectual property disputes
b. Commercial cross-border transactions and tax avoidance
c. Environmental regulations
d. Labor disputes
Answer: b. Commercial cross-border transactions and tax avoidance
113.What is the doctrine of constructive notice?

a. A legal notice sent by the court to all involved parties.
b. The presumption that everyone knows a company's internal documents.
c. A notice given to shareholders in a public company.
d. A notice given to employees regarding corporate policies.
Answer: b. The presumption that everyone knows a company's internal documents.
114.When does the doctrine of lifting or piercing the corporate veil apply?
a. In any legal proceeding involving a company.
b. When shareholders request it.
c. In cases of fraudulent and dishonest use of the corporate entity.
d. In cases of simple contract disputes.
Answer: c. In cases of fraudulent and dishonest use of the corporate entity.
115.What is the primary purpose of lifting or piercing the corporate veil?

a. To protect shareholders from liability.
b. To promote the concept of separate legal entities.
c. To hold directors personally liable for company debts.

d. To reveal the true character of a company's actions or ownership.

Answer: d. To reveal the true character of a company's actions or ownership.
116.In what situations have courts found it necessary to disregard the separate
personality of a company?
a. Whenever a company is involved in a lawsuit.
b. When shareholders are not satisfied with company performance.
c. When acts of a corporation are allegedly opposed to justice or public interest.
d. When the company's annual report is inaccurate.
Answer: c. When acts of a corporation are allegedly opposed to justice or public interest.
117.What is the significance of the term "one-person company" under the Companies
Act, 2013?
a. It signifies a company with only one shareholder.
b. It signifies a company with one director and no shareholders.
c. It signifies a company with one employee.
d. It signifies a company with one subsidiary.
Answer: a. It signifies a company with only one shareholder.
118. Roles and Responsibilities under the Companies Act, 2013

Who is considered an "officer" under the Companies Act, 2013?
a. Any employee of the company.
b. Any individual with authority in the company.
c. Any shareholder of the company.
d. Any director or manager of the company.
Answer: b. Any individual with authority in the company.
119. What is the role of an "Independent Director" as defined in the Companies Act,
2013?
a. To be a director elected by the shareholders.
b. To have control over the affairs of the company.
c. To provide an independent perspective on board decisions.
d. To manage the day-to-day operations of the company.
Answer: c. To provide an independent perspective on board decisions.
120.Under the Companies Act, 2013, which companies are mandated to observe
secretarial standards for general and board meetings?
a. Only listed companies.
b. All private companies.
c. Companies with annual turnover exceeding INR 100 crore.
d. Only public companies.
Answer: d. Only public companies.
121. What type of companies are required to undergo secretarial audit as per the
a. Only public companies.
b. All companies, regardless of their size.

c. Only listed companies and public companies with a turnover exceeding a specified limit.
d. Companies involved in cross-border transactions.
Answer: c. Only listed companies and public companies with a turnover exceeding a specified
limit.
122. What does the term "Government Company" mean under the Companies Act, 2013?
a. Any company owned by the Indian government.
b. Any company in which at least 10% of the shares are owned by the government.
c. Any company in which at least 51% of the paid-up share capital is held by the government.
d. Any company registered under a special Act.
Answer: c. Any company in which at least 51% of the paid-up share capital is held by the
government.
123. What are the requirements for a company to be considered a "small company"
under the Companies Act, 2013?
a. Paid-up share capital not exceeding INR 1 crore and turnover not exceeding INR 10 crore.
b. Paid-up share capital not exceeding INR 5 crore and turnover not exceeding INR 20 crore.
c. Paid-up share capital not exceeding INR 4 crore and turnover not exceeding INR 40 crore.
d. Paid-up share capital not exceeding INR 2 crore and turnover not exceeding INR 50 crore.
Answer: c. Paid-up share capital not exceeding INR 4 crore and turnover not exceeding INR 40
crore.
124. In which scenario is a company classified as a "foreign company" under the

a. If it conducts any business activity in India.
b. If it is incorporated outside India and has a place of business in India.
c. If its directors are foreign nationals.
d. If it is listed on a foreign stock exchange.
Answer: b. If it is incorporated outside India and has a place of business in India.
125.What is the purpose of class action suits under the Companies Act, 2013?
a. To protect the interests of shareholders.
b. To facilitate mergers and acquisitions.
c. To encourage companies to go public.
d. To enforce compliance with labour laws.
Answer: a. To protect the interests of shareholders.
126. Which of the following is NOT an example of when the corporate veil may be lifted?
a. Tax evasion by a company.
b. Violation of environmental regulations.
c. Protection of shareholders' interests.
d. Fraudulent use of a company's assets.
Answer: c. Protection of shareholders' interests.
127. What is the primary reason for establishing the doctrine of constructive notice?
a. To speed up legal proceedings.
b. To ensure all shareholders are aware of the company's actions.

c. To avoid court notifications.

d. To protect the company from legal liability.
Answer: b. To ensure all shareholders are aware of the company's actions.
128. What does "e-Governance" stand for?

a. Efficient Governance
b. Electronic Governance
c. Economic Governance
d. Ethical Governance
Answer: b. Electronic Governance
129. What is the primary goal of e-Governance?

a. To make government processes more complicated.
b. To make government processes more time-consuming.
c. To make government processes Simple, Moral, Accountable, Responsive, and Transparent
(SMART).
d. To reduce the use of technology in government operations.
Answer: c. To make government processes Simple, Moral, Accountable, Responsive, and
Transparent (SMART).
130. What is the Ministry of Corporate Affairs' flagship e-Governance project called?
a. E-Gov-21
b. MCA-21
c. SmartCorp
d. IT-Govern
Answer: b. MCA-21
131. When was MCA-21 version 3.0 launched?

a. May 24, 2021
b. March 8, 2022
c. September 1, 2022
d. January 9, 2023
Answer: a. May 24, 2021
132. What does NFRA (National Financial Reporting Authority) oversee?

a. Road infrastructure projects
b. Environmental regulations
c. Accounting and auditing standards compliance
d. Taxation policies
Answer: c. Accounting and auditing standards compliance
133. What is the primary role of the Registrar of Companies (ROC)?

a. To register musical bands in the country.
b. To manage public parks and recreational areas.
c. To register companies and ensure compliance with statutory requirements.
d. To oversee the national railways.
Answer: c. To register companies and ensure compliance with statutory requirements

134. What is the role of the Official Liquidator (OL)?

a. To investigate corporate frauds.
b. To manage public libraries.
c. To oversee government-owned hospitals.
d. To assist in the winding up of companies.
Answer: d. To assist in the winding up of companies.
135. What is the purpose of the Serious Fraud Investigation Office (SFIO)?
a. To promote corporate fraud.
b. To investigate corporate frauds.
c. To manage public transportation.
d. To regulate environmental conservation.
Answer: b. To investigate corporate frauds.
136. What is the purpose of the National Corporate Social Responsibility Data Portal?
a. To promote corporate tax evasion.
b. To facilitate insider trading.
c. To establish a platform for disseminating corporate social responsibility data.
d. To provide information on government regulations.
Answer: c. To establish a platform for disseminating corporate social responsibility data.
137. What is the primary objective of MCA-21?

a. To slow down corporate processes.
b. To eliminate all digital filings.
c. To promote environmental conservation.
d. To bring speed, transparency, and efficiency to government services.
Answer: d. To bring speed, transparency, and efficiency to government services.
138. What are the minimum system requirements for e-filing on MCA-21?
a. High-end supercomputers.
b. A typewriter.
c. A computer or laptop, efficient operating system, browser, Adobe Reader, scanner, and Java
Runtime Environment.
d. A smartphone with internet access.
Answer: c. A computer or laptop, efficient operating system, browser, Adobe Reader, scanner,
and Java Runtime Environment.
139.What is the necessity of pre-certification of E-Forms?

a. It helps in automating the registration process.
b. It reduces the workload of the Ministry of Corporate Affairs.
c. It's required by the government for tax purposes.
d. It's a formality with no real significance.
Answer: b. It reduces the workload of the Ministry of Corporate Affairs.

140. What category of Digital Signature Certificate (DSC) is required for e-filing on the
MCA Portal?
a. Class 1
b. Class 2 and Class 3
c. Class A
d. Class X
Answer: b. Class 2 and Class 3
141. What are the consequences of giving false certification knowingly in e-forms?
a. No consequences, it's a common practice.
b. Increased professional recognition.
c. Liability to punishment under the Companies Act.
d. A cash reward.
Answer: c. Liability to punishment under the Companies Act.
142. How can fees for filing documents be paid on the MCA Portal?
a. By mailing a check to the Ministry of Corporate Affairs.
b. By using digital currencies like Bitcoin.
c. By cash payment at the nearest post office.
d. By credit card, internet banking, or approved modes as per the Central Government.
Answer: d. By credit card, internet banking, or approved modes as per the Central Government.
143. What is the primary objective of e-Scrutiny in MCA-21?

a. To eliminate all scrutiny processes.
b. To increase the workload of ROCs.
c. To facilitate online hearings with stakeholders.
d. To promote tax evasion.
Answer: c. To facilitate online hearings with stakeholders.
145.What is the focus of MCA Lab?

a. Researching medical advancements.
b. Evaluating the effectiveness of compliance systems.
c. Promoting cultural activities.
d. Developing new digital games.
Answer: b. Evaluating the effectiveness of compliance systems.
146. What is the primary goal of e-Consultation in MCA-21 V 3.0?

a. To conduct online concerts.
b. To establish a platform for public consultation on proposed amendments and draft rules.
c. To sell electronic products.
d. To provide cooking recipes online.
Answer: b. To establish a platform for public consultation on proposed amendments and draft
rules.
147. What does CMS (Compliance Management System) assist MCA in?
a. Managing national parks.
b. Tracking wildlife.

c. Identifying non-compliant companies/LLPs and issuing e-notices.

d. Promoting corporate tax evasion.
Answer: c. Identifying non-compliant companies/LLPs and issuing e-notices.
148. What does the MCA Lab consist of?

a. Chemical laboratories.
b. Corporate law experts.
c. Astronomical observatories.
d. Zoological collections.
Answer: b. Corporate law experts.
149. What does the term "e-form" refer to in MCA-21?

a. An electronic music genre.
b. A digitally signed e-mail.
c. A re-engineered conventional form in electronic format for filing.
d. A programming language.
Answer: c. A re-engineered conventional form in electronic format for filing.
150. Who is the author of the article?

a. Anonymous
b. Shri Rajesh Verma
c. Dr. Manmohan Singh
d. Narendra Modi
Answer: b. Shri Rajesh Verma

2] Legal Status and Types of Registered Companies
1. What is the primary source of the regulatory framework for companies in India?
a) The Companies Act, 1956
b) The Companies Act, 2013
c) The Partnership Act, 1932
d) The Securities and Exchange Board of India (SEBI)
Answer: b) The Companies Act, 2013
2. What does a "company" represent in the context of business organization?

a) A group of friends doing business together
b) An association of like-minded individuals
c) A legal person with a separate identity from its members
d) A sole proprietorship
Answer: c) A legal person with a separate identity from its members
3. What is the origin of the term "corporation"?

a) Latin word "corpus," meaning "body"
b) Greek word "korpor," meaning "group"
c) Sanskrit word "corpora," meaning "association"
d) Arabic word "corpo," meaning "business"
Answer: a) Latin word "corpus," meaning "body"
4. Who described a company as "an association of many persons who contribute money
or money's worth to a common stock"?
a) Lord Justice Lindley
b) Chief Justice Marshall
c) Justice James
d) Lord Denning
Answer: a) Lord Justice Lindley
5. In which Act is the definition of a "company" provided in India?

a) Companies Act, 1956
b) Indian Contract Act, 1872
c) Companies Act, 2013
d) Partnership Act, 1932
Answer: c) Companies Act, 2013
6. What is the legal status of a registered company?

a) It is a natural person.
b) It is an artificial juridical person.
c) It is a government entity.
d) It is a partnership firm.
Answer: b) It is an artificial juridical person.

7. Can a company marry or divorce?

a) Yes
b) No
c) Only if allowed by the shareholders
d) Only if allowed by the board of directors
Answer: b) No
8. What is the significance of the "separate legal entity" of a company?

a) It allows shareholders to control the company's actions.
b) It enables shareholders to marry and divorce through the company.
c) It distinguishes the company from its members and gives it legal personality.
d) It allows shareholders to vote in elections.
Answer: c) It distinguishes the company from its members and gives it legal personality.
9. Which landmark case established the principle of separate legal entity for companies?
a) Salomon v. Salomon and Co. Ltd.
b) Lee v. Lee's Air Farming Ltd.
c) Re G.V. Pratap Reddy case
d) Salomon v. Lee case
Answer: a) Salomon v. Salomon and Co. Ltd.
10. In the case of Salomon v. Salomon and Co. Ltd., what was the nature of the business
involved?
a) A technology startup
b) A leather merchant and boot manufacturer
c) An agricultural company
d) A pharmaceutical company
Answer: b) A leather merchant and boot manufacturer
11. What was the outcome of the Salomon v. Salomon and Co. Ltd. case regarding the
legal status of the company?
a) The company was considered a mere alias of Salomon.
b) The company had no separate legal entity.
c) The company was recognized as a separate legal person from its shareholders.
d) The company was dissolved.
Answer: c) The company was recognized as a separate legal person from its shareholders.
12. In which case did the Privy Council uphold the principle that a shareholder and the
company are distinct legal persons?
c) Re Kondoli Tea Co. Ltd.
d) New Horizons Ltd. v. Union of India
Answer: b) Lee v. Lee's Air Farming Ltd.

13. What did the Privy Council conclude in the Lee v. Lee's Air Farming Ltd. case?
a) Lee and his company were the same legal entity.
b) Lee's company was not a separate legal person.
c) Lee and his company were distinct legal persons.
d) Lee's company was an agent of Lee.
Answer: c) Lee and his company were distinct legal persons.
14. What did the Calcutta High Court recognize in the Re Kondoli Tea Co. Ltd. case?
a) The company had no separate legal existence.
b) The company was a mere alias of the shareholders.
c) The company was a separate legal entity.
d) The company was a partnership firm.
Answer: c) The company was a separate legal entity.
15. In the New Horizons Ltd. v. Union of India case, what was the significance of the
company's joint venture status?
a) The company was considered a subsidiary.
b) The company's experience was based on its shareholders' experience.
c) The company had no legal identity.
d) The company could not enter into contracts.
Answer: b) The company's experience was based on its shareholders' experience.
16. In the New Horizons Ltd. v. Union of India case, what did the Supreme Court
consider when determining the company's experience?
a) Only the experience of the majority shareholders
b) Only the experience of the Indian group of companies
c) The experience of all the constituents of the joint venture
d) The experience of the company's board of directors
Answer: c) The experience of all the constituents of the joint venture
17. Which case established that a company can have the advantages of both master and
servant roles due to corporate personality?
c) Re G.V. Pratap Reddy case
d) New Horizons Ltd. v. Union of India
Answer: b) Lee v. Lee's Air Farming Ltd.
18. What is the primary purpose of forming a company under the law?
a) To avoid personal liability for business debts
b) To ensure that all shareholders have equal control
c) To simplify business operations
d) To allow shareholders to marry and divorce through the company
Answer: a) To avoid personal liability for business debts

19. Which of the following statements about a registered company is true?

a) It has no legal personality.
b) It is the same as its members in the eyes of the law.
c) It can sue and be sued in its own name.
d) It must have a majority of shareholders who are unrelated.
Answer: c) It can sue and be sued in its own name.
20. What is the legal term for a company's ability to do everything a natural person can
do except certain acts that require personal execution?
a) Corporate merger
b) Corporate personality
c) Corporate espionage
d) Corporate dissolution
Answer: b) Corporate personality
21. According to the principle of corporate personality, who can be held liable for the acts
of a company?
a) All shareholders collectively
b) The majority shareholders
c) No one; the company is solely responsible
d) The managing director of the company
Answer: c) No one; the company is solely responsible
22. In the case of Salomon v. Salomon and Co. Ltd., how many shares were subscribed to
by the shareholders, resulting in actual cash paid as capital of 7?
a) 7 shares
b) 1 share each
c) 100 shares each
d) 20,000 shares
Answer: b) 1 share each
23. What was the nominal capital of Salomon's company in the Salomon v. Salomon and
Co. Ltd. case?
a) ₹ 7
b) ₹ 38,782
c) ₹ 40,000
d) ₹ 6,050
Answer: c) ₹ 40,000
24. In the New Horizons Ltd. v. Union of India case, what did the Supreme Court
consider when determining the company's joint venture status?
a) The company's registration status
b) The company's total assets
c) The contributions and expertise of the constituents of the joint venture
d) The company's profitability
Answer: c) The contributions and expertise of the constituents of the joint venture

25. What was the outcome of the Re Kondoli Tea Co. Ltd. case regarding the legal status
of the company?
a) The company had no legal identity.
b) The company was considered a partnership.
c) The company was recognized as a separate legal entity.
d) The company was dissolved.
Answer: c) The company was recognized as a separate legal entity.
26. Who is considered the notional owner of a company's property and assets?
a) The board of directors
b) The majority shareholder
c) The managing director
d) The shareholders collectively
Answer: d) The shareholders collectively
27. What term is used to describe a company's ability to own property, enter into
contracts, and sue or be sued in its own name?
a) Corporate governance
b) Corporate veil
c) Corporate rights
d) Corporate liability
Answer: b) Corporate veil
28. In the context of a company, what does "incorporation" refer to?

a) The process of turning a natural person into a corporate entity
b) The process of forming a legal corporation as a juristic person
c) The process of merging with other companies
d) The process of registering as a partnership
Answer: b) The process of forming a legal corporation as a juristic person
29. What is the legal term for a company's ability to act like a natural person but only
through a designated person?
a) Corporate personality
b) Corporate espionage
c) Corporate agency
d) Corporate dissolution
Answer: c) Corporate agency
30. What is the significance of the "separate legal entity" of a company in the eyes of the
law?
a) It allows shareholders to control the company's actions.
b) It enables shareholders to avoid taxes.
c) It distinguishes the company from its members and gives it legal personality.
d) It allows shareholders to dissolve the company at any time.
Answer: c) It distinguishes the company from its members and gives it legal personality.

48. What is the significance of a company's domicile, according to the case of Gasque v.
Inland Revenue Commissioners?
a) A company's domicile determines its legal capacity.
b) A company's domicile affects its ability to own property.
c) A company's domicile is essential for its registration.
d) A company's domicile is where it conducts its business.
Answer: b) A company's domicile affects its ability to own property.
49. In the case of State Trading Corporation of India Ltd. v. C.T.O., what did the
Supreme Court clarify about a company's citizenship status?
a) A company is considered a citizen under the Citizenship Act.
b) A company is considered a citizen under the Constitution of India.
c) A company is not a citizen under either the Citizenship Act or the Constitution.
d) A company is a citizen if its majority shareholders are citizens.
Answer: c) A company is not a citizen under either the Citizenship Act or the Constitution.
50. What fundamental right available to citizens is also extended to a company, as

mentioned in Bennet Coleman Co. v. Union of India?
a) The right to privacy
b) The right to free speech and expression
c) The right to own property
d) The right to vote in elections
Answer: b) The right to free speech and expression.
51. Under what circumstances can members of a company be held severally liable for the
company's debts according to Section 3A?
a) When the company has more than seven members.
b) When the company carries on business for less than six months.
c) When the number of members falls below seven in a public company.
d) When the company is incorporated as an Unlimited Company.
Answer: c) When the number of members falls below seven in a public company.
52. In which situation can members of a company have unlimited liability according to
Section 7(7)(b)?
a) When the company fails to repay a loan.
b) When the company carries on business with more than seven members.
c) When the company is incorporated with fraudulent information.
d) When the company's shareholders are citizens.
Answer: c) When the company is incorporated with fraudulent information.
53. When can individuals be declared personally liable for the debts/liabilities of a
company without limitation, as per Section 339?
a) When they are unaware of the company's fraudulent activities.
b) When they were not involved in the company's business.
c) When they knowingly participated in fraudulent business activities.
d) When they are minority shareholders.
Answer: c) When they knowingly participated in fraudulent business activities.

54. What type of companies are categorized as "not for profit" companies according to
Section 8 of the Companies Act, 2013?
a) Companies with unlimited liability.
b) Companies that promote commerce and trade.
c) Companies with a primary goal of making a profit.
d) Companies with objectives like promoting education, social welfare, or charity.
Answer: d) Companies with objectives like promoting education, social welfare, or charity.
55. Which type of company has its members' liability limited to a predetermined amount
they agreed to contribute if the company is dissolved with outstanding liabilities?
a) Public company
b) Private company
c) Company limited by shares
d) Company limited by guarantee
Answer: d) Company limited by guarantee.
56. According to Section 2(11) of the Companies Act, 2013, what does the term "body
corporate" or "corporation" include?
a) Only Indian companies
b) All companies registered under the Companies Act
c) Co-operative societies
d) Government-owned companies
Answer: c) Co-operative societies.
57. What is the primary characteristic that distinguishes a public company from a private
company under Section 3 of the Companies Act, 2013?
a) The number of members.
b) The amount of share capital.
c) The government ownership.
d) The nature of the business.
Answer: a) The number of members.
58. Which type of company is subject to fewer statutory formalities and legal
compulsions compared to registered companies?
a) Public company
b) Private company
c) Statutory company
d) Government company
Answer: b) Private company.
59. What is the significance of a holding company in relation to its subsidiary companies
under Section 2(46)?
a) It controls the composition of the Board of Directors.
b) It exercises or controls more than one-half of the total voting power.
c) It is a company incorporated outside India.
d) It has fewer liabilities than subsidiary companies.
Answer: b) It exercises or controls more than one-half of the total voting power.

60. What type of company has no limit on the liability of its members and may or may
not have share capital?
a) Private company
b) Public company
c) Unlimited company
d) Government company
Answer: c) Unlimited company.
61. What is the main distinguishing feature of a "Statutory Company" according to

classification on the basis of incorporation?
a) It is governed by the Companies Act, 2013.
b) It is registered with the Registrar of Companies.
c) It is constituted by a Special Act of Parliament or State Legislature.
d) It is a subsidiary of a holding company.
Answer: c) It is constituted by a Special Act of Parliament or State Legislature.
62. What is the definition of a "Domestic Company"?

a) A company conducting business only within a city or town.
b) A company with limited liability.
c) A company registered under the Companies Act, 2013.
d) A company that conducts its affairs in its home country and has a registered office in India.
Answer: d) A company that conducts its affairs in its home country and has a registered office in
India.
63. What type of companies are explicitly exempted from the definition of "Small
Company" under Section 2(85)?
a) Public companies.
b) Holding companies.
c) Government companies.
d) Companies registered under Section 8.
Answer: b) Holding companies.
64. What does "associate company" mean, and what percentage of total voting power
defines significant influence according to Section 2(6)?
a) A company with less than 10% total voting power.
b) A company with more than 50% total voting power.
c) A company in which another company has at least 20% of total voting power.
d) A subsidiary company.
Answer: c) A company in which another company has at least 20% of total voting power.
65. When can members of an unlimited company be held personally responsible for the
company's debts according to Section 2(92)?
a) When the company is insolvent.
b) When they control more than one-half of the total voting power.
c) When the company is involved in illegal activities.
d) When there is no limit on their liability.
Answer: d) When there is no limit on their liability.

66. Which type of companies have their members' liability limited to the amount unpaid
on the shares they hold?
a) Companies limited by guarantee.
b) Unlimited companies.
c) Companies with share capital.
d) One Person Companies.
Answer: c) Companies with share capital.
67. What is the primary objective of a "not for profit" company according to Section 8 of
the Companies Act, 2013?
a) To maximize profits for its members.
b) To promote commerce and trade.
c) To engage in charitable activities without profit motive.
d) To compete with other companies in the market.
Answer: c) To engage in charitable activities without profit motive.
68. What type of companies must apply their profits or other incomes to promote their
specified objectives according to Section 8?
a) Private companies.
b) Public companies.
c) Not-for-profit companies.
d) Unlimited companies.
Answer: c) Not-for-profit companies.
69. Which classification of companies falls under the category of "Registered

Companies"?
a) Statutory Companies.
b) Public Companies.
c) Companies limited by shares.
d) Companies incorporated under the Companies Act, 2013.
Answer: d) Companies incorporated under the Companies Act, 2013.
70. What is the significance of having a "significant influence" over an associate

company according to Section 2(6)?
a) Control of at least 10% of total voting power.
b) Control of at least 50% of total voting power.
c) Control of at least 20% of total voting power.
d) Control of the company's management.
Answer: c) Control of at least 20% of total voting power.
71. Which type of company may have layers of subsidiaries beyond a prescribed limit
according to Section 2(87)?
a) Private companies.
b) Government companies.
c) Holding companies.
d) Statutory companies.
Answer: c) Holding companies.

72. Under Section 2(45) of the Companies Act, 2013, what percentage of paid-up share
capital must be held by the Central Government or State Governments for a company to
be considered a "Government Company"?
a) At least 25%.
b) At least 33%.
c) At least 51%.
d) At least 75%.
Answer: c) At least 51%.
73. What are the distinguishing characteristics of a "Government Company"?

a) Controlled by the Central Government only.
b) Controlled by the State Government only.
c) Controlled by both Central and State Governments.
d) No specific controlling authority.
Answer: c) Controlled by both Central and State Governments.
74. What is the primary objective of a "Government Company"?

a) To maximize profits for shareholders.
b) To promote trade and commerce.
c) To serve the public interest and carry out government functions.
d) To compete with private companies.
Answer: c) To serve the public interest and carry out government functions.
75. What is the difference between a holding company and a subsidiary company,
according to Section 2(46)?
a) Holding companies have fewer members.
b) Holding companies exercise more control over subsidiary companies.
c) Holding companies are always government-owned.
d) Holding companies are not registered under the Companies Act.
Answer: b) Holding companies exercise more control over subsidiary companies.
76. What is the significance of a "Dormant Company" under Section 455 of the
a) It is a company with no business operations.
b) It is a company that actively engages in business.
c) It is a subsidiary of a holding company.
d) It is a government-owned company.
Answer: a) It is a company with no business operations.
77. What is the primary disadvantage of incorporated companies, as mentioned in the

text?
a) High liability for shareholders.
b) Lack of statutory formalities.
c) Loss of privacy.
d) Lack of control.
Answer: c) Loss of privacy.

78. Which type of company has a primary disadvantage of "loss of privacy" due to filing
documents with the Registrar of Companies?
a) Public company
b) Private company
c) Unlimited company
d) Statutory company
Answer: b) Private company.
79. What type of companies cannot have effective control over their workings compared
to sole proprietorship and partnership business models?
a) Public companies
b) Private companies
c) Unlimited companies
d) Statutory companies
Answer: a) Public companies.
80. Why might regulatory authorities intervene if a company operates against public
interest, as mentioned in the text?
a) To increase the company's profits.
b) To promote competition among companies.
c) To protect the rights of minority shareholders.
d) To prevent actions that harm the public or other stakeholders.
Answer: d) To prevent actions that harm the public or other stakeholders.
81. What is the maximum number of members allowed in a private company according
to the Companies Act, 2013?
a) 50
b) 100
c) 150
d) 200
Answer: d) 200
82. When must the words 'Private Limited' be added to the end of the name of a private
limited company?
a) At the discretion of the company
b) After 5 years of incorporation
c) Immediately upon incorporation
d) Only if requested by shareholders
Answer: c) Immediately upon incorporation
83. What is the minimum number of directors required for a private company under
Section 149(1) of the Act?
a) 1
b) 2
c) 3
d) 4
Answer: b) 2

84. Under what circumstances can the personal assets of shareholders of a private
company be at risk?
a) Anytime the company faces a loss
b) If the company becomes insolvent
c) When the company's directors are also employees
d) None of the above
Answer: d) None of the above
85. According to Section 3A, when can members of a private company be held severally
liable for the company's debts?
a) If the number of members falls below two
b) If the business is carried on for more than six months with less than two members
c) If the company is declared insolvent
d) If the company's directors are also shareholders
Answer: b) If the business is carried on for more than six months with less than two members
86. What is perpetual succession in the context of a private company?

a) The company keeps on existing even in the case of bankruptcy of any of its members.
b) The company can operate indefinitely without an annual review.
c) The company's directors are not required to retire by rotation.
d) The company can be sold or dissolved at any time.
Answer: a) The company keeps on existing even in the case of bankruptcy of any of its
members.
87. When is the maintenance of an index of members necessary for a private company?
a) If the company has more than 50 members
b) If the company has more than 100 members
c) If the company has more than 200 members
d) If the company has more than 500 members
Answer: c) If the company has more than 200 members
88. How many directors are required for the formation of a private company?
a) 1
b) 2
c) 3
d) 4
Answer: b) 2
89. What is the minimum paid-up share capital required for a private limited company?
a) Rs. 1 lakh
b) Rs. 5 lakhs
c) There is no minimum requirement
d) Rs. 10 lakhs
Answer: c) There is no minimum requirement

90. In a private limited company, is it mandatory to issue a prospectus for the public to
subscribe to its shares?
a) Yes
b) No, but it is optional
c) No, it is prohibited
d) Only if the company has more than 500 members
Answer: c) No, it is prohibited
91. What must a private company do before commencing business after its
incorporation?
a) File an annual return
b) Submit a prospectus
c) File a declaration regarding share capital
d) Obtain permission from the Registrar of Companies
Answer: c) File a declaration regarding share capital
92. When must a private company close the register of members or debenture holders?
a) At least 30 days prior to closure
b) At least 7 days prior to closure
c) Whenever it desires
d) Only if it's a listed company
Answer: b) At least 7 days prior to closure
93. Which of the following statements is true about the appointment of an independent
director in a private company?
a) It is mandatory for all private companies.
b) It is only required if the company has a turnover of Rs. 100 crore or more.
c) Private companies are exempt from appointing independent directors.
d) It is required only for private companies with more than 200 members.
Answer: c) Private companies are exempt from appointing independent directors.
94. When does a private company need to appoint an internal auditor according to
Section 138?
a) Always, regardless of its turnover or loans
b) If it has a turnover of Rs. 100 crore or more
c) If it has outstanding loans exceeding Rs. 50 crore
d) Only if it chooses to do so
Answer: b) If it has a turnover of Rs. 100 crore or more
95. What is the maximum managerial remuneration payable by a public company in

respect of any financial year?
a) 5% of net profits
b) 10% of net profits
c) 15% of net profits
d) 11% of net profits
Answer: d) 11% of net profits

96. Which committee is mandatory for every listed public company but not for private
companies?
a) Audit Committee
b) Nomination and Remuneration Committee
c) Corporate Social Responsibility Committee
d) Vigil Mechanism Committee
Answer: c) Corporate Social Responsibility Committee
97. What must a private company do if it wishes to close the register of members or
debenture holders?
a) Notify the Registrar of Companies
b) Provide notice to all members or debenture holders at least 30 days prior
c) Advertise the closure in a newspaper
d) Notify the Securities and Exchange Board of India
Answer: b) Provide notice to all members or debenture holders at least 30 days prior
98. What is the primary rationale behind providing privileges and exemptions to private
companies?
a) To encourage them to go public
b) To ensure they invite capital from the public
c) To reduce public interest in their affairs
d) To make them subject to more regulations
Answer: c) To reduce public interest in their affairs
99. How many persons are required to form a private company, as opposed to a public
limited company?
a) 2
b) 5
c) 7
d) 10
Answer: a) 2
100. When can the Articles of Association of a private limited company be altered under
the Entrenchment provisions?
a) Only if all members agree
b) If conditions are met that are more restrictive than those for special resolutions
c) At any time without restrictions
d) Only if the Registrar of Companies approves
Answer: b) If conditions are met that are more restrictive than those for special resolutions
101. In a private limited company, what is the maximum number of directors allowed
according to the law?
a) 2
b) 5
c) 10
d) Unlimited
Answer: d) Unlimited

102. What is the exemption for private companies regarding the appointment of woman
directors?
a) They are required to have at least one woman director.
b) They are exempt from appointing woman directors.
c) The requirement applies only to companies with a turnover of Rs. 100 crore or more.
d) The requirement applies only to listed companies.
Answer: b) They are exempt from appointing woman directors.
103. When can a private company close its register of members or debenture holders
without giving prior notice to the public?
a) When it wants to
b) When it's a listed company
c) When all members are informed
d) When it has fewer than 50 members
Answer: d) When it has fewer than 50 members
104. What type of shareholders are not counted toward the maximum number of
members in a private company?
a) All shareholders are counted.
b) Shareholders who are also directors.
c) Shareholders who are employees.
d) Shareholders who are joint holders.
Answer: d) Shareholders who are joint holders.
105. What must a private company file with the Registrar of Companies to commence
business after incorporation?
a) A declaration of compliance
b) A prospectus
c) A request for permission
d) A letter of intent
Answer: a) A declaration of compliance
106. What is the maximum time limit for serving notice prior to closing the register of
members or debenture holders in a private company?
a) 7 days
b) 15 days
c) 30 days
d) 45 days
Answer: a) 7 days
107. Which type of companies is exempt from appointing independent directors as per
the Companies Act, 2013?
a) All companies must appoint independent directors.
b) Only public companies with a turnover of Rs. 300 crore or more.
c) Private companies.
d) Companies with fewer than 50 members.
Answer: c) Private companies.

108. What is the primary difference between the requirements for public and private
companies regarding the maximum managerial remuneration?
a) Public companies have no maximum limit, while private companies are limited to 11% of net
profits.
b) Public companies are limited to 10% of net profits, while private companies are limited to
15%.
c) Both public and private companies have the same limit of 11%.
d) Private companies have no maximum limit, while public companies are limited to 15%.
Answer: a) Public companies have no maximum limit, while private companies are limited to
11% of net profits.
109. Under what circumstances must a private company appoint a Whole Time Company
Secretary?
a) Always, regardless of share capital.
b) When the company has a paid-up share capital of Rs. 10 crores or more.
c) When the company has outstanding loans exceeding Rs. 50 crores.
d) Only if the shareholders request it.
Answer: b) When the company has a paid-up share capital of Rs. 10 crores or more.
110. Which of the following committees must a private company constitute according to
Section 177 and 178 of the Companies Act, 2013?
a) Audit Committee and Nomination and Remuneration Committee
b) Corporate Social Responsibility Committee
c) Vigil Mechanism Committee
Answer: d) None of the above
111. Which section of the Companies Act, 2013 deals with the transfer of shares in a
Government company held by nominees of the Government?
a) Section 56
b) Section 143
c) Section 170
d) Section 394
Answer: a) Section 56
112. What is the exemption provided to Government companies regarding the

appointment of independent directors in the Companies Act, 2013?
a) Government companies are exempt from appointing independent directors.
b) Government companies can appoint independent directors without any restrictions.
c) Government companies must appoint independent directors as per the law.
d) Government companies must seek approval from the Central Government for independent
director appointments.
Answer: c) Government companies must appoint independent directors as per the law.
113. When can a Government company hold its Annual General Meeting (AGM)?
a) Only on National Holidays
b) Only on weekends

c) During business hours, excluding National Holidays

d) On any day at the discretion of the Board of Directors
Answer: c) During business hours, excluding National Holidays
114. Which committee's role is modified for Government companies regarding the
appointment, remuneration, and terms of auditors?
a) Audit Committee
b) Nomination and Remuneration Committee
c) Stakeholders Relationship Committee
d) Board's Report Committee
Answer: a) Audit Committee
115. Which section of the Companies Act, 2013 deals with the exemption from certain
disclosure requirements in the Board's Report for Government companies?
a) Section 123
b) Section 129
c) Section 134
d) Section 177
Answer: c) Section 134
116. Which provision of the Companies Act, 2013 deals with the exemption for
Government companies regarding the appointment of directors to be voted individually?
a) Section 160
b) Section 162
c) Section 163
d) Section 185
117. In a Government company, what is exempted concerning loans to directors, as per

Section 185 of the Companies Act, 2013?
a) Loans are not allowed to directors.
b) Loans are allowed without any restrictions.
c) Loans are allowed with approval from the Ministry or Department of the Central
Government.
d) Loans are allowed only as part of the conditions of service extended to all employees.
Answer: c) Loans are allowed with approval from the Ministry or Department of the Central
Government.
118. Which section of the Companies Act, 2013 deals with the requirement for member's
approval by means of a Special Resolution for making loans/investments in a
Government company?
a) Section 123
b) Section 129
c) Section 134
d) Section 186
Answer: d) Section 186

119. What exemption is provided to Government companies under Section 188 of the
Companies Act, 2013, regarding related party transactions?
a) No exemptions are provided.
b) Exemptions are granted only for contracts with other Government companies.
c) Exemptions are granted for contracts with other Government companies and with Central or
State Governments.
d) Exemptions are granted for all related party transactions without any restrictions.
Answer: c) Exemptions are granted for contracts with other Government companies and with
Central or State Governments.
120. When can the provisions relating to the retirement of directors by rotation and filing
of vacancies be exempted for Government companies?
a) Always, without any restrictions
b) Only if the Central Government approves
c) Only if the Board approves
d) Only if the Comptroller and Auditor General of India (C & AG) approves
Answer: a) Always, without any restrictions
121. Which section of the Companies Act, 2013 deals with the exemption for Government
companies concerning the appointment of directors to be voted individually?
a) Section 160
b) Section 162
c) Section 163
d) Section 185
122. In a Government company, which sections of the Companies Act, 2013 are not
applicable in respect of matters specified by the concerned Ministries or Departments of
the Central Government or State Government?
a) Sections 143 and 144
b) Sections 147 and 148
c) Sections 149 and 150
d) Sections 151 and 152
Answer: C Sections 149 and 150

maintenance and inspection of the Register of Directors and Key Managerial Personnel
(KMP)?
b) Maintenance is exempted but not inspection.
c) Both maintenance and inspection are exempted.
d) Maintenance is required, but inspection is exempted.
Answer: c) Both maintenance and inspection are exempted.

requirement to file a return of appointment of Managerial Personnel with the Registrar of
Companies (ROC)?


b) Exempted for CFOs and CSs only.
c) Exempted for all Managerial Personnel.
d) Exempted for CEOs and MDs only.
Answer: a) No exemptions are provided.
125. Which section of the Companies Act, 2013 deals with the requirement for an Audit
Committee to recommend the remuneration of auditors for Government companies?
a) Section 123
b) Section 129
c) Section 170
d) Section 177
Answer: d) Section 177
126. In a Government company, when can the requirement of seeking consent from a
Director to hold office of director and filing the same within 30 days of appointment be
relaxed?
a) Always, without any restrictions
b) Only if the Central Government approves
c) Only if the Board approves
d) Only if the Comptroller and Auditor General of India (C & AG) approves
Answer: b) Only if the Central Government approves
127. What exemption is provided to Government companies regarding the appointment

of Managerial Personnel for a term not exceeding 5 years at a time?
a) They are exempt from appointing Managerial Personnel.
b) They can appoint Managerial Personnel for any term.
c) They can appoint Managerial Personnel for a term exceeding 5 years.
d) They need approval from the Central Government for such appointments.
Answer: d) They need approval from the Central Government for such appointments.
applicable to CFOs and CSs?
Answer: d) Sections 196 and 203
129. Who appoints the first auditor in a Government company as per the Companies Act,
2013?
a) The Board of Directors
b) The shareholders
c) The Comptroller and Auditor General of India (C & AG)
d) The Central Government
Answer: c) The Comptroller and Auditor General of India (C & AG)

130. What happens if the Comptroller and Auditor General of India (C & AG) does not
appoint the first auditor in a Government company within 60 days of registration?
a) The Board of Directors appoints the auditor.
b) The shareholders appoint the auditor.
c) The Central Government appoints the auditor.
d) The company remains without an auditor.
Answer: a) The Board of Directors appoints the auditor.
131. In a Government company, who appoints the auditor for subsequent financial years
as per the Companies Act, 2013?
b) The shareholders
c) The Central Government
d) The Comptroller and Auditor General of India (C & AG)
Answer: d) The Comptroller and Auditor General of India (C & AG)
132. When a casual vacancy arises in the office of the auditor in a Government company,
who fills the vacancy?
b) The shareholders
c) The Central Government
d) The Comptroller and Auditor General of India (C & AG)
Answer: c) The Central Government
133. What is the role of the Comptroller and Auditor General of India (C & AG) regarding
the audit report of a Government company as per the Companies Act, 2013?
a) The C & AG appoints the auditor.
b) The C & AG reviews the audit report.
c) The C & AG provides directions for the audit.
d) The C & AG signs the audit report.
Answer: c) The C & AG provides directions for the audit.
134. In a Government company, what is the purpose of the supplementary audit ordered
by the Comptroller and Auditor General of India (C & AG)?
a) To conduct a full audit of the company's accounts.
b) To review the audit report.
c) To supplement the audit report.
d) To audit the company's annual report.
Answer: c) To supplement the audit report.
135. What must the company do with the comments or supplements provided by the
Comptroller and Auditor General of India (C & AG) on the audit report?
a) Include them in the annual report.
b) Keep them confidential.
c) Share them with the Board of Directors.
d) Disclose them to the public.
Answer: a) Include them in the annual report.

136. According to Section 394 of the Companies Act, 2013, what should the Central
Government do if it is a member of a Government company?
a) Prepare the company's annual report.
b) Approve the company's accounts.
c) Cause an annual report to be prepared and laid before both Houses of Parliament.
d) Appoint the company's auditor.
Answer: c) Cause an annual report to be prepared and laid before both Houses of Parliament.
137. If a State Government is also a member of a Government company, what is its

responsibility regarding the annual report as per Section 394 of the Companies Act, 2013?
a) Prepare the company's annual report.
b) Approve the company's accounts.
c) Cause a copy of the annual report to be laid before the State Legislature.
d) Appoint the company's auditor.
Answer: c) Cause a copy of the annual report to be laid before the State Legislature.
138. Which section of the Companies Act, 2013 deals with the exemption for Government
companies regarding the maintenance and inspection of the Register of Directors and
Key Managerial Personnel (KMP)?
a) Section 170
b) Section 177
c) Section 196
d) Section 203
applicable in respect of matters specified by the concerned Ministries or Departments of
the Central Government or State Government?
Answer: c) Sections 149 and 150

maintenance and inspection of the Register of Directors and Key Managerial Personnel
(KMP)?
b) Maintenance is exempted but not inspection.
c) Both maintenance and inspection are exempted.
d) Maintenance is required, but inspection is exempted.
Answer: c) Both maintenance and inspection are exempted.

3] Memorandum and Articles of Association and its Alteration
1. What is the primary purpose of the Memorandum of Association (MoA)?

a) To describe the company's history
b) To specify the capital structure
c) To define the company's purpose and scope of operations
d) To outline the company's organizational hierarchy
Answer: c) To define the company's purpose and scope of operations
2. Who requires the submission of the Memorandum of Association (MoA) when

registering a company?
a) Shareholders
b) Registrar of Companies (ROC)
c) Government authorities
d) Board of Directors
Answer: b) Registrar of Companies (ROC)
3. What is the significance of the term "ultra vires" concerning the Memorandum of
Association (MoA)?
a) It refers to a company's ability to earn profits.
b) It denotes actions taken within the company's defined powers.
c) It signifies actions beyond the company's authorized powers.
d) It is a legal term for annual financial statements.
Answer: c) It signifies actions beyond the company's authorized powers.
4. Under the Companies Act, 2013, how many persons are required to form a public
company and prepare a Memorandum of Association (MoA)?
a) Seven or more persons
b) Two or more persons
c) One person
d) Ten or more persons
Answer: a) Seven or more persons
5. In the Memorandum of Association (MoA), what does "Limited" signify when used at
the end of a company's name?
a) It indicates that the company is limited by guarantee.
b) It represents a public limited company.
c) It signifies the company is a private limited company.
d) It refers to unlimited liability.
Answer: b) It represents a public limited company.

6. According to Section 4 of the Companies Act, 2013, what is the primary purpose of the
Memorandum of Association (MoA)?
a) To describe the history of the company
b) To outline the company's organizational structure
c) To define the scope of the company's operations
d) To specify the company's share prices
Answer: c) To define the scope of the company's operations
7. What does "One Person Company" mean in the context of the Companies Act, 2013?
a) A company with only one shareholder
b) A company with one director and no employees
c) A company with one product or service
d) A company with one office location
Answer: a) A company with only one shareholder
8. Which Tables in Schedule I of the Companies Act, 2013, provide model Forms for the
Memorandum of Association (MoA) for different types of companies?
a) Tables A, B, and C
b) Tables C and D
c) Tables A, B, C, D, and E
d) Tables D and E
Answer: c) Tables A, B, C, D, and E
9. What is the consequence of having a name for a company that is identical or too
similar to an existing registered company's name under the Companies Act, 2013?
a) The company cannot be formed.
b) The new company can use the same name.
c) The existing company must change its name.
d) The new company must change its name.
Answer: a) The company cannot be formed.
10. According to Section 4(5) of the Companies Act, 2013, how long can a name be
reserved upon application?
a) 10 days
b) 20 days
c) 30 days
d) 60 days
Answer: b) 20 days
11. What happens if the Memorandum and Articles of a company contain provisions
contrary to the Companies Act, 2013?
a) The company must follow its own provisions.
b) The company can choose which provisions to follow.
c) The Companies Act, 2013, takes precedence.
d) The provisions must be amended to match the Act.
Answer: c) The Companies Act, 2013, takes precedence.

12. In the Memorandum of Association (MoA), what is the purpose of the "Name
Clause"?
a) To specify the names of the directors
b) To define the company's trading name
c) To outline the company's history
d) To state the name by which the company is to be known
Answer: d) To state the name by which the company is to be known
13. What is the primary role of the "Liability Clause" in the Memorandum of Association
(MoA)?
a) To outline the company's history
b) To describe the company's capital structure
c) To specify the liability of company members
d) To define the company's trading name
Answer: c) To specify the liability of company members
14. In the Memorandum of Association (MoA), what does the "Capital Clause" pertain
to?
a) The company's organizational hierarchy
b) The division of shares into different classes
c) The company's trading name
d) The company's liability
Answer: b) The division of shares into different classes
15. What is the significance of including the "Subscription Clause" in the Memorandum
of Association (MoA)?
a) It lists the names of subscribers.
b) It specifies the company's objectives.
c) It describes the company's capital structure.
d) It outlines the company's trading name.
Answer: a) It lists the names of subscribers.
16. What is the term used to describe actions taken beyond the company's authorized
powers, as mentioned in the Memorandum of Association (MoA)?
a) Ultra vires
b) Intra vires
c) Supra vires
d) Infra vires
Answer: a) Ultra vires
17. In the context of the Memorandum of Association (MoA), what does "affirmatively"
refer to?
a) Actions beyond the company's powers
b) Actions within the company's powers
c) Negative statements
d) Ancillary objectives
Answer: b) Actions within the company's powers

18. Who is responsible for preparing the Memorandum of Association (MoA) when
forming a company?
a) Shareholders
b) Board of Directors
c) Registrar of Companies (ROC)
d) Government authorities
Answer: b) Board of Directors
19. What is the primary purpose of including the "Objects Clause" in the Memorandum
a) To list the names of shareholders
b) To define the liability of members
c) To specify the company's objectives
d) To outline the company's trading name
Answer: c) To specify the company's objectives
20. In the case of a company limited by shares, what does the "Liability Clause" state
regarding the liability of its members?
a) Liability is unlimited.
b) Liability is limited to the amount unpaid on shares.
c) Liability is limited to the company's assets.
d) Liability is limited to a fixed amount.
Answer: b) Liability is limited to the amount unpaid on shares.
21. Which type of company requires the addition of "Private Limited" at the end of its
name as per the Companies Act, 2013?
a) Public limited company
b) One Person Company
c) Government company
d) Private limited company
Answer: d) Private limited company
22. What does the term "ultra vires" mean concerning the Memorandum of Association
(MoA)?
a) Actions within the company's authorized powers
b) Actions beyond the company's authorized powers
c) Actions undertaken by shareholders
d) Actions taken without approval
Answer: b) Actions beyond the company's authorized powers
23. Which section of the Companies Act, 2013, provides the mode of incorporation of a
company and mentions that a company may be formed for any lawful purpose?
a) Section 2(56)
b) Section 3
c) Section 4
d) Section 5
Answer: b) Section 3

24. In which famous case did Lord Cairn state that the Memorandum of Association of a
company is its charter and defines the limitations of the company's powers?
a) Ashbury Railway Carriage & Iron Co. Ltd. v. Riche
b) Re Attorney General Vs. Great Eastern Railway
c) Egyptian Salt and Soda Co. Ltd. v. Port Said Salt Association Ltd.
d) Companies Act vs. Memorandum Case
Answer: a) Ashbury Railway Carriage & Iron Co. Ltd. v. Riche
25. What is the purpose of including ancillary/incidental objectives along with the main
objects of the company, as mentioned in Re Attorney General Vs. Great Eastern Railway
(1880)?
a) To confuse shareholders
b) To expand the company's operations
c) To prioritize ancillary objectives
d) To consider additional objectives along with the main ones
Answer: d) To consider additional objectives along with the main ones
26. What role does the Memorandum of Association (MoA) play in enabling shareholders
and creditors to understand a company's operations and risks?
a) It provides information on shareholders' names.
b) It lists the company's suppliers.
c) It outlines the purposes for which the company was formed.
d) It describes the company's history.
Answer: c) It outlines the purposes for which the company was formed.
27. What is the significance of the Memorandum of Association (MoA) being a public
document?
a) It is accessible to anyone upon request.
b) It is confidential and only accessible to shareholders.
c) It is available for a fee.
d) It is shared with government authorities only.
Answer: a) It is accessible to anyone upon request.
28. Which section of the Companies Act, 2013, specifies the forms in which the
Memorandum of Association (MoA) should be drafted?
a) Section 3
b) Section 4
c) Section 56
d) Section 462
29. How should the Memorandum of Association (MoA) be signed?

a) By shareholders and government authorities
b) By the Registrar of Companies (ROC)
c) By subscribers of the company
d) By the company's board of directors

Answer: c) By subscribers of the company
30. What is the term for the compulsory clauses designated as "conditions" prescribed
by the Companies Act, 2013, in the Memorandum of Association (MoA)?
a) Non-negotiable clauses
b) Inviolable clauses
c) Mandatory clauses
d) Arbitrary clauses
Answer: c) Mandatory clauses
31. In the case of Atlas Cycles (Haryana) Ltd. v. Atlas Products Pvt. Ltd., what was the
dispute related to?
a) Brand name usage in corporate names
b) Intellectual property rights
c) Product liability
d) Merger and acquisition
Answer: a) Brand name usage in corporate names
32. When a company is directed to change its name, who has the authority to effect the
name change?
a) Registrar of Companies (ROC)
b) Court
c) Shareholders
d) Government authorities
Answer: b) Court
33. What happens if a person attempts to name a company after his personal name, and
it resembles the name of an existing company?
a) It is allowed with proper documentation.
b) It is permissible with shareholder approval.
c) It is prohibited.
d) It is subject to government approval.
Answer: c) It is prohibited.
34. What clause in the Memorandum of Association (MoA) indicates the location of the
registered office and helps determine the jurisdiction of the Registrar of Companies
(RoC)?
a) Name Clause
b) Objects Clause
c) Situation Clause
d) Liability Clause
Answer: c) Situation Clause
35. According to Section 12(3) of the Companies Act, 2013, what is required regarding the
display of a company's name and address?
a) Display in English only
b) Display in the local language only

c) Display in legible letters in a conspicuous position

d) Display only inside the registered office
Answer: c) Display in legible letters in a conspicuous position
36. In which situation is a company allowed to use its name in English in addition to the
local language for compliance with Section 12(3)?
a) Always
b) Never
c) When dealing with government authorities
d) When conducting online business
Answer: a) Always
37. What is the primary purpose of the "Object Clause" in the Memorandum of
Association (MoA)?
a) To list the names of shareholders
c) To specify the company's objectives
Answer: c) To specify the company's objectives
38. In the context of the Memorandum of Association (MoA), what does "ultra vires"
mean?
a) Actions within the company's authorized powers
b) Actions beyond the company's authorized powers
c) Actions authorized by shareholders
d) Actions that are common practice
Answer: b) Actions beyond the company's authorized powers
39. Which clause in the Memorandum of Association (MoA) specifies the liability of
members of the company?
a) Name Clause
b) Situation Clause
c) Objects Clause
d) Liability Clause
Answer: d) Liability Clause
40. What does the "Capital Clause" in the Memorandum of Association (MoA) specify?
a) The maximum authorized capital
b) The total number of shareholders
c) The number of shares each member can hold
d) The total profit earned by the company
Answer: a) The maximum authorized capital
41. What is the term for the maximum capital that a company can raise, as specified in
the "Capital Clause" of the Memorandum of Association (MoA)?
a) Nominal capital
b) Subscribed capital

c) Paid-up capital
d) Authorized capital
Answer: d) Authorized capital
42. How is the division of the authorized capital specified in the "Capital Clause"
typically presented in the Memorandum of Association (MoA)?
a) The total number of shareholders
b) The number of shares each member can hold
c) The division into shares of a fixed amount
Answer: c) The division into shares of a fixed amount
43. What is the purpose of the "Subscription Clause" in the Memorandum of Association
(MoA)?
a) To list the names of subscribers
b) To specify the registered office location
c) To declare the company's objectives
d) To identify who is signing the memorandum
Answer: d) To identify who is signing the memorandum
44. How many witnesses are typically required when subscribers sign the Memorandum
a) None
b) One
c) Two
d) Three
Answer: c) Two
45. What is the minimum number of shares that each subscriber must agree to take
according to the "Subscription Clause"?
a) None
b) At least one share
c) At least ten shares
d) It depends on the company's size
Answer: b) At least one share
46. What is the significance of the Memorandum of Association (MoA) in relation to a

company's powers and actions?
a) It grants unlimited powers to the company.
b) It defines and confines the company's powers.
c) It is a legal document for shareholders' signatures.
d) It has no impact on the company's actions.
Answer: b) It defines and confines the company's powers.

47. In which section of the Companies Act, 2013 is the definition of "memorandum"
provided?
a) Section 2(5)
b) Section 4(1)(c)
c) Section 12(3)
d) Section 61
Answer: a) Section 2(5)
48. What term is used to describe an act or transaction of a company that is beyond the
powers stated in the Memorandum of Association (MoA)?
a) Intra vires
b) Extra vires
c) Supra vires
d) Ultra legal
Answer: b) Extra vires
49. According to Section 4(1)(a) of the Companies Act, 2013, what must be included in
the Memorandum of Association (MoA) regarding the company's name?
a) The name of the company only
b) The name of the company with "Limited" for public companies
c) The name of the company with "Private Limited" for private companies
d) The name of the company in any language
Answer: b) The name of the company with "Limited" for public companies
50. In which case was it held that a company's name must not be identical or too similar
to that of an existing company?
a) Dr. H.L. Batliwalla Sons & Company Ltd. v. Emperor
b) Egyptian Salt and Soda Co. Ltd. v. Port Said Salt Association Ltd.
c) Bell Houses Ltd. v. City Wall Properties Ltd.
d) Halifax Plc v. Halifax Repossessions Ltd.
Answer: a) Dr. H.L. Batliwalla Sons & Company Ltd. v. Emperor
51. Which clause of the Memorandum of Association (MoA) specifies the location of the
registered office and its importance in determining jurisdiction?
a) Name Clause
b) Situation Clause
c) Objects Clause
d) Capital Clause
Answer: b) Situation Clause
52. According to Section 12(3) of the Companies Act, 2013, where should a company
display its name and address?
a) Inside the registered office only
b) On its website only
c) In a conspicuous position in its business premises and communications
d) In a discreet location within the registered office

Answer: c) In a conspicuous position in its business premises and communications
53. What should a company do if it has changed its name during the last two years,
according to Section 12(3) of the Companies Act, 2013?
a) Nothing, as name changes are not relevant.
b) Paint or affix the former name on its premises.
c) Inform the Registrar of Companies.
d) Display the old name on its website.
Answer: b) Paint or affix the former name on its premises.
54. Which clause in the Memorandum of Association (MoA) specifies the objectives and
purpose for which the company is formed?
a) Name Clause
b) Situation Clause
c) Objects Clause
d) Liability Clause
Answer: c) Objects Clause
55. What is the term for actions or transactions that are beyond the scope of a company's
authorized powers as defined in the Memorandum of Association (MoA)?
a) Extra vires
b) Intra vires
c) Ultra legal
d) Supra vires
Answer: a) Extra vires
56. In which case was it held that the Memorandum of Association (MoA) should be
construed to confer on the company all powers reasonably required to attain its objects?
a) Dr. Lakshmanaswami Mudaliar A. v. LIC
b) Egyptian Salt and Soda Co. Ltd. v. Port Said Salt Association Ltd.
c) Cotman v. Brougham
d) Ashbury Railway Carriage and Iron Company v. Riche
Answer: c) Cotman v. Brougham
57. What is the primary purpose of the "Liability Clause" in the Memorandum of
Association (MoA)?
a) To specify the maximum authorized capital
c) To declare the company's objectives
Answer: b) To define the liability of members
58. What is the "Capital Clause" in the Memorandum of Association (MoA) primarily
concerned with specifying?
a) The number of shareholders
b) The number of shares each member can hold
c) The maximum authorized capital


Answer: c) The maximum authorized capital
59. How does the Memorandum of Association (MoA) typically present the division of
authorized capital into shares of a fixed amount?
a) By specifying the number of shares each member can hold
b) By indicating the total profit earned by the company
c) By describing the maximum authorized capital
d) By stating the number of shares and their fixed amount
Answer: d) By stating the number of shares and their fixed amount
60. What does the "Subscription Clause" in the Memorandum of Association (MoA)
declare about the subscribers?
a) Their contact information
b) Their intentions to invest in the company
c) Their past business experience
d) Their preferred language for communic
Answer: b) Their intentions to invest in the company
61. Which section of the Companies Act, 2013 provides for the alteration of a company's
Memorandum of Association (MoA)?
a) Section 4(5)
b) Section 13(1)
c) Section 61
d) Section 16
Answer: b) Section 13(1)
62. In which situations is the approval of the Central Government required for changing
the name of a company?
a) Whenever a company changes its name
b) Only when the change relates to the addition/deletion of the word 'Private'
c) Only when the change is within the same town
d) Only when the company is listed on a stock exchange
Answer: b) Only when the change relates to the addition/deletion of the word 'Private'
63. What is the time frame within which a company must change its name if it has a
name identical or too similar to an existing company, as directed by the Central
Government?
a) Within 6 months
b) Within 1 year
c) Within 3 months
d) Within 30 days
Answer: c) Within 3 months
64. What happens after a company successfully changes its name in accordance with
Section 13(2) of the Companies Act, 2013?
a) The old name remains in use alongside the new name.

b) The company is dissolved.

c) The new name is entered in the register of companies.
d) The company's Memorandum of Association is automatically altered.
Answer: c) The new name is entered in the register of companies.
65. What application form should a company file for a change in its name with the
Registrar of Companies (ROC)?
a) Form No. INC-24
b) Form No. INC-25
c) Form No. INC-23
d) Form No. INC-28
Answer: a) Form No. INC-24
66. According to Regulation 45 of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, what is the minimum period that should elapse from
the last name change before a company can change its name again?
a) 3 months
b) 6 months
c) 1 year
d) 2 years
Answer: c) 1 year
67. When changing the registered office of a company within the same state but under
the jurisdiction of a different Registrar of Companies (ROC), what is the role of the
Regional Director?
a) The Regional Director approves the change without any hearing.
b) The Regional Director does not play a role in such changes.
c) The Regional Director must hear the case and then decide.
d) The Regional Director is responsible for conducting the shareholders' meeting.
Answer: c) The Regional Director must hear the case and then decide.
68. What type of resolution is required for a change in the registered office of a company
within the same state but under the jurisdiction of a different ROC?
a) Ordinary Resolution
b) Special Resolution
c) Postal Ballot Resolution
d) Resolution by the Regional Director
Answer: b) Special Resolution
69. In which form should a company file the certified copy of the order of the Regional
Director approving the alteration of the memorandum for the transfer of the registered
office within the same state?
a) Form No. INC-24
b) Form No. INC-25
c) Form No. INC-23
d) Form No. INC-28

Answer: d) Form No. INC-28
70. What records, registers, and documents must be updated to reflect the changed name
of a company?
a) Only the Register of Members
b) All records except the Register of Members
c) All records, registers, and documents
d) None of the records need to be updated
Answer: c) All records, registers, and documents
71. What provision in the Companies Act, 2013 ensures that any change in the name of a
company is also displayed with the old name for a certain period?
a) Section 4(5)
b) Section 12(3)
c) Section 13(3)
d) Section 16
72. In which situations does a company need to seek approval for changing its name
under Regulation 45 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015?
a) When the change is within the same state
b) When the company is not listed on a stock exchange
c) When the change is related to a change in activities
d) When the company is not registered under the Companies Act, 2013
Answer: c) When the change is related to a change in activities
73. According to Section 12(5) of the Companies Act, 2013, in which situations can a
company change its registered office without a special resolution?
a) In all situations
b) Only when the company is listed on a stock exchange
c) Only when the change is within the same town
d) Only when the change is outside the local limits of any city, town, or village
Answer: d) Only when the change is outside the local limits of any city, town, or village
74. What action should a company take if it wants to change its registered office within
the same state from the jurisdiction of one ROC to another?
a) The company can make the change without any formalities.
b) The company must obtain permission from the Central Government.
c) The company must apply to the Ministry of Corporate Affairs.
d) The company must seek confirmation from the Regional Director.
Answer: d) The company must seek confirmation from the Regional Director.
75. What is the key purpose of Rule 28 of Companies (Incorporation) Rules 2014 in
relation to changing the registered office of a company within the same state but under
the jurisdiction of a different ROC?
a) To require the company to make the change within 30 days

b) To specify the fees for changing the registered office

c) To outline the documents required for the change
d) To provide the procedure for obtaining confirmation from the Regional Director
Answer: d) To provide the procedure for obtaining confirmation from the Regional Director.
76. What is the primary role of the Central Government in approving the change of a
company's name?
a) To ensure the new name is unique
b) To confirm the availability of the proposed name
c) To validate the company's financial stability
d) To verify compliance with local regulations
Answer: b) To confirm the availability of the proposed name
77. When is a company required to change its name under Section 12(5) of the
a) Whenever it wishes to do so
b) When the Central Government directs it to do so
c) When it goes public
d) When it wants to enter a new business segment
Answer: b) When the Central Government directs it to do so
78. What does SEBI stand for in the context of Regulation 45 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015?
a) Securities and Exchange Board of India
b) Stock Exchange and Business Investment
c) Securities and Equity Business Initiative
d) Shareholder Engagement and Business Intelligence
Answer: a) Securities and Exchange Board of India
79. In which form should a company file the special resolution passed by shareholders
for altering the Memorandum of Association with the concerned ROC?
a) Form No. INC-24
b) Form No. INC-25
c) Form No. MGT-14
d) Form No. INC-28
Answer: c) Form No. MGT-14
80. What does 'ROC' stand for in the context of changing the registered office of a
company?
a) Registrar of Copyrights
b) Registrar of Companies
c) Records of Corporations
d) Registrar of Certifications
Answer: b) Registrar of Companies

81. What is the maximum period within which the Registrar of Companies (ROC) must
issue a fresh certificate of incorporation with the new name after a change in the name of
a company?
a) 7 days
b) 15 days
c) 30 days
d) 60 days
Answer: c) 30 days
82. In which situation can a company change its registered office outside the local limits
of any city, town, or village without a special resolution?
a) Only when it gets approval from the Regional Director
b) Only when it is listed on a stock exchange
c) Only when it goes public
d) In all situations
Answer: d) In all situations
83. What must a company do if it wants to change its registered office within the same
state from the jurisdiction of one ROC to another?
a) Seek approval from the Central Government
b) File an application with the Regional Director
c) Notify the shareholders
d) Publish the change in a national newspaper
Answer: b) File an application with the Regional Director
84. What is the significance of obtaining ROC approval and Name Availability Letter
when changing a company's name?
a) It grants immediate effect to the name change.
b) It ensures the company is dissolved.
c) It is not necessary for the name change.
d) It confirms the availability of the proposed name.
Answer: d) It confirms the availability of the proposed name.
85. What must a company do after successfully passing a special resolution for changing
its name and obtaining ROC approval?
a) The company is dissolved.
b) Nothing further, as the change is automatic.
c) Notify all concerned parties about the name change.
d) Wait for approval from the Central Government.
Answer: c) Notify all concerned parties about the name change.
86. What document must be filed with the Registrar of Companies (ROC) within 30 days
after passing a special resolution for altering the Memorandum of Association?
a) Form No. INC-24
b) Form No. INC-25
c) Form No. INC-23
d) Form No. INC-28

Answer: b) Form No. INC-25
87. When changing the registered office within the same state from one ROC jurisdiction
to another, what role does the Regional Director play?
a) The Regional Director grants approval automatically.
b) The Regional Director is not involved in this process.
c) The Regional Director conducts a public hearing.
d) The Regional Director confirms the change in a certificate.
Answer: d) The Regional Director confirms the change in a certificate.
88. What should a company do when it decides to change its name according to
Regulation 45 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015?
a) Seek approval from SEBI.
b) Apply to the Reserve Bank of India.
c) File an application with the Ministry of Corporate Affairs.
d) Notify the stock exchange where it is listed.
Answer: d) Notify the stock exchange where it is listed.
89. What does 'MoA' stand for in the context of altering a company's Memorandum of
Association?
a) Mode of Authorization
b) Memorandum of Alteration
c) Method of Approval
d) Memorandum of Association
Answer: d) Memorandum of Association
90. In which form should a company file the application for the change of registered
office from the jurisdiction of one ROC to another within the same state?
a) Form No. INC-24
b) Form No. INC-25
c) Form No. INC-23
d) Form No. INC-28
Answer: a) Form No. INC-24
91. What is the initial step required for changing a company's registered office from one
State to another State?
a) Approval from the Stock Exchange
b) Publication of notice in a national newspaper
c) Passing a special resolution
d) Obtaining consent from the Central Government
Answer: c) Passing a special resolution
92. What does Section 13(5) of the Companies Act, 2013 require the Central Government
to do before approving the alteration of a company's memorandum involving a change of
registered office from one State to another?

a) Satisfy itself about the alteration's impact on shareholders

b) Verify the company's financial stability
c) Confirm consent from creditors, debenture-holders, and others
d) Check the company's compliance with tax regulations
Answer: c) Confirm consent from creditors, debenture-holders, and others
93. Which form should a company use to file the special resolution passed for altering its
memorandum when changing its registered office from one State to another?
a) Form No. INC-23
b) Form No. INC-28
c) Form No. MGT-14
d) Form No. INC-26
Answer: c) Form No. MGT-14
94. What is the time limit for filing a certified copy of the Central Government's order
approving the alteration of a company's memorandum when shifting its registered office
from one State to another?
a) 15 days
b) 30 days
c) 45 days
d) 60 days
Answer: b) 30 days
95. Which rule of the Companies (Incorporation) Rules, 2014, governs the filing of a
certified copy of the Central Government's order for transferring a company's registered
office from one State to another?
a) Rule 28
b) Rule 29
c) Rule 30
d) Rule 31
Answer: d) Rule 31
96. What is the effective date of the change of the registered office of a company when
shifting from one State to another?
a) Date of the Central Government's order
b) Date of filing the application with the Central Government
c) Date of issue of the registration certificate by the ROC of the new State
d) Date of passing the special resolution
Answer: c) Date of issue of the registration certificate by the ROC of the new State
97. In which newspaper languages must a company publish a notice of the EGM for
passing a special resolution to change its registered office from one State to another?
a) English only
b) Vernacular language only
c) Both vernacular and English
d) Any language chosen by the company

Answer: c) Both vernacular and English
98. When should a company advertise its intention to change its registered office in
newspapers?
a) Not required for this process
b) At least 30 days before filing the application
c) Immediately upon filing the application
d) After receiving approval from the Central Government
Answer: b) At least 30 days before filing the application
99. What must be attached to the application for shifting the registered office when
objections are received?
a) An affidavit from the Central Government
b) An affidavit from the Company Secretary
c) A list of shareholders
d) Copies of all objections received
Answer: d) Copies of all objections received
100. How long does the Central Government have to approve the shifting of a registered
office if no consensus is reached during the hearing process?
a) 15 days
b) 30 days
c) 45 days
d) 60 days
Answer: d) 60 days
101. What happens to the shifting of a registered office if any inquiry, inspection, or
prosecution is pending against the company?
a) It is approved with conditions
b) It is not allowed
c) It is delayed until resolved
d) It is approved without any impact
Answer: b) It is not allowed
102. When does the change of address of the registered office become effective after
receiving approval from the Central Government?
a) Immediately upon approval
b) After publication in a national newspaper
c) 30 days after approval
d) 60 days after approval
Answer: a) Immediately upon approval
103. What documents must be submitted to the ROC after receiving approval for shifting
the registered office?
a) Proof of office furniture
b) Copy of the latest tax return
c) Proof of utility services

d) Company's employee list

Answer: c) Proof of utility services
104. What is the timeframe for the ROC to issue a new Certificate of Incorporation after
approval for shifting the registered office is granted?
a) 7 days
b) 15 days
c) 30 days
d) 45 days
Answer: c) 30 days
105. What action should a company take after obtaining a new certificate from the ROC
following the shifting of its registered office?
a) Notify all concerned parties
b) Immediately dissolve the company
c) Wait for further instructions from SEBI
d) Submit a new application to SEBI
Answer: a) Notify all concerned parties
106. What is the primary purpose of publishing a notice of the Extraordinary General
Meeting (EGM) in newspapers?
a) To notify shareholders about the company's financial performance
b) To meet regulatory requirements for advertising
c) To attract new investors to the company
d) To promote the company's products and services
Answer: b) To meet regulatory requirements for advertising
107. In which form should a company file a certified copy of the Central Government's
order approving the alteration of the memorandum for shifting the registered office?
a) Form No. INC-23
b) Form No. INC-28
c) Form No. MGT-14
d) Form No. INC-26
Answer: b) Form No. INC-28
108. When must a company advertise its intention to change its registered office in
newspapers for shifting within the same state?
a) 7 days before filing the application
b) 14 days before the date of hearing
c) 30 days before filing the application
d) 45 days before the conclusion of the Extraordinary General Meeting
Answer: b) 14 days before the date of hearing
109. What should a company do if no objections are received in response to the

advertisement or notice for changing the registered office?
a) Withdraw the application
b) Proceed with the shifting of the office without further action

c) File an affidavit of non-objection

d) Wait for approval from the Central Government
Answer: b) Proceed with the shifting of the office without further action
110. What is the maximum time limit for the Central Government to approve the shifting
of the registered office if no consensus is reached during hearings?
a) 15 days
b) 30 days
c) 45 days
d) 60 days
Answer: d) 60 days
111. What can the Central Government include in its order approving the alteration of the
memorandum for shifting the registered office?
a) Order for closure of the company
b) Order for appointing a new CEO
c) Terms and conditions, if any
d) Order for dividend distribution
Answer: c) Terms and conditions, if any
112. What is the action required after completing an inquiry, inspection, or investigation
with no prosecution envisaged?
a) File a fresh application with the Central Government
b) Immediately proceed with the shifting of the registered office
c) Notify the Stock Exchange
d) Seek approval from the Registrar of Companies
Answer: b) Immediately proceed with the shifting of the registered office
113. When does the change of address of the registered office become effective after
approval from the Central Government?
a) After publication in a national newspaper
b) Immediately upon approval
c) 30 days after approval
d) 60 days after approval
Answer: b) Immediately upon approval
114. What documents must be submitted to the Registrar of Companies (ROC) after
approval for shifting the registered office is granted?
a) Copy of the latest tax return
b) Proof of office furniture
c) Proof of utility services
d) Company's employee list
Answer: c) Proof of utility services
115. Which document is required to prove the company's ownership or occupancy

authorization for the new registered office premises?
a) Copy of a utility bill

b) Notarized copy of lease or rent agreement

c) Employee list
d) Certificate of Incorporation
Answer: b) Notarized copy of lease or rent agreement
116. What should a company do if it wants to notify all concerned parties about the
change in its registered office address?
a) Change the office address on its website
b) Update the information on its social media profiles
c) Notify the ROC
d) Make necessary changes in letterheads, records, etc.
Answer: d) Make necessary changes in letterheads, records, etc.
117. What action should a company take if it wants to update its PAN, TAN, or GST
details after changing its registered office address?
a) Submit a new application to the Central Government
b) Notify the ROC
c) Wait for automatic updates by the authorities
d) Update the details with the relevant authorities
Answer: d) Update the details with the relevant authorities
118. What is the maximum time limit for the ROC to issue a new Certificate of
Incorporation after approval for shifting the registered office is granted?
a) 7 days
b) 15 days
c) 30 days
d) 45 days
Answer: c) 30 days
119. Why is it important for a company to inform banks, government departments, and
customers about the change in its registered office address?
a) To seek financial assistance
b) To attract new investors
c) To prevent legal action
d) To ensure continued business operations
Answer: d) To ensure continued business operations
120. In which section of the Companies Act, 2013, is the provision related to shifting the
registered office of a company mentioned?
A) Section 12
B) Section 13
C) Section 17
D) Section 102
Answer: B) Section 13

121. Under what conditions may the Central Government direct notice to be served on
the State regarding the alteration of a company's registered office?
A) Always
B) If requested by the company
C) If the interest of the State is affected
D) If the company's shareholders approve
Answer: C) If the interest of the State is affected
122. What is the primary consideration when altering the registered office from one State
to another, as mentioned in the case laws?
A) Shareholders' interests
B) Loss of revenue in the current state
C) Increase in revenue in the new state
D) Country's interest as a whole
Answer: D) Country's interest as a whole
123. In the case of Usha Beltron Re, what conditions did the Bihar Government impose
when granting land for the company's factory?
A) Shifting the registered office within Bihar
B) No alteration of the memorandum of association
C) Continuation of the registered office in Bihar
D) No loss of revenue to Bihar
Answer: C) Continuation of the registered office in Bihar
124. In which case did the employees' union have legal standing to oppose the shifting of
the registered office?
A) Bharat Commerce and Industries Ltd., Re
B) Metal Box India Ltd. Re
C) Kwality Ice Creams (India) P Ltd., Re
D) Satyashree Balaji Wires & Cables (P) Ltd., In re
Answer: A) Bharat Commerce and Industries Ltd., Re
125. What grounds did the employees' union not have the right to oppose in the case of
Bharat Commerce and Industries Ltd., Re?
A) Validity of the special resolution
B) Loss of revenue in the State
C) Unemployment in the State
D) Prejudicial impact on their interests
Answer: B) Loss of revenue in the State
126. In which case did the Company Law Board allow shifting the registered office
subject to the condition that no employee's interests would be prejudiced?
A) Metal Box India Ltd. Re
B) Kwality Ice Creams (India) P Ltd., Re
C) Usha Beltron Re
D) Bharat Commerce and Industries Ltd., Re
Answer: B) Kwality Ice Creams (India) P Ltd., Re

127. In the sample board resolution, who is authorized to sign and file the petition for
shifting the registered office?
A) Shareholders
B) Employees' union
C) Company Secretary and Director
D) Central Government
Answer: C) Company Secretary and Director
128. In the sample shareholder's resolution, which authority's approval is required for
shifting the registered office?
A) Central Government
B) Employees' union
C) Registrar of Companies
D) Regional Director
Answer: D) Regional Director
129. According to the explanatory statement, why does the company propose to shift its
registered office?
A) To benefit the directors
B) To secure more subsidies
C) For better management and control
D) To avoid shareholder opposition
Answer: C) For better management and control
130. Who typically signs the notice for a Board Meeting in a company?
a) Shareholders
b) Managing Director
c) Regulatory authorities
d) Auditors
Answer: b) Managing Director
131. What is the purpose of confirming the minutes of a previous Board Meeting?
a) To authorize a new Board Meeting
b) To review financial results
c) To record the decisions made at the previous meeting
d) To request leave of absence
Answer: c) To record the decisions made at the previous meeting
132. In a pre-incorporation contract, who acts as the company's agent to represent its
interests?
a) Shareholders
b) Promoters
c) Directors
d) Auditors
Answer: b) Promoters

133. What is the legal status of a contract made on behalf of a company beyond the limits
defined in its Memorandum of Association?
a) Legally binding
b) Void
c) Irrelevant
d) Automatically ratified
Answer: b) Void
134. Which type of contract can be made by a company before its incorporation to secure
assets and make preparations for its operation?
a) Post-incorporation contract
b) Preliminary contract
c) Shareholder agreement
d) Founders agreement
Answer: b) Preliminary contract
135. When can a pre-incorporation contract be considered binding on the company after
its incorporation?
a) As soon as the contract is signed
b) Only if approved by shareholders
c) After ratification by the Board
d) After registration with regulatory authorities
Answer: c) After ratification by the Board
136. What must be included in the Articles to authorize the directors to pay expenses
related to the company's registration?
a) A mention of the company's name
b) The objects clause
c) The company's logo
d) The corporate seal
Answer: b) The objects clause
137. In which legal context can a pre-incorporation contract be adopted and enforced by
the company after its incorporation?
a) Specific Relief Act, 1963
b) Companies Act, 2013
c) Consumer Protection Act, 2019
d) Securities Exchange Act, 1934
Answer: a) Specific Relief Act, 1963
138. What is the term for the ratification of a pre-incorporation contract by a company
after its incorporation?
a) Contract acceptance
b) Adoption
c) Company approval
d) Shareholder ratification

Answer: b) Adoption
139. What must be initiated to legally enforce a pre-incorporation contract that has been
adopted by the company?
a) A court case
b) A shareholder vote
c) A Board resolution
d) An arbitration process
Answer: c) A Board resolution
140. What legal principle allows a company to enforce a pre-incorporation contract after
its incorporation if it aligns with the company's objects as stated in the memorandum?
a) The Doctrine of Promoter's Liability
b) The Doctrine of Pre-incorporation Ratification
c) The Doctrine of Pre-incorporation Adoption
d) The Doctrine of Ultra Vires
Answer: b) The Doctrine of Pre-incorporation Ratification

4] Shares and Share Capital – Concepts
1. In the context of securities, what does 'Cumulative Preference Share' mean?

a) Dividends are accumulated and paid before equity shares
b) Dividends are not paid to shareholders
c) Shareholders receive dividends at the end of the fiscal year
d) Shareholders can convert their shares into equity shares
Answer: a) Dividends are accumulated and paid before equity shares
2. What is the key characteristic of 'Noncumulative Preference Shares'?

a) Shareholders receive dividends at the end of the fiscal year
b) Dividends are accumulated and paid before equity shares
c) Shareholders can convert their shares into equity shares
d) If dividends are not paid in the current year, the claim of preference shareholders is lost
Answer: d) If dividends are not paid in the current year, the claim of preference shareholders is
lost
3. What is the primary feature of 'Convertible Preference Shares'?

a) Shareholders receive fixed dividends
b) Shareholders can convert their shares into equity shares
c) Shareholders have voting rights
d) Shareholders receive dividends in proportion to their shareholding
Answer: b) Shareholders can convert their shares into equity shares
4. What is the primary feature of 'NonConvertible Preference Shares'?

a) Shareholders receive fixed dividends
b) Shareholders can convert their shares into equity shares
c) Shareholders have voting rights
d) Shareholders receive dividends in proportion to their shareholding
Answer: a) Shareholders receive fixed dividends
5. Which of the following is NOT a characteristic of 'Participating Preference Shares'?

a) Shareholders have voting rights
b) Shareholders can participate in surplus profits
c) Shareholders receive a fixed rate of dividend
d) Shareholders have a preferential right to repayment during winding up
Answer: c) Shareholders receive a fixed rate of dividend
6. What is the primary difference between 'Redeemable Preference Shares' and

'Irredeemable Preference Shares'?
a) Redeemable preference shares have a maturity date; irredeemable shares do not
b) Irredeemable preference shares have a maturity date; redeemable shares do not
c) Both types have the same maturity date
d) Irredeemable preference shares are issued by government entities

Answer: a) Redeemable preference shares have a maturity date; irredeemable shares do not
7. What do 'Voting Rights of Equity Shareholders' mean under Section 47 of the

a) Equity shareholders have the right to vote on any resolution placed before the company
b) Equity shareholders cannot vote on any resolution
c) Equity shareholders can only vote on financial resolutions
d) Equity shareholders can vote on resolutions related to preference
Answer: a) Equity shareholders have the right to vote on any resolution placed before the
company
8. When can a preference shareholder vote on resolutions placed before the company
according to Section 47 of the Companies Act, 2013?
a) On all resolutions
b) Only on resolutions directly affecting preference shares
c) Only during the annual general meeting
d) Preference shareholders cannot vote
Answer: b) Only on resolutions directly affecting preference shares
9. What is the penalty for noncompliance with Section 60 of the Companies Act, 2013
regarding publication of share capital information?
a) Fine on the Registrar of Companies
b) Company dissolution
c) Fines on the company and its directors
d) Loss of voting rights for shareholders
Answer: c) Fines on the company and its directors
10. What does the term 'Shelf Prospectus' mean in the context of securities and
companies?
a) A prospectus with an unlimited validity period
b) A prospectus for selling shares to employees
c) A prospectus with incomplete information
d) A prospectus for selling shares without investor approval
Answer: a) A prospectus with an unlimited validity period
11. What is the way for a company to avoid repeated issuance of prospectus when it
intends to raise share capital in stages?
a) Issue an abridged prospectus
b) Issue a split prospectus
c) Issue a deferred prospectus
d) Issue a composite prospectus
Answer: a) Issue an abridged prospectus
12. In the context of share issuance, what does 'OFS' stand for?
a) Official Financial Statement
b) Offer for Sale
c) Original Financial Statement

d) Offshore Financial Statement

Answer: b) Offer for Sale
13. What document is deemed to be a prospectus issued by a company when securities

are offered for sale to the public?
a) Annual Report
b) Memorandum of Association
c) Offer for Sale document
d) Share certificate
Answer: c) Offer for Sale document
14. Under what circumstances can an "Offer for Sale" be made without the intention to
make shares available directly to the public through a prospectus?
a) If the shares are offered to the public
b) If the shares are offered to employees
c) If the shares are offered to a specific group of investors
d) If the shares are offered to an issuing house
Answer: d) If the shares are offered to an issuing house
15. What additional information must be disclosed in an "Offer for Sale" document, in
addition to the matters required in a prospectus?
a) The names of all shareholders
b) The company's financial statements
c) The net amount of consideration received for the securities
d) The history of the company
Answer: c) The net amount of consideration received for the securities
16. In what circumstances can certain members of a company offer their shares to the
public in consultation with the Board of Directors?
a) When the shares are newly issued
b) When the shares are not transferable
c) When the company is in financial distress
d) When authorized by law
Answer: d) When authorized by law
17. Who bears the cost of making an offer for sale, and what rules are applicable to such
an offer document?
a) The company bears the cost, and all rules apply.
b) The issuing house bears the cost, and no rules apply.
c) The shareholders bear the cost, and only some rules apply.
d) The government bears the cost, and all rules apply.
Answer: a) The company bears the cost, and all rules apply.
18. According to Section 56(4) of the Companies Act, 2013, what is the maximum period
within which a company must deliver share certificates for securities allotted,
transferred, or transmitted?
a) One year

b) Three months
c) Two months
d) Six months
Answer: c) Two months
19. Under what circumstances can a duplicate share certificate be issued to a

shareholder?
a) If the shareholder requests it for any reason
b) If the original certificate is lost or destroyed
c) If the shareholder wants to sell the shares
d) If the company decides to reissue certificates
Answer: b) If the original certificate is lost or destroyed
20. What is the legal effect of a share certificate issued by a company?

a) It constitutes title to the shares.
b) It is proof of ownership but not title.
c) It is a form of advertisement for the company.
d) It has no legal significance.
Answer: b) It is proof of ownership but not title.
21. What is the legal consequence if a person deceitfully personates as an owner of any
security or interest in a company and attempts to obtain any such security or interest?
a) A fine of up to 1 lakh rupees
b) Imprisonment for up to 6 months
c) Imprisonment for at least 1 year and a fine of at least 1 lakh rupees
d) No legal consequences
Answer: c) Imprisonment for at least 1 year and a fine of at least 1 lakh rupees
22. In the context of share issuance, what does 'ABRIDGED PROSPECTUS' refer to?
a) A short summary of a prospectus
b) A long, detailed prospectus
c) An annual report of a company
d) A statement of company policies
Answer: a) A short summary of a prospectus
23. According to Section 46(1) of the Companies Act, who can sign a share certificate
issued under the common seal of the company?
a) Any company employee
b) Any shareholder of the company
c) Two Directors or a Director and the Company Secretary
d) The Company Secretary alone
Answer: c) Two Directors or a Director and the Company Secretary
24. What is the timeline for issuing share certificates for subscribers to the memorandum
after the date of incorporation, according to Section 56(4) of the Companies Act?
a) Within 6 months
b) Within 1 month

c) Within 3 months
d) Within 2 months
Answer: d) Within 2 months
25. When can a company refuse to issue a duplicate share certificate to a shareholder?
a) Only if the original certificate is surrendered
b) If the original certificate is in good condition
c) If the original certificate is lost or destroyed
d) If the company suspects fraud
Answer: b) If the original certificate is in good condition
26. What is the purpose of consecutively machinenumbering blank forms to be used for
share certificates?
a) To identify the shareholder's name
b) To maintain record of shares
c) To ensure the forms are genuine and authorized
d) To track dividend payments
Answer: c) To ensure the forms are genuine and authorized
27. How long should a company preserve share certificate forms and related books and
documents according to Rule 7 of the Companies (Share Capital and Debenture) Rules,
2014?
a) At least 10 years
b) At least 5 years
c) At least 30 years
d) Permanently
Answer: c) At least 30 years
28. In the case of disputed share certificates, how long should the company preserve
them?
a) 1 year
b) 2 years
c) 3 years
d) Permanently
Answer: d) Permanently
29. In the context of share certificates, what is the significance of 'estoppel'?

a) It refers to a legal document
b) It prevents a person from denying certain facts
c) It signifies ownership of the shares
d) It is another term for a share certificate
Answer: b) It prevents a person from denying certain facts
30. What does 'personation' mean in the context of share certificates?

a) Impersonating a company director
b) Pretending to be a shareholder fraudulently
c) A formal document issued by the company

d) Authorizing someone else to hold shares

Answer: b) Pretending to be a shareholder fraudulently
31. Why does a company decide to issue securities, such as shares?

a) To raise capital for economic development
b) To buy other companies
c) To repay debts
d) To decrease investor confidence
Answer: a) To raise capital for economic development
32. Which of the following is NOT a primary reason for a company to issue securities?
a) Starting a new venture
b) Repaying debts
c) Expanding and diversifying
d) Increasing shareholder dividends
Answer: d) Increasing shareholder dividends
33. What is the primary purpose of an orderly regulated environment in the corporate
sector, as mentioned in the passage?
a) Boosting investor confidence
b) Maximizing profits
c) Reducing government intervention
d) Reducing corporate taxes
Answer: a) Boosting investor confidence
34. How does an investor contribute to a company's business when they buy securities?
a) By becoming an employee of the company
b) By investing directly in the company's projects
c) By enabling the company to use the funds for its business
d) By reducing the company's liabilities
Answer: c) By enabling the company to use the funds for its business
35. What are the three primary classifications of issues mentioned in the passage?
a) Public issue, Private issue, Bonus issue
b) Public issue, Rights issue, Private placement
c) Initial issue, Further issue, Bonus issue
d) Public issue, Rights issue, Preferential issue
Answer: b) Public issue, Rights issue, Private placement
36. Which section of the Companies Act, 2013 deals with "Prospectus and allotment of
securities"?
a) Section 23
b) Section 24
c) Section 25
d) Section 26

37. According to Section 23(1) of the Companies Act, a public company may issue
securities through which of the following methods?
a) Only through private placement
b) Only through a rights issue
c) Through a public offer, private placement, or rights issue
Answer: c) Through a public offer, private placement, or rights issue
38. What is a "public offer" as defined in the passage?

a) An offer made by a private company to the public
b) An offer made by an existing shareholder to the public
c) An offer made by a public company to the public through a prospectus
d) An offer made by a public company to its employees
Answer: c) An offer made by a public company to the public through a prospectus
39. When can a private company issue securities through private placement, according to
Section 23(2)?
a) Only when they meet specific profit criteria
b) Only when they have a minimum number of shareholders
c) By way of rights issue or bonus issue
d) Through a public offer
Answer: c) By way of rights issue or bonus issue
40. What is the minimum percentage of nominal amount that must be paid on
application for securities, as per the passage?
a) 10%
b) 5%
c) 15%
d) 20%
Answer: b) 5%
41. In which jurisdiction can a public company issue securities for listing on permitted
stock exchanges, as mentioned in the passage?
a) Only in India
b) Only in foreign jurisdictions
c) Only in specified foreign jurisdictions
d) In permissible foreign jurisdictions or as prescribed
Answer: d) In permissible foreign jurisdictions or as prescribed
42. Who has the authority to exempt certain public companies from specific provisions of
the Companies Act, as per the passage?
a) The Reserve Bank of India
b) The Central Government
c) The Securities and Exchange Board of India (SEBI)
d) The Registrar of Companies
Answer: b) The Central Government

43. How is "private placement" defined in Explanation I to Section 42?

a) An offer to the general public
b) An offer to a select group of persons, excluding the company's employees
c) An offer made through a prospectus
d) An offer made only by the promoters of the company
Answer: b) An offer to a select group of persons, excluding the company's employees
44. Which laws govern the issue of securities for a public company desiring to list its
securities on recognized stock exchanges in India?
a) The Companies Act, 2013
b) The Securities Contract (Regulation) Act, 1956
c) The SEBI Act, 1992
d) All of the above
Answer: d) All of the above
45. In the case of issues by private companies, who exercises the power of
administration?
a) The Central Government
b) The Reserve Bank of India
c) The SEBI
d) The Registrar of Companies
Answer: a) The Central Government
46. What does Section 24 of the Companies Act empower SEBI to regulate?
a) The issue and transfer of securities
b) The appointment of company directors
c) The taxation of corporate income
d) The hiring of employees
Answer: a) The issue and transfer of securities
47. What must a company do with the amount received as premium when issuing shares at a
premium, according to Section 52(1)?
a) Transfer it to a "securities premium account"
b) Distribute it as dividends to shareholders
c) Use it for employee salaries
d) Invest it in the stock market
Answer: a) Transfer it to a "securities premium account"
48. How can a company utilize the securities premium account, as per Section 52(2)?
a) To pay off company debts
b) To purchase assets
c) To issue bonus shares, write off expenses, pay commissions, and more
d) To distribute as dividends
Answer: c) To issue bonus shares, write off expenses, pay commissions, and more

49. What is the consequence if a company fails to repay the application money within 15
days from the closure of the issue?
a) The company will be fined by SEBI
b) The company will be dissolved
c) The directors of the company in default will be liable to repay with interest
d) The company will be exempt from repaying the money
Answer: c) The directors of the company in default will be liable to repay with interest
50. Under Section 53, when can a company issue shares at a discount?
a) Whenever it wants, without any conditions
b) Only when the company is facing financial difficulties
c) Only when converting debt into shares according to RBI guidelines
d) Only when issuing bonus shares
Answer: c) Only when converting debt into shares according to RBI guidelines
51. What is the consequence of issuing shares at a discount, according to Section 53?
a) The shares become fully paidup automatically.
b) The shares issued at a discount are void.
c) The company must pay a penalty.
d) Shareholders receive preferential rights.
Answer: b) The shares issued at a discount are void.
52. When can a company issue shares at a discount, as an exception to Section 53?
a) When it wants to reward its employees.
b) When creditors agree to it during debt conversion.
c) When it needs to raise capital.
d) When shareholders demand it.
Answer: b) When creditors agree to it during debt conversion.
53. Which section of the Companies Act, 2013 deals with the allotment of securities?
a) Section 23
b) Section 39
c) Section 52
d) Section 24
54. What is the minimum amount of application payable on every security as per the
passage?
a) 1% of the nominal amount
b) 2% of the nominal amount
c) 5% of the nominal amount
d) 10% of the nominal amount
Answer: c) 5% of the nominal amount
55. Which form should a company file with the Registrar when making any allotment of
securities?
a) Form S1

b) Form PAS1
c) Form PAS3
d) Form SEBI10
Answer: c) Form PAS3
56. What should be attached to Form PAS3 in the case of securities issued for
consideration other than cash?
a) A copy of the company's annual report
b) A certified list of shareholders
c) A copy of the prospectus
d) A copy of the contract and a report from a registered valuer
Answer: d) A copy of the contract and a report from a registered valuer
57. When should the application money be repaid to applicants if the minimum amount
has not been subscribed?
a) Within 30 days from the date of issue of the prospectus
b) Within 15 days from the closure of the issue
c) Within 60 days from the date of issue of the prospectus
d) Within 90 days from the date of issue of the prospectus
Answer: b) Within 15 days from the closure of the issue
58. In case of default in repayment of application money, what is the penalty as per
Section 39(5)?
a) A fine of Rs. 1,000 per day
b) A fine of Rs. 1 lakh per day
c) A fine of Rs. 10,000 per day
d) A fine of Rs. 5 lakh per day
Answer: a) A fine of Rs. 1,000 per day
59. What did the Supreme Court hold in the case of Sri Gopal Jalan & Co. vs. Calcutta
Stock Exchange Association Ltd. 1963?
a) The exchange was liable to file a return of forfeited shares.
b) There is no allotment when shares are forfeited and reissued.
c) The exchange was responsible for all share transactions.
d) Shareholders must be informed before shares are forfeited.
Answer: b) There is no allotment when shares are forfeited and reissued.
60. What is the consequence of allotting shares against promissory notes, according to
the case law mentioned?
a) The allotment is valid without any restrictions.
b) The allotment is considered fully paid.
c) The allotment is void unless the contract is fraudulent.
d) The allotment is void if the consideration is inadequate.
Answer: c) The allotment is void unless the contract is fraudulent.

61. What is the primary purpose of issuing shares at a premium?

a) To reward loyal shareholders
b) To increase the company's credit rating
c) To sell shares below par value
d) To raise additional capital
Answer: d) To raise additional capital
62. According to Section 52(1), where should the sum equal to the aggregate amount of
premium received on shares be transferred?
a) To the company's revenue account
b) To a "securities premium account"
c) To the shareholders' personal accounts
d) To the general reserve fund
Answer: b) To a "securities premium account"
63. What is the permissible use of the securities premium account, as mentioned in
Section 52(2)?
a) Paying dividends to shareholders
b) Funding company operations
c) Issuing bonus shares to members
d) Acquiring competitors
Answer: c) Issuing bonus shares to members
64. In case of default in refunding application money, what is the rate of interest to be
paid, as per the passage?
a) 5% per annum
b) 10% per annum
c) 12% per annum
d) 15% per annum
Answer: d) 15% per annum
65. What is the consequence of not repaying application money within the specified
period?
a) The company will face legal action.
b) The directors will be personally liable for repayment.
c) Shareholders lose their rights.
d) The shares become fully paidup.
Answer: b) The directors will be personally liable for repayment.
66. What is the primary responsibility of the SEBI regarding securities issuance, as
mentioned in Section 24?
a) Regulating insider trading
b) Overseeing mergers and acquisitions
c) Regulating matters related to prospectus and transfer of securities
d) Approving dividend payments
Answer: c) Regulating matters related to prospectus and transfer of securities

67. What is the primary purpose of the securities premium account, as emphasized in the
passage?
a) To distribute as dividends to shareholders
b) To treat as free reserves
c) To keep as capital reserve
d) To use for specific purposes like bonus issues
Answer: d) To use for specific purposes like bonus issues
68. According to Section 53, under what condition can a company issue shares at a
discount?
a) Whenever it pleases the company
b) In case of financial distress
c) If the shares are fully paidup
d) When the shareholders request it
Answer: b) In case of financial distress
69. What is the significance of attaching a report from a registered valuer when issuing
securities for consideration other than cash?
a) To satisfy tax authorities
b) To obtain insurance coverage
c) To establish the fair value of the consideration
d) To calculate the company's net worth
Answer: c) To establish the fair value of the consideration
70. According to the case law mentioned, what is the effect of inadequacy of
consideration when allotting shares?
a) It is considered fully paid.
b) It is valid without restrictions.
c) It is void unless the contract is fraudulent.
d) It does not affect the validity of the allotment.
Answer: c) It is void unless the contract is fraudulent.
71. What does the term "allotment" of shares refer to in the context of a company's
capital?
a) Selling shares to the public
b) Appropriating shares to existing shareholders
c) Issuing shares to the government
d) Acquiring shares from competitors
Answer: b) Appropriating shares to existing shareholders
72. Who is the proper authority for making the allotment of securities in a company, as
per the general principles outlined in the passage?
a) Shareholders
b) The government
c) Board of Directors or an authorized committee
d) Stock exchange authorities

Answer: c) Board of Directors or an authorized committee
73. What does Section 6 of the Indian Contract Act, 1872, state regarding the timing of an
offer acceptance?
a) An offer must be accepted within a reasonable time.
b) An offer must be accepted immediately.
c) An offer can be accepted at any time.
d) An offer cannot be accepted.
Answer: a) An offer must be accepted within a reasonable time.
74. How many days does Section 56 specify for making allotment of shares in the case of
allotment of any of its shares?
a) 15 days
b) 30 days
c) 45 days
d) 60 days
Answer: d) 60 days
75. What is the primary condition for an allotment to be considered "absolute"

according to the passage?
a) It must be subject to certain conditions.
b) It must be communicated verbally.
c) It should be made on the same terms as applied for.
d) It should involve a majority of shareholders.
Answer: c) It should be made on the same terms as applied for.
76. What form of communication is considered valid for allotment according to the
passage?
a) Verbal communication
b) Written communication
c) Electronic communication
d) Smoke signals
Answer: b) Written communication
77. In the case of an allotment, what does "renunciation" mean, as mentioned in the
passage?
a) The right to change the terms of allotment
b) The right to refuse allotment
c) The right to appeal the allotment decision
d) The right to receive additional allotments
Answer: b) The right to refuse allotment
78. When can a company issue equity shares with differential voting rights, as per the
governing provisions in the Companies Act 2013?
a) Only if approved by the Board of Directors
b) Only if approved by the company's auditors
c) Only if approved by a special resolution at a general meeting

d) Only if the company is listed on a recognized stock exchange

Answer: c) Only if approved by a special resolution at a general meeting
79. What is the maximum percentage of voting power allowed for shares with differential
rights in a company, as per Rule 4 of the Companies (Share Capital and Debentures)
Rules, 2014?
a) 50%
b) 60%
c) 74%
d) 100%
Answer: c) 74%
80. In what form should the explanatory statement for shares with differential rights be
annexed when seeking shareholder approval?
a) It is not required to be annexed.
b) As a separate booklet.
c) As part of the company's annual report.
d) To the notice of the general meeting or postal ballot.
Answer: d) To the notice of the general meeting or postal ballot.
81. What is the maximum redemption period for preference shares issued by a company
according to the Companies Act 2013?
a) 10 years
b) 15 years
c) 20 years
d) 30 years
Answer: c) 20 years
82. Under what condition can a company issue preference shares for a period exceeding
20 years?
a) With the consent of the Registrar of Companies
b) With the approval of the shareholders
c) For infrastructure projects
Answer: c) For infrastructure projects
83. What type of resolution is required to authorize the issue of preference shares?
a) Ordinary resolution
b) Special resolution
c) Extraordinary resolution
d) Unanimous resolution
Answer: b) Special resolution
84. Preference shares can be redeemed out of which of the following?

a) Proceeds of a fresh issue of shares
b) Profits of the company
c) Proceeds of a bank loan

d) Debenture proceeds
Answer: b) Profits of the company
85. What is the purpose of the Capital Redemption Reserve Account?

a) To reserve funds for future investments
b) To pay dividends to preference shareholders
c) To redeem preference shares
d) To finance infrastructure projects
Answer: c) To redeem preference shares
86. In what situations should the premium on the redemption of preference shares be
provided for?
a) Only in the case of class specific companies
b) In all cases, regardless of the type of company
c) Only when the company has substantial profits
d) Never, it's optional
Answer: b) In all cases, regardless of the type of company
87. What does Section 55(3) of the Companies Act 2013 allow a company to do in case it
cannot redeem preference shares?
a) Issue further preference shares
b) Extend the redemption period
c) Issue equity shares
d) Merge with another company
Answer: a) Issue further preference shares
88. What is the consequence of issuing further redeemable preference shares?

a) An increase in share capital
b) A reduction in share capital
c) No change in share capital
d) An increase in the number of directors
Answer: c) No change in share capital
89. Which particulars should be included in a resolution authorizing the issue of

preference shares?
a) Details of the company's profits
b) Details of the company's assets
c) Details related to the issue of preference shares
d) Details of the company's liabilities
Answer: c) Details related to the issue of preference shares
90. In the case of a listed entity, what must be done before issuing preference shares?
a) Intimate the stock exchange
b) Seek approval from the Ministry of Finance
c) Consult with industry experts
d) Nothing specific is required

Answer: a) Intimate the stock exchange
91. What should be included in the explanatory statement to a special resolution

authorizing the issue of preference shares?
a) Details of the company's annual revenue
b) The company's marketing strategy
c) Material facts concerning the issue of preference shares
d) Personal details of the board members
Answer: c) Material facts concerning the issue of preference shares
92. Where should the particulars of preference shareholders be recorded when a

company issues preference shares?
a) In the Register of Companies
b) In the Register of Directors
c) In the Register of Members
d) In the Register of Auditors
Answer: c) In the Register of Members
93. What form should be filed with the Registrar after issuing preference shares?
a) Form A1
b) Form C2
c) Form MGT14
d) Form XYZ123
Answer: c) Form MGT14
94. How soon should the Return of Allotment be filed with the Registrar after issuing
preference shares?
a) Within 7 days
b) Within 15 days
c) Within 30 days
d) Within 90 days
Answer: c) Within 30
95. When should a company update the Register of Members after issuing preference
shares?
a) Immediately
b) Within 7 days
c) Within 15 days
d) Within 30 days
Answer: a) Immediately
96. In what situations can a company redeem preference shares?

a) At any time
b) Only at a fixed time
c) Only when the shareholders request it
d) Only with the approval of the government

Answer: a) At any time
97. How can a company redeem preference shares?

a) By selling the shares on the open market
b) By paying cash to the shareholders
c) By converting them into equity shares
d) By donating them to a charity
Answer: b) By paying cash to the shareholders
98. When should the notice of redemption of preference shares be filed with the
Registrar?
a) Within 7 days of redemption
b) Within 15 days of redemption
c) Within 30 days of redemption
d) Within 90 days of redemption
Answer: c) Within 30 days of redemption
99. What is the maximum period for filing a return of allotment after issuing preference
shares?
a) 7 days
b) 15 days
c) 30 days
d) 90 days
Answer: c) 30 days
100. How long does a company have to deliver share certificates after allotment?
a) 7 days
b) 15 days
c) 30 days
d) 60 days
Answer: d) 60 days
101. In case preference shares are not redeemed, what can be issued to cover the amount
due to preference shareholders?
a) Equity shares
b) Debentures
c) Further preference shares
d) Corporate bonds
Answer: c) Further preference shares
102. In what circumstances can a company invoke Rule 11 of NCLT Rules, 2016?
a) When issuing new shares
b) When facing a financial crisis
c) When preference shareholders seek relief
d) When changing the board of directors
Answer: c) When preference shareholders seek relief

103. When a company increases its subscribed capital by issuing further shares, who
should the shares be offered to first?
a) Employees
b) Lenders
c) Any persons
d) Shareholders
Answer: d) Shareholders
104. What is the method for offering shares to existing shareholders as per Section
62(1)(a) of the Companies Act 2013?
a) Public auction
b) Private placement
c) Letter of offer
d) Direct purchase from the company
Answer: c) Letter of offer
105. What is the time period within which the offer of rights shares should be made to
shareholders under Rule 12A?
a) 7 days
b) 15 days
c) 30 days
d) 60 days
Answer: a) 7 days
106. In case a shareholder declines the offer of rights shares, what can the company do
with those shares?
a) Sell them in the open market
b) Keep them as treasury stock
c) Dispose of them in a non disadvantageous manner
d) Donate them to a charity
Answer: c) Dispose of them in a non disadvantageous manner
107. What does the Right to Renounce refer to in the context of issuing rights shares?
a) The right to change the terms of the shares
b) The right to decline the offer
c) The right to purchase additional shares
d) The right to transfer shares to another person
Answer: b) The right to decline the offer
108. To which type of companies do the restrictions contained in Section 62 of the

Companies Act not apply?
a) All types of companies
b) Private companies only
c) Public companies only
d) Government owned companies
Answer: a) All types of companies

109. Under what condition does Section 62(3) apply, allowing an increase in subscribed
capital?
a) When the government intervenes
b) When debentures or loans are converted into shares
c) When a special resolution is passed
d) When the board of directors decides
Answer: b) When debentures or loans are converted into shares
110. When a government directs the conversion of debentures or loans into shares, what
factors should be considered according to Section 62(5)?
a) Government's preferences
b) The company's size
c) The financial position of the company
d) The company's industry
Answer: c) The financial position of the company
111. What is the primary purpose of Section 81 (Corresponding to section 62 of the

Companies Act, 2013)?
a) To define the responsibilities of company directors.
b) To determine the maximum authorized limit of shares.
c) To regulate employee stock options.
d) To govern the issuance of further shares within the authorized limit.
Answer: d) To govern the issuance of further shares within the authorized limit.
112. According to the Supreme Court's decision in Needle Industries (India) Ltd. vs.
Needle Industries Newey (India) Holding Ltd., what must directors of a company
prioritize?
a) Personal aggrandizement
b) Benefit of the company
c) Shareholder interests
d) Compliance with statutory requirements
Answer: b) Benefit of the company
113. What is the significance of the term 'holders of equity shares' in Section 81
(Corresponding to section 62 of the Companies Act, 2013)?
a) It defines the eligibility criteria for ESOPs.
b) It differentiates between public and private companies.
c) It refers to persons listed in the register of members.
d) It specifies the maximum number of shares an individual can hold.
Answer: c) It refers to persons listed in the register of members.
114. In the case of the death of a member, what rights can the persons entitled to the
deceased member's shares exercise, according to Worldwide Agencies (P) Ltd. vs.
Margaret T. Desor?
a) None
b) All membership rights
c) Only voting rights

d) Only dividend rights

Answer: b) All membership rights
115. According to Mathalone (R) vs. Bombay Life Assurance Co. Ltd., can a transferee
compel the transferor to take up rights shares offered to them?
a) Yes, under all circumstances
b) No, not under any circumstances
c) Yes, if specified in the Articles of Association
d) Yes, if the transferor consents
Answer: b) No, not under any circumstances
116. What is the definition of 'Employee Stock Option' (ESOP) according to the
a) An option given to employees to purchase shares at any time.
b) An option given to employees to purchase shares at a fixed price.
c) An option given to employees to purchase shares in the secondary market.
d) An option given to employees to purchase or subscribe for shares at a predetermined price in
the future.
Answer: d) An option given to employees to purchase or subscribe for shares at a predetermined
price in the future.
117. Which type of resolution is required for a public company to issue shares under the
Employee Stock Option Scheme (ESOP)?
a) Ordinary Resolution
b) Special Resolution
c) Simple Majority Resolution
d) Unanimous Resolution
Answer: b) Special Resolution
118. Who is excluded from the definition of 'employees' for the purpose of ESOPs?
a) Promoters or persons belonging to the promoter group
b) Independent Directors
c) Directors holding more than ten percent of outstanding equity shares
d) Permanent employees working outside India
Answer: a) Promoters or persons belonging to the promoter group
119. In the case of a startup company, when do the conditions related to employees'
ESOPs not apply?
a) Up to five years from the date of incorporation
b) Up to three years from the date of incorporation
c) Up to ten years from the date of incorporation
d) Up to one year from the date of incorporation
Answer: c) Up to ten years from the date of incorporation

120: What information should be disclosed in the explanatory statement when proposing
an Employee Stock Option Scheme (ESOP)?
a) Only the total number of stock options to be granted
b) Only the exercise price for options
c) Various details including vesting requirements, exercise period, and more
d) Only the names of the proposed allottees
Answer: c) Various details including vesting requirements, exercise period, and more
121. How can a company determine the exercise price of shares under an ESOP?
a) Based on market price at the time of exercise
b) Based on the highest trading price in the last year
c) Based on the average of the highest and lowest trading prices in the last six months
d) Based on a valuation report of a registered valuer
Answer: d) Based on a valuation report of a registered valuer
122. What happens to the options granted to employees if they are not exercised within
the exercise period?
a) They are forfeited by the company.
b) They are refunded to the employees.
c) They become transferable to other employees.
d) They are converted into equity shares automatically.
Answer: a) They are forfeited by the company.
123. When can a company vary the terms of an Employees Stock Option Scheme
(ESOP)?
a) Only when it benefits the company.
b) Only with the approval of shareholders.
c) At any time without restrictions.
d) When it doesn't affect the option holders' interests.
Answer: b) Only with the approval of shareholders.
124: What is the minimum vesting period for options granted under an ESOP?
a) 6 months
b) 1 year
c) 2 years
d) 3 years
Answer: b) 1 year
125: When can an employee exercise the options granted to them in case of resignation
or termination of employment?
a) Within 30 days of termination
b) Within 60 days of termination
c) Within 90 days of termination
d) Within 120 days of termination
Answer: b) Within 60 days of termination

126: In case of the death of an employee holding ESOPs, who can exercise those
options?
a) Legal heirs or nominees of the deceased employee
b) Other employees of the company
c) Company directors
d) Shareholders of the company
Answer: a) Legal heirs or nominees of the deceased employee
127: What must the Board of Directors disclose in the Directors' Report regarding the
Employees Stock Option Scheme?
a) Only the total number of options granted during the year
b) Details of options exercised by employees
c) Various details about the scheme, including the number of options granted and vesting period
d) Only the names of the employees who benefited from the scheme
Answer: c) Various details about the scheme, including the number of options granted and
vesting period
128: What form should a company use to maintain a register of Employee Stock Options?
a) Form SH.1
b) Form SH.2
c) Form SH.3
d) Form SH.6
Answer: d) Form SH.6
129: In which situations can a company issue shares on a preferential basis?

a) Only to existing shareholders for cash
b) Only to existing shareholders for cash or other considerations
c) Only to new shareholders for cash
d) Only to new shareholders for cash or other considerations
Answer: b) Only to existing shareholders for cash or other considerations
130: What is the primary requirement for issuing shares on a preferential basis under
Section 62(1)(c) of the Companies Act, 2013?
a) Special resolution by the board of directors
b) Special resolution by the members of the company
c) Ordinary resolution by the members of the company
d) Approval by the Ministry of Corporate Affairs
Answer: b) Special resolution by the members of the company
131: Which of the following does not constitute a 'Preferential Offer'?

a) Shares offered through a public issue
b) Shares offered through an Employee Stock Option Scheme
c) Shares offered through a rights issue
d) Shares offered through a foreign stock exchange
Answer: a) Shares offered through a public issue

132: What should be included in the explanatory statement when proposing a preferential
offer?
a) Only the price of shares
b) Only the number of shares to be issued
c) Various details including objects of the issue, price, and names of allottees
d) Only the change in control of the company
Answer: c) Various details including objects of the issue, price, and names of allottees
133: How long does a company have to complete the allotment of securities on a
preferential basis from the date of passing the special resolution?
a) 6 months
b) 12 months
c) 18 months
d) 24 months
Answer: b) 12 months
134: How is the price of shares for a preferential offer determined?

a) By the market price on the allotment date
b) By the highest trading price in the last year
c) By the valuation report of a registered valuer
d) By the book value of the shares
Answer: c) By the valuation report of a registered valuer
135: What happens if the preferential offer includes convertible securities?

a) Conversion price is fixed at the time of offer
b) Conversion price is fixed 60 days before conversion
c) Conversion price is determined by the market
d) Conversion price is decided after the conversion
Answer: b) Conversion price is fixed 60 days before conversion
136: What is the treatment of noncash consideration for preferential offers?

a) It is expensed as per accounting standards.
b) It is always treated as an asset.
c) It is never considered as a part of the offer.
d) It is forfeited by the company.
Answer: a) It is expensed as per accounting standards.
137: When can a company vary the terms of a preferential offer?

a) At any time without restrictions
b) Only with the approval of shareholders
c) Only when it benefits the company
d) When it doesn't affect the option holders' interests
Answer: a) At any time without restrictions
138: What is the minimum vesting period for options granted under a preferential offer?
a) 6 months
b) 1 year

c) 2 years
d) 3 years
Answer: b) 1 year
139: How does the company treat shares issued pursuant to a preferential offer with
respect to voting rights?
a) Shareholders have voting rights immediately upon allotment.
b) Shareholders have voting rights after one year.
c) Shareholders have voting rights after two years.
d) Shareholders never have voting rights.
Answer: a) Shareholders have voting rights immediately upon allotment.
140: What is the treatment of the amount payable by employees at the time of grant of
option in a preferential offer?
a) It is always refunded to the employees.
b) It is forfeited by the company if options are not exercised.
c) It is used to pay dividends to existing shareholders.
d) It is treated as additional paid in capital.
Answer: b) It is forfeited by the company if options are not exercised.
141: According to Section 61(1)(e) of the Companies Act, 2013, what is the definition of
diminution of capital?
a) Cancellation of subscribed capital
b) Cancellation of unsubscribed capital
c) Cancellation of preference shares
d) Cancellation of equity shares
Answer: b) Cancellation of unsubscribed capital
142: Under which section of the Companies Act, 2013, does the cancellation of shares not
constitute a reduction of share capital?
a) Section 61(1)(e)
b) Section 61(2)
c) Section 66
d) Section 230
143: Which of the following methods does NOT require approval from the Tribunal for
the reduction of share capital?
a) Redemption of redeemable preference shares
b) Purchase of shares by the Company on the order of the Tribunal
c) Buyback of the company's own securities
d) Cancellation of shares that have not been taken or agreed to be taken by any person
Answer: a) Redemption of redeemable preference shares
144: In which scenario is the diminution of share capital NOT treated as a reduction of
capital?
a) Cancellation of unsubscribed shares

b) Redemption of redeemable preference shares

c) Forfeiture of shares for nonpayment of calls
d) Buyback of the company's own shares under Section 68
Answer: a) Cancellation of unsubscribed shares
145: In the case of a reduction of share capital ordered by the Tribunal sanctioning any
compromise or arrangement under Section 230, does it require approval from the
Tribunal?
a) Yes
b) No
c) Depends on the specific arrangement
d) Tribunal's approval is optional
Answer: b) No
146: According to the case law SIEL Ltd., Inre., what is the view on the reduction of
share capital?
a) Reduction of share capital is prohibited by the Companies Act
b) Reduction of share capital requires approval from all shareholders
c) Reduction of share capital is a domestic concern of the company, and the decision of the
majority prevails
d) Reduction of share capital is only allowed for public companies
Answer: c) Reduction of share capital is a domestic concern of the company, and the decision of
the majority prevails
147: In which case did the Act prescribe the manner in which the reduction of capital is
to be effected?
a) SIEL Ltd., Inre.
b) British and American Trustee and Finance Corpn. vs. Couper
c) Borough Commercial and Bldg. Society
d) Great Universal Stores Ltd., Re
Answer: b) British and American Trustee and Finance Corpn. vs. Couper
148: What are the three considerations that the Court must take into account while
sanctioning the reduction of capital?
a) Shareholders' interests, creditors' interests, and public interest
b) Shareholders' interests, directors' interests, and employees' interests
c) Shareholders' interests, government interests, and public interest
d) Shareholders' interests, employees' interests, and public interest
Answer: a) Shareholders' interests, creditors' interests, and public interest
149: In the case of an unlimited company to which Section 100 (corresponds to section
66 of the Companies Act, 2013) does not apply, how can it reduce its capital?
a) By passing a special resolution
b) By obtaining approval from the Tribunal
c) By altering its Memorandum of Association
d) By increasing its share capital

Answer: c) By altering its Memorandum of Association
150: In what scenario can a reduction of share capital not be prevented even if a
company has ceased to trade and the Registrar exercises the power to strike off the
company's name from the register?
a) When the company has outstanding debts
b) When the reduction is unfair to shareholders
c) When the reduction involves preferential shareholders
d) When the company is defunct
Answer: d) When the company is defunct
151: What principle should be followed when reducing shares of one class where different
amounts are paid up on shares of the same class?
a) Equal reduction for all shares of the same class
b) Reduction based on the original face value of the shares
c) Reduction based on the number of shares held by each shareholder
d) Equalizing the amount already paidup
Answer: d) Equalizing the amount already paidup
152: In which case does the extinguishment of shares not necessarily result in a reduction
of share capital?
a) Asian Investments Ltd. Re
b) Marwari Stores Ltd. vs. Gouri Shanker Goenka
c) British and American Trustee Corpn. vs. Couper
d) Great Universal Stores Ltd., Re
Answer: a) Asian Investments Ltd. Re
153: Under what conditions can shares be surrendered in a private company?

a) When the shareholder wants to exit the company
b) When the company is facing financial difficulties
c) When the company's articles of association allow it, and forfeiture of such shares is justified
d) When the company's directors approve the surrender
Answer: c) When the company's articles of association allow it, and forfeiture of such shares is
justified
154: What is the effect of the forfeiture of shares in a company?

a) The company acquires the forfeited shares
b) The shareholder whose shares are forfeited loses all rights to the shares
c) The shareholder whose shares are forfeited can still vote on company matters
d) The forfeited shares are distributed among all shareholders
Answer: b) The shareholder whose shares are forfeited loses all rights to the shares
155: When reissuing forfeited shares, what price must be maintained?

a) Higher than the original issue price
b) Lower than the original issue price
c) The same as the original issue price
d) Determined by the company's board of directors

Answer: c) The same as the original issue price
156: What is the primary purpose of Section 59 of the Companies Act, 2013?
A) To regulate the formation of companies
B) To facilitate mergers and acquisitions
C) To provide a procedure for the rectification of the register of members
D) To govern foreign investments in Indian companies
Answer: C
157: In which court should an appeal be filed if foreign members or debenture holders
residing outside India want to challenge the register of members?
A) Indian Supreme Court
B) Competent Court in India
C) Competent Court outside India as specified by the Central Government
D) Any district court in India
Answer: C
158: What can the Tribunal do after hearing an appeal related to the rectification of the
register of members?
A) Dismiss the appeal
B) Direct the company to pay damages
C) Both A and B
D) Neither A nor B
Answer: C
159: Under what circumstances can rectification of the register of members be

permissible?
A) In case of regular share transfers
B) When there is a delay in entering a person's name in the register
C) When a person is induced to take shares by misrepresentation
D) When a company changes its name
Answer: C
160: What is the maximum period within which a lost transfer document must be
delivered to the company for registration?
A) 30 days
B) 45 days
C) 60 days
D) 90 days
Answer: C

5] Members and Shareholders
1: According to Section 2(55) of the Companies Act, 2013, who is considered a member
of a company?
A) Shareholders
B) Subscribers to the memorandum
C) Employees
D) Promoters
Answer: B
2: What are the essential elements required for a person to acquire membership of a
company?
A) Agreement to become a member and holding shares
B) Entry of the name in the register of members and signing a contract
C) Agreement to become a member and entry of the name in the register of members
D) Purchase of shares and subscribing to the memorandum
Answer: C
3: Which Act lays down the legal capacity requirements for a person to contract for
membership in a company?
A) Companies Act, 2013
B) Indian Contract Act, 1872
C) Companies (Management and Administration) Rules, 2014
D) Indian Companies Act, 1956
Answer: B
4: How can a person acquire membership of a company according to Section 2(55) of the
A) By applying for membership
B) By receiving shares as a gift
C) By subscribing to the Memorandum of Association or entering an agreement
D) By becoming a director of the company
Answer: C
5: In the case of a subscriber, when does one become a member of the company?
A) After receiving share certificates
B) After the company goes into liquidation
C) On the incorporation of the company
D) After the company's first annual general meeting
Answer: C
6: What happens if a subscriber to the memorandum wishes to rescind the contract for
the purchase of shares?
A) The company must refund the subscription amount.
B) The subscriber can rescind the contract on grounds of fraud.
C) The subscriber cannot rescind the contract.

D) The subscriber can rescind the contract within 30 days of incorporation.

Answer: C
7: When does a person become a shareholder if they apply for shares in a company?
A) Upon applying for shares
B) When they receive the share certificates
C) When shares are allotted, and their name is entered in the register of members
D) After signing the Memorandum of Association
Answer: C
8: How are shares in a company transferred from an existing member to a new member?
A) By submitting an application for transfer
B) By issuing a share warrant
C) By execution of an instrument of transfer and registering it with the company
D) By transferring shares through a depository
Answer: C
9: Under what circumstances can a person become a member of a company through the
transmission of shares?
A) By making an application to the company
B) By holding shares as a beneficial owner
C) By succeeding to the estate of a deceased member
D) By entering into an agreement with the company
Answer: C
10: When is a person considered a member of a company by acquiescence or estoppel?

A) When they receive share certificates
B) When they apply for membership
C) When they allow their name to be on the register of members without sufficient cause
D) When they hold shares in another company
Answer: C
11: Who can become a member of a company according to the Companies Act, 2013?
A) Employees of the company
B) Subsidiary companies
C) Any sui juris person except the company itself
D) Foreign nationals only
Answer: C
12: Under what conditions can a subsidiary company hold shares in its holding
company?
A) Always, without any exceptions
B) Only when authorized by the Memorandum of Association (MOA)
C) Never, it is prohibited by law
D) Only if the subsidiary holds shares as a trustee
Answer: B

13: What type of company cannot become a member of another company?

A) Public limited companies
B) Companies limited by guarantee
C) Private limited companies
D) Government-owned companies
Answer: B
14: Can a partnership firm become a member of a company?

A) Yes, in all cases
B) Yes, but only if it is registered under the Companies Act, 2013
C) No, it is not a legal entity to become a member
D) Only if it has more than ten partners
Answer: C
15: Can a Limited Liability Partnership (LLP) become a member of a company?

A) Yes, always
B) Yes, if it is authorized by its LLP agreement
C) No, an LLP is not allowed to hold shares in a company
D) Only if the LLP has at least 100 partners
Answer: B
16: When can a foreigner become a member of an Indian company?

A) At any time, without restrictions
B) Only after obtaining Indian citizenship
C) Subject to the provisions of the Foreign Exchange Management Act, 1999
D) Never, foreign nationals are prohibited from owning shares in Indian companies
Answer: C
17: Who becomes an alien enemy during a war with their country?
A) Foreign nationals
B) Shareholders of the company
C) Employees of the company
D) Any person who owns shares in a company
Answer: A
18: What happens when a person allows their name to remain on the register of members
without sufficient cause?
A) They become a member automatically
B) They lose their rights as a member
C) They can still deny their membership at any time
D) They can vote in company meetings without owning shares
Answer: A
19: Which of the following entities can become a member of a company?

A) Any person, partnership firm, and Limited Liability Partnership
B) Only private limited companies
C) Only government-owned companies

D) Only individuals above the age of 25

Answer: A
20: Who is considered a shareholder of a company?

A) Anyone who subscribes to the memorandum of association
B) Anyone who holds shares of the company
C) Only the company's directors
D) Only those who attend annual general meetings
Answer: B
21: What is the legal requirement for a subsidiary company to hold shares in its holding
company?
A) Approval from the Ministry of Corporate Affairs
B) Approval from the Securities and Exchange Board of India (SEBI)
C) Authorization in the subsidiary's articles of association
D) No specific legal requirement
Answer: C
22: Can a partnership firm become a member of a private limited company?

A) Yes, always
B) Yes, if the partnership firm has more than 20 partners
C) No, a partnership firm cannot become a member of a private limited company
D) Only if the partnership firm is registered under the Companies Act, 2013
Answer: C
23: What type of company can become a member of another company, even if it is not
authorized by its MOA?
A) Public limited companies
B) Private limited companies
C) Government-owned companies
D) Section 8 companies
Answer: D
24: How can a person holding shares as a beneficial owner become a member of a
company?
A) By attending annual general meetings
B) By voting in company elections
C) By having their name entered as a beneficial owner in the records of a depository
D) By signing a separate membership agreement
Answer: C
25: When does a shareholder become a member of a company?

A) Upon applying for shares
B) Upon receiving dividends
C) After signing the Articles of Association
D) Once their name is entered in the register of members
Answer: D

Question 26: In what situations can a person holding shares in another company become
a member of the concerned company?
A) Only if they hold a significant number of shares
B) Only if they serve as a director in both companies
C) By becoming a shareholder before the companies are incorporated
D) When they hold shares as a beneficial owner in the records of a depository
Answer: D
Question 27: What is the primary difference between a member and a shareholder?
A) A member is always a shareholder, but a shareholder is not always a member.
B) A shareholder is always a member, but a member is not always a shareholder.
C) The terms are used interchangeably in the Companies Act, 2013.
D) Shareholders are individuals, while members are companies.
Answer: A
28: Who can become a member of a company, subject to the Memorandum and
Articles?
A) Any person, partnership firm, and Limited Liability Partnership
B) Only government-owned companies
C) Only foreign nationals
D) Only individuals above the age of 18
Answer: A
29: Can a subsidiary company become a member of its holding company?

A) Yes, always
B) Yes, if authorized by its MOA
C) No, it is prohibited by law
D) Only if the subsidiary holds more than 50% of the holding company's shares
Answer: C
30: Under what circumstances can a shareholder's power of voting and rights be
suspended?
A) During a strike by company employees
B) During a financial crisis of the company
C) In the event of war with the shareholder's country
D) When the shareholder is absent from company meetings
Answer: C
31: Can a minor become a member of a company?

A) Yes, with the approval of the company's board of directors
B) No, a minor is not competent to enter into a contract
C) Yes, as long as they are over 16 years old
D) Yes, if the minor's guardian signs on their behalf
Answer: D

32: When can a minor's agreement to become a member of a company be signed on their
behalf?
A) Only when the minor reaches the age of 18
B) Never, minors cannot be members
C) By anyone who is willing to sign on their behalf
D) Only by their lawful guardian
Answer: D
33: What happens if a minor, upon reaching the age of majority, does not wish to be a
member of the company?
A) The company must continue their membership
B) The minor's shares are forfeited
C) The minor must pay a penalty for repudiation
D) The minor must repudiate their liability based on minority
Answer: D
34: When shares are transferred to a minor, who is liable for future calls on those shares?
A) The minor
B) The company
C) The transferor
D) The minor's guardian
Answer: C
35: Can an insolvent be a member of a company?

A) No, an insolvent cannot be a member
B) Yes, but they lose all beneficial interest in the shares
C) Yes, but only if they are the majority shareholder
D) Yes, and they can vote in company matters
Answer: B
36: Who represents a Hindu Undivided Family (HUF) when it becomes a member of a
company?
A) The eldest member of the HUF
B) The family priest
C) The Karta of the HUF
D) The HUF secretary
Answer: C
37: What is the consequence of a pawnee having no right of foreclosure?

A) The pawnee loses all rights to the shares
B) The pawnee can sell the shares at any time
C) The pawner continues to be a member
D) The shares are automatically transferred to the pawnee
Answer: C

38: When can a receiver exercise membership rights if their name is not in the register of
members?
A) They can always exercise membership rights
B) Only if the company agrees to it in a general meeting
C) When an order is made in a legal proceeding
D) They can never exercise membership rights
Answer: C
39: Can a society registered under the Societies Registration Act, 1860 become a member
of a company?
A) Yes, without any restrictions
B) No, it is prohibited by law
C) Yes, but it requires special permission
D) Yes, only if it has been in existence for over 10 years
Answer: C
40: What happens when a person takes shares in a fictitious name?

A) They are exempt from any criminal liability
B) They cannot be a member of the company
C) They can claim double voting rights
D) They are liable as a member and face criminal penalties
Answer: D
41: According to Section 447 of the Companies Act, 2013, what is the minimum threshold
amount for fraud that can result in imprisonment?
A) 1% of the company's turnover
B) 5 lakh rupees
C) 10 lakh rupees
D) 50 lakh rupees
Answer: C
42: Can a trade union registered under the Trade Union Act hold shares in a company?
A) No, trade unions are not allowed to hold shares
B) Yes, but only if they have a certain number of members
C) Yes, they can hold shares in their own corporate name
D) Yes, but only in public companies
Answer: C
43: Can a holder of Global Depository Receipts (GDRs) be considered a member of a

company?
A) Yes, automatically upon holding GDRs
B) Yes, after transferring the GDRs into underlying equity shares
C) No, GDR holders cannot be members
D) Yes, but only if they have a substantial number of GDRs
Answer: B

44: When multiple persons apply for shares in a company and shares are allotted to them,
what is the outcome?
A) Only one of them becomes a member, chosen by the company
B) They must draw lots to determine the member
C) They must immediately sell their shares
D) Each of them becomes a member
Answer: D
45: In what situation does a joint member have the right to insist on having their names
registered in any order they require?
A) Always, as per their preference
B) Only if they are the majority shareholder
C) If the articles of the company do not provide otherwise
D) Only if they are senior citizens
Answer: C
46: When can a joint member split their holding into several joint holdings with their
names in different orders?
A) Only if they have more than 10% of the company's shares
B) If they have a specific approval from the board of directors
C) At any time, as per their preference
D) Only if they are the first-named holders
Answer: C
47: How many persons are required to form a public company according to Section 3(1)
of the Companies Act, 2013?
A) Seven or more persons
B) Two or more persons
C) One person
D) Ten or more persons
Answer: A
48: According to Section 2(68)(ii) of the Companies Act, 2013, what is the maximum
number of members allowed in a private company, excluding employees?
A) 200 members
B) 100 members
C) 50 members
D) 20 members
Answer: A
49: When does a person cease to be a member of a company?

A) When they stop attending company meetings
B) When they transfer their shares to another person
C) When their name is removed from the register of members
D) When they resign from the company
Answer: C

50: Can a public limited company expel a member by altering its Articles of Association?
A) Yes, as long as the majority of members agree
B) Yes, with the approval of the Central Government
C) No, it is against the fundamental principles of company law
D) Yes, as long as it is done by a resolution passed at a general meeting
Answer: C
51: What information should be included in the register of members for a company that
does not have share capital?
A) Name, date of birth, and occupation of the member
B) Name, address, email, and PAN of the member
C) Name, address, email, PAN, and Aadhar number of the member
D) Name, date of birth, and nationality of the member
Answer: B
52: According to Rule 3 & 5 of the Companies (Management and Administration) Rules,
2014, what form should a register of members for a company limited by shares be
maintained in?
A) Form No. MGT-1
B) Form No. MGT-2
C) Form No. REG-3
D) Form No. INC-20A
Answer: A
53: Within how many days should entries in the registers be made after the board of
directors approves the allotment or transfer of shares, debentures, or other securities?
A) 3 days
B) 5 days
C) 7 days
D) 10 days
Answer: C
54: Where should the registers of members be maintained by default?

A) At the company's registered office
B) At the company's principal place of business
C) At the residence of the company secretary
D) At any location within India
Answer: A
55: When should entries be made in the register of members in the case of changes in the
status of a member, debenture holder, or other security holder?
A) Within 30 days
B) Within 15 days
C) Within 7 days
D) Within 90 days
Answer: B

56: In case of any rectification in the register by the company pursuant to an order, what
should be indicated in the respective register?
A) The reason for the rectification
B) The names of the directors who approved it
C) The reference of such order
D) The date of the company's annual meeting
Answer: C
57: When should the particulars of any pledge, charge, lien, or hypothecation created by
the promoters be entered in the register?
A) Within 7 days
B) Within 15 days
C) Within 30 days
D) Within 45 days
Answer: B
58: Who is responsible for authenticating the entries in the registers maintained under
Section 88?
A) The company's auditor
B) The company's legal advisor
C) The company secretary or a person authorized by the Board
D) The company's CEO
Answer: C
59: What should be mentioned when authenticating entries in the registers?

A) The date of the last annual meeting
B) The date of the board resolution authorizing the same
C) The company's stock price
D) The name of the company's largest shareholder
Answer: B
60: Who should authenticate the entries in the foreign register?

A) The company secretary only
B) The board of directors
C) The company secretary or a person authorized by the Board
D) The Registrar of Companies
Answer: C
61: According to Section 95 of the Companies Act, 2013, what are the registers, indices,
and copies of annual returns maintained under sections 88 and 94 considered as?
A) Secondary evidence
B) Tertiary evidence
C) Prima facie evidence
D) Inadmissible evidence
Answer: C

62: If a person's name is in the register of members of a company, what is he deemed to

be?
A) A creditor
B) A shareholder
C) An auditor
D) A director
Answer: B
63: In Re. M.F.R.D. Cruz, what happened to the plaintiff when he did not take steps for
rectification of the register of members?
A) He received a refund of his application
B) He lost his right to have his name removed
C) He was exempted from contributing to the company
D) He was compensated for his inconvenience
Answer: B
64: What does Section 88(4) of the Companies Act, 2013 empower companies to keep?
A) Duplicate registers
B) Foreign registers of members
C) Registers of debenture holders
D) Registers of securities
Answer: B
65: What is a foreign register deemed to be in relation to the company's principal

register?
A) Independent
B) Separate
C) Distant
D) Part of
Answer: D
66: How often should entries in the foreign register be made after the approval of the
allotment or transfer of shares, debentures, or other securities?
A) Within 24 hours
B) Within 7 days
C) Within 30 days
D) Within 90 days
Answer: B
67: According to Rule 7 of the Companies (Management and Administration) Rules,

2014, what should a company do within 30 days from the date of opening a foreign
register?
A) Close the foreign register
B) File notice with the Registrar of Companies
C) File notice of closure with the Registrar
D) Transfer entries to the principal register
Answer: B

68: What is the purpose of closing the register of members as per Section 91 of the
A) To prevent new members from joining
B) To facilitate shareholder meetings
C) To update the register for dividend and bonus calculations
D) To disqualify existing members
Answer: C
69: If a company closes the register of members without giving the required notice, what
penalty may it face?
A) A maximum fine of 10,000 rupees
B) A maximum fine of 1 lakh rupees
C) A maximum fine of 5,000 rupees
D) A maximum fine of 50,000 rupees
Answer: B
70: What is an alternate option for closing the registers for the purpose of dividend or
bonus calculations?
A) Record date
B) Annual general meeting
C) Board resolution
D) Extraordinary general meeting
Answer: A
71: According to Rule 15 of the Companies (Management and Administration) Rules,

2014, how long should the register of members, along with the index, be preserved?
A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: D
72: How long should the register of debenture holders or any other security holders,
along with the index, be preserved?
A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: B
73: Who is responsible for keeping the register of members and the register of debenture
holders or other security holders in custody as per Rule 15?
A) Chairman of the company
B) The Central Government
C) The Company Secretary or an authorized person
Answer: C

74: How long should the foreign register of members be preserved?

A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: D
75: When should the foreign register of debenture holders or other security holders be
preserved for?
A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: B
76: In whose custody should the foreign register be kept?

A) Registrar of Companies
B) Company Secretary
C) The Central Government
D) The shareholders
Answer: B
77: What is the minimum preservation period for the register of debenture holders or
other security holders?
A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: B
78: When can the foreign register be discontinued?

A) After 5 years
B) After 8 years
C) After 10 years
D) When all entries are transferred to another foreign register or the principal register
Answer: D
79: Who has the authority to authorize the custody of the registers mentioned in Rule 15?
A) The shareholders
C) The Board of Directors
Answer: C

80: What is the permanent preservation period for the register of members, according to
Rule 15?
A) 5 years
B) 8 years
C) 10 years
D) Permanently
Answer: D
81: What is the term used for a person whose name is entered in the Register of Members
but does not hold any beneficial interest in the share?
A) Beneficial Owner
B) Registered Owner
C) Shareholder
D) Beneficiary
Answer: B
82: According to Section 89(1) of the Companies Act, 2013, what declaration is obligatory
for a Registered Owner?
A) Declaration of ownership
B) Declaration of beneficial interest
C) Declaration of dividend
D) Declaration of securities
Answer: B
83: What declaration is required for a person who holds or acquires beneficial interest in
a share of a company, as per Section 89(2) of the Act?
A) Declaration of income
B) Declaration of identity
C) Declaration of beneficial interest
D) Declaration of address
Answer: C
84: According to Section 89(3), when should a declaration be made in case of a change in
beneficial interest in shares?
A) Within 7 days
B) Within 15 days
C) Within 30 days
D) Within 45 days
Answer: C
85: What penalty may be imposed on a person failing to make a declaration under
Section 89(5)?
A) 10,000 rupees
B) 25,000 rupees
C) 50,000 rupees
D) 100,000 rupees
Answer: C

86: Who is responsible for making a note of the declaration received by the company in
the register of members?
B) Beneficial Owner
C) Company Secretary
D) Shareholders
Answer: C
87: According to Section 89(7), what is the penalty for a company that fails to file a return
as required?
A) 5,000 rupees
B) 10,000 rupees
C) 50,000 rupees
D) 100,000 rupees
Answer: B
88: According to Section 89(8), what is the enforceability of rights in relation to shares for
which a declaration is required but not made by the beneficial owner?
A) Rights are enforceable
B) Rights are not enforceable
C) Rights are partially enforceable
D) Rights depend on the nature of the declaration
Answer: B
89: What does Section 89(10) include in the definition of "beneficial interest in a share"?
A) Right to vote
B) Right to receive dividends
C) Right to transfer shares
D) Right to sell shares
Answer: B
90: Who has the authority to exempt certain classes of persons from complying with the
requirements of Section 89, except sub-section (10)?
C) The Company Secretary
D) The shareholders
Answer: B
91: Who is considered a "significant beneficial owner" as per Section 90(1) of the
A) Any individual holding shares in a company
B) Any individual holding at least 10% of the shares
C) Any individual holding at least 25% of the shares
D) Any individual holding less than 10% of the shares
Answer: C

92: What must a significant beneficial owner declare to the company?

A) Declaration of income
B) Declaration of interest
C) Declaration of control
D) Declaration of assets
Answer: B
93: According to Section 90, who is exempt from making the declaration as a significant
beneficial owner?
A) All individuals
B) Individuals holding less than 10% of shares
C) Individuals residing outside India
D) Individuals holding at least 25% of shares
Answer: C
94: In case of a Government company, does Section 90 apply?

A) Yes
B) No
C) It depends on the company's size
D) It depends on the government's decision
Answer: B
95: What is the revised definition of a "significant beneficial owner" as per Rule 2(h) of
the Companies (Significant Beneficial Owners) Rules, 2018?
A) Any individual holding more than 50% of the shares
B) Any individual holding at least 10% of the shares
C) Any individual holding less than 10% of the shares
D) Any individual holding less than 25% of the shares
Answer: B
96: What is the explanation provided regarding the direct holding of right and
entitlement?
A) The shares must be held in the name of the individual.
B) The individual must hold a beneficial interest in the shares.
C) The shares must be held in the name of a trust.
D) The individual must have a significant influence over the company.
Answer: A
97: Under what conditions is an individual considered to hold a right or entitlement

indirectly in a reporting company?
A) When the individual holds less than 10% of shares.
B) When the individual holds more than 50% of shares.
C) When the individual holds a majority stake in a body corporate.
D) When the individual is a government employee.
Answer: C

98: What does "acting together" mean as defined in Explanation V?

A) When individuals work together formally in a company.
B) When individuals act with a common intent or purpose pursuant to an agreement or
understanding.
C) When individuals hold more than 50% of the shares.
D) When individuals are government officials.
Answer: B
99: What does the term "shares" include for the purpose of calculating beneficial
interest?
A) Only equity shares.
B) All financial instruments.
C) Global Depository Receipts.
D) Only preference shares.
Answer: B
100: What is the definition of a "reporting company" as per Rule 2(f) of the Companies
(Significant Beneficial Owners) Rules, 2018?
A) Any company with foreign shareholders.
B) Any company required to comply with the requirements of Section 90.
C) Any company with a majority stakeholder.
D) Any government-owned company.
Answer: B
101: What is the obligation of a reporting company upon receiving a declaration from a
Significant Beneficial Owner (SBO)?
A) Filing a return in Form No. BEN-2 with the Registrar
B) Sending a notice to the SBO requesting more information
C) Issuing additional shares to the SBO
D) Paying a fee to the SBO
Answer: A
102: What are the independent obligations concerning SBO declarations for individuals
and reporting companies?
A) They have no independent obligations.
B) Individuals must declare, and reporting companies must take necessary steps.
C) Individuals must take necessary steps, and reporting companies must issue notices.
D) They both have the same obligations.
Answer: B
103: How long does a reporting company have to file a return in Form No. BEN-2 with
the Registrar upon receiving a declaration from an SBO?
A) 15 days
B) 30 days
C) 60 days
D) 90 days
Answer: B

104: According to Rule 2A(1), what steps should a reporting company take to identify an
SBO?
A) Notify the Registrar of Companies
B) File a return in Form No. BEN-1
C) Seek information from members
D) Send a notice to the central government
Answer: C
105: What action must a reporting company take if a person fails to provide the
information required by the notice in Form No. BEN-4?
A) Apply to the Tribunal for a penalty
B) Suspend the person's voting rights
C) Transfer the shares without restrictions
D) Issue additional shares to the person
Answer: A
106: Who has the opportunity to explain why they are not a significant beneficial owner
after an application is made to the Tribunal?
A) Reporting company only
B) Concerned person or member
C) Registrar of Companies
D) Central government
Answer: B
107: What does the MCA's notification dated June 09, 2021, pertain to?
A) Penalties for non-compliance with SBO rules
B) Transfer of shares to the Investor Education and Protection Fund (IEPF)
C) Reporting company registration
D) Declaration forms for SBOs
Answer: B
108: According to Rule 5 of the Companies (Significant Beneficial Owners) Rules, 2018,
what information should be included in the register of significant beneficial owners?
A) Information about company employees
B) Names of all shareholders
C) Names of individuals, their date of birth, address, ownership details, and more
D) Stock market data
Answer: C
109: What is the maximum fee a member of the company can be charged for inspecting
the register of significant beneficial owners?
A) Rs. 10
B) Rs. 25
C) Rs. 50
D) Rs. 100
Answer: C

110: Which of the following entities is NOT exempt from the applicability of the
Companies (Significant Beneficial Owners) Rules, 2018?
A) SEBI registered Investment Vehicles
B) Central Government
C) State Government
D) Mutual funds
Answer: B
111: Until when is a person entitled to exercise all the rights of a member of a company?
A) As long as they hold shares in the company
B) Until they sell their shares
C) Until they are appointed as a receiver
D) Until they become a significant beneficial owner
Answer: A
112: What determines whether a person can exercise the rights of membership in a
company?
A) The number of shares they hold
B) Whether they have pledged their shares
C) Their name being registered as a member
D) Their appointment as a director
Answer: C
113: What is the time limit for filing an application for rectification of the register of
members under the Limitation Act?
A) 1 year
B) 2 years
C) 3 years
D) 5 years
Answer: C
114: Which of the following is NOT considered an individual right of a member?

A) Right to transfer shares
B) Right to receive copies of financial statements
C) Right to inspect statutory registers
D) Right to appoint directors
Answer: D
115: What types of documents can a member request copies of from the company?
A) Financial statements, auditor's report, and general meeting notices
B) Employment contracts of directors
C) Debenture trust deeds
D) All of the above
Answer: A

116: What rights do members have regarding attending and voting at shareholders'
meetings?
A) Only majority shareholders can attend and vote
B) They can vote personally or through a proxy
C) Voting rights are determined by the number of shares held
D) They can only vote if they have received dividend payments
Answer: B
117: In what situation can members collectively apply to the Board for relief?
A) When they want to call an Extra Ordinary General Meeting
B) When the majority becomes oppressive or engages in mismanagement
C) When they want to transfer shares
D) When they need to appoint directors
Answer: B
118: What determines a member's voting right on a poll?

A) The number of shares held
B) The type of shares held (equity or preference)
C) The member's age
D) The member's residence
Answer: B
119: Which type of shareholders typically vote only on matters directly affecting their
share capital?
A) Equity shareholders
B) Preference shareholders
C) Majority shareholders
D) Minority shareholders
Answer: B
120: Under what conditions can a preference shareholder vote on all resolutions placed
before the company?
A) When they hold a majority of shares
B) When they haven't received dividends for two years or more
C) When the company issues more shares
D) When they are appointed as a director
Answer: B
121: What rights do dissenting shareholders have when the rights of any class of shares
are varied?
A) They can automatically cancel the variation
B) They can apply to the Tribunal to have the variation canceled
C) They can vote to approve the variation
D) They can sell their shares at any time
Answer: B

122: Within how many days must the application to the Tribunal be made by dissenting
shareholders after the variation of share rights?
A) 10 days
B) 21 days
C) 30 days
D) 45 days
Answer: B
123: What happens to the variation of share rights if an application is made to the
Tribunal by dissenting shareholders?
A) The variation takes effect immediately
B) The variation is automatically canceled
C) The variation is not effective until confirmed by the Tribunal
D) The variation is decided by the majority of shareholders
Answer: C
124: How can a holder of securities nominate a person to whom their securities shall vest
in the event of their death?
A) In any manner they choose
B) In writing to the company
C) Through a verbal agreement
D) By selling the securities
Answer: B
125: When securities are held jointly, how can joint holders nominate a person to whom
the rights in the securities shall vest in the event of their death?
A) They cannot make such a nomination
B) Each joint holder must nominate separately
C) Joint holders must nominate together
D) It is automatically determined by the company
Answer: C
126: What happens if a nominee's right to vest securities is not varied or cancelled?
A) The nominee can immediately sell the securities
B) The nominee is entitled to all rights in the securities upon the death of the holder
C) The nominee loses all rights in the securities
D) The nominee must vote on all company resolutions
Answer: B
127: What action can be taken if a nominee is a minor?

A) The nominee's rights are automatically cancelled
B) The nominee must immediately transfer the securities
C) The holder of the securities can appoint another person to receive the securities
D) The nominee's rights remain unchanged
Answer: C

128: What is the role of Rule 19 of the Companies (Share Capital and debentures) Rules,
2014?
A) To restrict nominations by securities holders
B) To define the rights of shareholders
C) To provide guidance on voting rights
D) To regulate nomination by securities holders
Answer: D
129: What does shareholders' democracy mean in the corporate context?

A) Shareholders have no say in corporate governance
B) Shareholders have absolute power over the board of directors
C) Shareholders have a say in corporate governance either directly or through elected
representatives
D) Shareholders have no rights in the corporate world
Answer: C
130: What is the primary role of the Board of Directors in a company, as defined under
the Companies Act?
A) To have ultimate control over all aspects of the company
B) To exercise all powers and do all acts and things that the company is authorized to do
C) To make all decisions without any input from shareholders
D) To ensure that shareholders have no influence in company matters
Answer: B
131: Which of the following is NOT an example of a business decision that typically
requires shareholder approval?
A) Alteration of Memorandum of Association and Articles of Association
B) Payment of commission to a director
C) To shift the registered office of the company outside the local limits
D) Appointment of directors
Answer: B
132: What obligation does the Act place on directors concerning General Meetings?
A) Directors must attend all General Meetings
B) Directors must send notices for convening General Meetings
C) Directors must approve all resolutions passed at General Meetings
D) Directors have no obligations concerning General Meetings
Answer: B
133: Which of the following duties are NOT determined by the courts as duties of a
director?
A) Duty of utmost care and skill
B) Duty to act in the interest of the company
C) Duty to maximize personal profit
D) Duty to not exercise powers for collateral benefit
Answer: C

134: What are rights attached to a class of shares known as?

A) Shareholder's rights
B) Classifications
C) Special rights
D) Class rights
Answer: D
135: Which of the following is NOT a type of shareholder's right?

A) Dividend rights
B) Voting rights
C) Return of capital rights
D) Auditing rights
Answer: D
136: Under what circumstances can the rights attached to a class of shares be varied?
A) With the consent of one-fourth of the shareholders of that class
B) Only if expressly allowed in the company's Articles of Association
C) With the consent of three-fourths of the shareholders of that class or by a special resolution
D) Rights cannot be varied under any circumstances
Answer: C
137: In a company with unlimited liability, what is the liability of each member?
A) Liability is limited to the nominal value of their shares
B) Liability is limited to a specified contribution in the event of winding up
C) Liability is unlimited for all the company's debts during their membership
D) Liability is limited to the amount of the shares they hold
Answer: C
138: What happens if a member ceases to be a member within one year prior to the
commencement of the company's winding up?
A) They have no liability
B) They are liable for the full nominal value of the shares they held
C) They are liable for any debts incurred during their membership
D) They are liable only if they voluntarily contribute
Answer: B
139: When can a person be liable as a member even after transferring their shares?
A) If the transfer was not done in writing
B) If the transfer was not approved by the company's board
C) If the name of the transferee is not placed on the register of members
D) If the shares were transferred to a fictitious person
Answer: C
140: Under what circumstances can the Tribunal direct that the liability of the members
shall be unlimited?
A) If a member fails to attend General Meetings
B) If the company is unable to pay its debts

C) If a member ceases to be a member within one year prior to the winding up

D) If the company was incorporated through fraudulent actions
Answer: D
141: What does SHA stand for in the context of business agreements?
A) Shareholders' Authority
B) Shareholder Agreement
C) Shareholder Arrangement
D) Shareholder Authorization
Answer: B
142: In which situations are shareholders' agreements commonly entered into?

A) Only in public companies
B) Only in family-owned businesses
C) In various situations such as family companies, JV companies, and venture capital
investments
D) Only in private equity investments
Answer: C
143: What is the primary purpose of a shareholders' agreement?

A) To operate the company
B) To define the rights and obligations of shareholders
C) To establish the company's Articles of Association
D) To register the company with the government
Answer: B
144: In terms of enforceability, what is the general stance of Indian courts regarding
shareholders' agreements?
A) They always enforce all clauses in shareholders' agreements.
B) They generally Favor shareholders' agreements unless they are detrimental to minority
stakeholders.
C) They never recognize clauses in shareholders' agreements.
D) They enforce clauses in shareholders' agreements only if they are incorporated in the
company's articles of association.
Answer: D
145: In which case did the House of Lords find that shareholders could agree on how
they would exercise their voting rights to alter the articles/constitution?
A) Russell v. Northern Bank Development Corporation Ltd
B) Blount v. Taft
C) Foss vs. Harbottle
D) V.B. Rangaraj v. V.B. Gopalakrishnan
Answer: A

146: According to the Companies Act, 2013, what percentage of members in number
must approve related-party transactions through a resolution?
A) 25%
B) 50%
C) 75%
D) 90% or more
Answer: D
147: What is the key difference between veto power and casting vote?
A) Veto power is exercised by the Chairman, while casting vote is exercised by shareholders.
B) Veto power is used to prevent any change, while casting vote breaks a tie.
C) Veto power is always used in favor of the majority shareholders, while casting vote is used for
minority shareholders.
D) There is no difference between veto power and casting vote.
Answer: B
148: How does the Companies Act, 2013 define the nature of property in the shares of a
company?
A) Shares are considered real property.
B) Shares are considered immovable property.
C) Shares are considered movable property.
D) Shares are considered tangible property.
Answer: C
149: According to Section 44 of the Companies Act, 2013, what is necessary for a
company to refuse the transfer of shares?
A) Approval from the majority shareholders
B) Approval from the Chairman
C) Approval from the company's articles
D) Approval from the government
Answer: C
150: What is the general rule regarding the transfer of shares between a buyer and seller?
A) The buyer is entitled to all dividends declared after the contract of sale.
B) The seller is entitled to all dividends declared after the contract of sale.
C) The dividends are divided equally between the buyer and seller.
D) Dividends are not applicable to transferred shares.
Answer: A

6] Debt Instruments – Concepts
1: What is borrowing in the context of finance?

A) Lending money to others
B) Obtaining or receiving money on loan with the promise to repay
C) Earning interest on savings
D) Investing in stocks
Answer: B
2: Why do individuals and businesses borrow money?

A) To lend it to others at a higher interest rate
B) To invest in stocks and bonds
C) To obtain money for planned or unplanned events
D) To save money in a bank
Answer: C
3: What is the primary difference between a loan and debt?

A) A loan is repaid in instalments, while debt is repaid in a lump sum.
B) A loan is money borrowed from a bank, while debt is money raised through bonds and
debentures.
C) A loan involves interest payments, while debt does not.
D) A loan is always obtained from friends and family, while debt is from banks.
Answer: A
4: How is debt typically raised by a company?

A) By issuing equity shares
B) By accumulating profit
C) By borrowing money through bonds and debentures
D) By obtaining loans from the government
Answer: C
5: Under which section of the Companies Act, 2013, is the power to borrow money
authorized by the Board of Directors?
A) Section 179
B) Section 180
C) Section 181
D) Section 182
Answer: A
6: According to Section 179 of the Companies Act, 2013, who can the Board of Directors
delegate the power to borrow money to?
A) Shareholders
B) Government officials
C) A committee of Directors or specific company officers
D) Banks

Answer: C
7: When can the Board of Directors exercise its power to borrow money under Section
180 of the Companies Act, 2013?
A) Without the consent of the company
B) With the consent of the company by a simple majority vote
C) With the consent of the company by a special resolution
D) Without any restrictions
Answer: C
8: What does Section 180(1)(c) of the Companies Act, 2013 specify regarding borrowing
money?
A) The Board can borrow any amount of money without restrictions.
B) The company can borrow money without any consent.
C) The company cannot borrow money.
D) The company can borrow money, but it should not exceed the aggregate of its paid-up share
capital and free reserves and securities premium unless approved by a special resolution.
Answer: D
9: What is the meaning of "temporary loans" in the context of Section 180(1)(c)?

A) Loans that have no fixed repayment schedule
B) Loans that are to be repaid within six months from the date of the loan
C) Long-term loans used for capital expenditure
D) Loans obtained from friends and family
Answer: B
10: According to an exemption notification, which type of companies are exempted from
complying with the entire provisions of Section 180 of the Companies Act, 2013?
A) Public companies
B) Foreign companies
C) Private companies
D) Government companies
Answer: C
11: What does "ultra-vires" mean in the context of a company's actions?

A) Acting in accordance with the company's objectives
B) Acting within the company's legal authority and scope
C) Acting beyond the company's legal authority or outside the scope of its objectives
D) Acting with the consent of the shareholders
Answer: C
12: What is the Memorandum of Association in a company?

A) A document stating the financial objectives of the company
B) A legal document that sets out the company's constitution and objectives
C) A list of shareholders in the company
D) A report on the company's financial performance
Answer: B

13: What is the consequence of an ultra-vires act?

A) It is considered a valid and binding action of the company.
B) It is null and void from the beginning.
C) It can be ratified by shareholders.
D) It is legally enforceable.
Answer: B
14: What is the legal term for restraining a company from using money borrowed through
ultra-vires acts?
A) Ratification
B) Subrogation
C) Estoppel
D) Injunction
Answer: D
15: What is subrogation in the context of ultra-vires borrowing?

A) The lender's right to prevent the company from using the borrowed money.
B) The lender's right to sue the directors for misrepresentation.
C) The lender's right to recover the loan from the company if the borrowed money was used to
pay lawful debts.
D) The lender's right to convert an ultra-vires act into an intra-vires act.
Answer: C
16: Intra-vires borrowing but outside the scope of agents' authority refers to:
A) Borrowing money beyond the company's legal authority.
B) Borrowing money within the company's legal authority but without directorial approval.
C) Borrowing money with the consent of shareholders.
D) Borrowing money for capital expenditure.
Answer: B
17: When is intra-vires borrowing but outside the scope of agents' authority binding on
the company?
A) When the company refuses to ratify the agent's act.
B) When the agent acts in bad faith.
C) When the agent's lack of authority is clear from public documents.
D) When the agent's lack of authority is not obvious from public documents.
Answer: D
18: What protects a lender in cases of intra-vires borrowing but outside the scope of
agents' authority?
A) Estoppel
B) Ratification
C) Indoor Management doctrine
D) Ultra-vires doctrine
Answer: C

19: According to the doctrine of Indoor Management, who is protected if the agent's lack
of authority is not clear from public documents?
A) The lender
B) The company
C) The shareholders
D) The agent
Answer: A
20: What is the significance of the Memorandum and Articles of Association in

determining liability in intra-vires borrowing cases?
A) They protect the lender regardless of the circumstances.
B) They provide clear guidance on borrowing limits.
C) They establish the company's financial objectives.
D) They determine whether the lender is protected based on the agent's authority.
Answer: D
21: What type of borrowing typically represents money borrowed for a period of five years
or more?
A) Short-term Borrowing
B) Medium Term Borrowing
C) Secured Borrowing
D) Long-term Borrowing
Answer: D
22: Which type of borrowing is primarily used to meet working capital needs and has to
be paid off within a year?
A) Long-term Borrowing
B) Medium Term Borrowing
C) Short-term Borrowing
D) Secured Borrowing
Answer: C
23: What is the main characteristic of secured borrowing?

A) It has no collateral issued against it.
B) It consists of financial obligations.
C) Creditors have recourse to the company's assets ahead of general claims.
D) It is borrowed for a period ranging from one to five years.
Answer: C
24: What is the key difference between secured borrowing and unsecured borrowing?
A) Secured borrowing has no specified interest rate, while unsecured borrowing does.
B) Unsecured borrowing is backed by collateral, while secured borrowing is not.
C) Unsecured borrowing consists of financial obligations, while secured borrowing does not.
D) Secured borrowing relies on creditworthiness, while unsecured borrowing does not.
Answer: B

25: What is syndicated borrowing?

A) Borrowing from a single bank or financial institution
B) Borrowing from a public exchange
C) Borrowing from a group of lenders under a single agreement
D) Borrowing from a government agency
Answer: C
26: What is bilateral borrowing?

A) Borrowing from a public exchange
B) Borrowing from a group of lenders under a single agreement
C) Borrowing from a particular bank or financial institution
D) Borrowing from multiple banks simultaneously
Answer: C
27: What is private borrowing?

A) Borrowing from a public exchange
B) Borrowing from a group of lenders under a single agreement
C) Borrowing from a bank or financial institution
D) Borrowing from a government agency
Answer: C
Question 28: What is public borrowing?

A) Borrowing from a group of lenders under a single agreement
B) Borrowing from a government agency
C) Borrowing from a public exchange
D) Borrowing from a particular bank or financial institution
Answer: C
29: Which financial instrument is considered a form of debt security and is freely
tradable on public exchanges?
A) Debentures
B) Bonds
C) Convertible debt instruments
D) Equity shares
Answer: B
30: What is the primary difference between debentures and equity shares?
A) Debentures represent ownership in a company, while equity shares represent debt.
B) Debenture holders have voting rights, while equity shareholders do not.
C) Debentures are a form of debt with specified interest, while equity shares represent
ownership.
D) Equity shareholders receive interest payments, while debenture holders do not.
Answer: C
31: What is the primary difference between bonds and debentures?

A) Bonds are issued by governments, while debentures are issued by corporations.
B) Bonds are a form of debt with specified interest, while debentures represent ownership.

C) Bonds represent ownership in a company, while debentures represent debt.

D) Bonds have no collateral backing, while debentures are backed by collateral.
Answer: B
32: Which term is used interchangeably with debentures, bonds, loan stock, or note in
some countries?
A) Collateral
B) Security receipts
C) Subordinated debt
D) Bond
Answer: D
33: What is the primary characteristic of debentures in terms of voting rights?

A) Debenture holders have voting rights.
B) Debenture holders have the right to attend company meetings but cannot vote.
C) Debenture holders do not have voting rights.
D) Debenture holders can only vote on specific matters.
Answer: C
34: How are interest payments to debenture holders treated in a company's financial
statements?
A) They are not accounted for in the financial statements.
B) They are considered a liability in the financial statements.
C) They are considered a part of the company's share capital.
D) They are recorded as equity.
Answer: B
35: What is the primary difference between senior debentures and subordinate
debentures?
A) Senior debentures have lower priority for repayment.
B) Subordinate debentures get paid before senior debentures.
C) Senior debentures have higher interest rates.
D) Subordinate debentures are backed by collateral.
Answer: B
36: What does the term "indebtedness" refer to in the context of debentures?
A) The inability to repay principal and interest.
B) The total amount borrowed by a company.
C) The process of issuing debentures.
D) The acknowledgement of a debt.
Answer: D
37: What are convertible debt instruments?

A) Instruments that cannot be converted into equity shares.
B) Instruments that create indebtedness but are not marketable.
C) Instruments that acknowledge a debt and can be converted into equity shares.
D) Instruments issued by the government.

Answer: C
38: Under which regulation are "convertible debt instruments" defined?

A) SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018
B) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
C) SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
D) Companies Act, 2013
Answer: A
39: What is the primary reason companies issue debentures?

A) To raise funds for corporate expansion.
B) To provide ownership shares to investors.
C) To secure a loan from financial institutions.
D) To establish a voting majority among shareholders.
Answer: A
40: What is the legal term for a document that acknowledges a debt and specifies
repayment terms?
A) Bond
B) Security receipt
C) Debenture
D) Indenture
Answer: D
41: What does the term "pari passu" imply in the context of debentures?
A) Debentures are payable according to the date of issue.
B) Debentures are discharged rateably in terms of security and assets.
C) Debentures are payable in numerical order.
D) Debentures are issued with different terms for old and new debentures.
Answer: B
42: When can a company issue a new series of debentures that rank pari passu with a
prior series?
A) Only with the approval of the company's board of directors.
B) Only if the power to do so is expressly reserved in the debentures of the previous series.
C) At any time without any specific requirement.
D) Only if the company issues them on the same day as the prior series.
Answer: B
43: What is the primary purpose of issuing debenture stock?

A) To consolidate borrowed capital into one mass for convenience.
B) To create separate bonds or mortgages for each lender.
C) To raise funds for corporate expansion.
D) To provide ownership shares to investors.
Answer: A

44: How is debenture stock generally secured?

A) By a trust deed.
B) By a bond certificate.
C) By a company's share capital.
D) By a mortgage.
Answer: A
45: Under Section 71(1) of the Act, when can a company issue debentures with an option
to convert them into shares?
A) Only when approved by the Registrar of Companies.
B) Only when approved by the company's board of directors.
C) Only when approved by a special resolution passed at a general meeting.
D) At any time without any specific approval.
Answer: C
46: According to Section 71(2) of the Act, can companies issue debentures carrying
voting rights?
A) Yes, companies can issue debentures with voting rights.
B) No, companies are not allowed to issue debentures with voting rights.
C) Companies can issue debentures with voting rights, but only with specific approval.
D) Companies can issue debentures with voting rights, but only to certain types of shareholders.
Answer: B
47: What is the maximum redemption period for secured debentures under Section 71(3)
of the Act?
A) 5 years
B) 10 years
C) 15 years
D) 30 years
Answer: B
48: When is a valuation report from a registered valuer required for the issuance of
convertible debentures?
A) Only for Non-Convertible Debentures
B) Always required for all types of debentures
C) Only if there is a dilution of shareholding
D) Never required for any type of debentures
Answer: A
49: What is the purpose of holding a Board meeting in the process of issuing debentures?
A) To approve the conversion of debentures into shares
B) To identify the group of persons to whom debentures are offered
C) To appoint a debenture trustee
D) To finalize the stamp duty for debentures
Answer: B

50: For a Public Company, what is the requirement after passing a Board Resolution for
issuing debentures?
A) File E-Form MGT-14 within 30 days
B) File a debenture trust deed with the registrar
C) Convene an Extra-Ordinary General Meeting
D) Open a separate bank account for each debenture holder
Answer: A
51: What is the purpose of opening a separate bank account for debenture applications?
A) To pay interest to debenture holders
B) To hold funds received from the application process
C) To invest the funds in securities
D) To issue debenture certificates
Answer: B
52: Which form should be used to prepare a list of persons to whom an offer to subscribe
debentures will be given?
A) Form PAS-5
B) Form MGT-2
C) Form CHG-9
D) Form PAS-4
Answer: A
53: What is the preferred mode of receiving application money for debenture
subscriptions?
A) Cash
B) Cheque or demand draft
C) Credit card
D) PayPal
Answer: B
54: How long does a company have to convene a Board meeting to consider the
allotment of debentures after receiving subscription money?
A) 30 days
B) 45 days
C) 60 days
D) 90 days
Answer: C
55: In which form should entries be made in the Register of Debenture holders?
A) Form MGT-2
B) Form CHG-7
C) Form PAS-3
D) Form PAS-5
Answer: A

56: When should entries be made in the Register of Charges for debentures?
A) Within 30 days of the Board meeting
B) Within 7 days of the Board meeting
C) Within 15 days of allotment
D) Within 90 days of the issue date
Answer: B
57: What is the maximum time frame for issuing debenture certificates after allotment?
A) 3 months
B) 6 months
C) 9 months
D) 12 months
Answer: B
58: What is the primary purpose of Debenture Redemption Reserve (DRR)?

A) To maximize shareholder dividends
B) To minimize the risk of default on debenture repayment
C) To increase the company's liquidity
D) To invest in government securities
Answer: B
59: What are the two components of DRR?

A) Earmarking of funds and dividend distribution
B) Earmarking of funds and investment of funds
C) Profit allocation and dividend distribution
D) Profit allocation and investment of funds
Answer: B
60: Why might a company face default on debenture repayment at maturity?

A) Lack of profitability and lack of liquidity
B) Excessive profitability and lack of liquidity
C) Lack of profitability and excessive liquidity
D) Lack of profitability and high dividend payments
Answer: A
61: What is the primary effect of setting aside a portion of the profit for DRR?
A) Increase in shareholder dividends
B) Reduction in the chance of default due to profitability issues
C) Increase in the company's liquidity
D) Decrease in the company's assets
Answer: B
62: What kind of investments can be purchased for DRR, as per the government's
approval?
A) Any investment
B) Only government securities
C) Only stocks and bonds

D) Any investment approved by the company's board

Answer: B
63: According to Section 71(4) of the Companies Act 2013, what is the requirement
regarding the utilization of the amount credited to DRR?
A) The amount can be used for any corporate purpose.
B) The amount must be used to pay dividends to shareholders.
C) The amount can only be used for the redemption of debentures.
D) The amount must be reinvested in the company.
Answer: C
64: What is the minimum adequacy requirement for DRR for unlisted companies?
A) 5% of the value of outstanding debentures
B) 10% of the value of outstanding debentures
C) 15% of the value of outstanding debentures
D) 20% of the value of outstanding debentures
Answer: B
65: When should investments or deposits be made in respect of debentures maturing

during the year?
A) On or before the 31st day of March of the current year
B) On or before the 30th day of April of the current year
C) On or before the 31st day of December of the current year
D) On or before the 15th day of February of the current year
Answer: B
66: What is the purpose of disclosing the amount transferred to Debenture Redemption
Reserve in the Director's Report?
A) To attract investors
B) To showcase the company's profitability
C) To provide transparency to stakeholders
D) To determine dividend payouts
Answer: C
67: In case of partly convertible debentures, when should Debenture Redemption

Reserve be created?
A) Only for the convertible portion
B) Only for the non-convertible portion
C) For both convertible and non-convertible portions
D) Not required for partly convertible debentures
Answer: B
68: What is the primary purpose of the Debenture Redemption Reserve (DRR)?
A) To maximize shareholder dividends
C) To invest in speculative assets
D) To provide liquidity to shareholders

Answer: B
69: Which of the following statements regarding DRR is correct?

A) DRR is created to increase shareholder dividends.
B) DRR is established to provide additional liquidity to the company.
C) DRR helps reduce the risk of default on debenture repayment.
D) DRR is used to make speculative investments.
Answer: C
70: What components are involved in creating the Debenture Redemption Reserve
(DRR)?
A) Allocation of profits and purchasing securities
B) Earmarking of funds and dividend distribution
C) Setting aside a portion of the profit and investment of funds
D) Paying off other liabilities and issuing new debentures
Answer: C
71: How does the DRR help minimize the risk of default on debenture repayment?
A) By maximizing dividend distribution
B) By reducing shareholder equity
C) By ensuring adequate profits are available
D) By investing in high-risk assets
Answer: C
72: What types of investments are allowed to be purchased for DRR?

A) Any type of investment
B) Only government-approved securities
C) Only real estate properties
D) Only stocks and bonds
Answer: B
73: According to Rule 18(7) of the Companies (Share Capital and Debenture) Rules, 2014,
when should companies invest or deposit funds in respect of debentures maturing
during the year?
A) On or before the 30th day of April
B) On or before the 31st day of March
C) On or before the 31st day of December
D) On or before the 15th day of February
Answer: A
74: What is the minimum adequacy requirement for DRR for unlisted companies?
A) 5% of the value of outstanding debentures
B) 10% of the value of outstanding debentures
C) 15% of the value of outstanding debentures
D) 20% of the value of outstanding debentures
Answer: B

75: When can the amount credited to Debenture Redemption Reserve be utilized by the
company?
A) For any corporate purpose
B) Only for the redemption of debentures
C) For dividend payments to shareholders
D) For speculative investments
Answer: B
76: Why is it important to disclose the amount transferred to Debenture Redemption

Reserve in the Director's Report?
A) To attract potential employees
B) To comply with legal requirements
C) To avoid taxation
D) To promote new products
Answer: B
77: In case of partly convertible debentures, when should Debenture Redemption

Reserve be created?
A) Only for the convertible portion
B) Only for the non-convertible portion
C) For both convertible and non-convertible portions
D) Not required for partly convertible debentures
Answer: B
78: How many debenture trustees must a company appoint before issuing debentures to
the public or its members?
A) One debenture trustee
B) Two debenture trustees
C) Three debenture trustees
D) As many as required by the company
Answer: A
79: What information about debenture trustees must be included in the letter of offer
inviting subscription for debentures?
A) None
B) Names of trustees are not required
C) Names of trustees are required
D) Only one trustee's name is required
Answer: C
80: Under what condition can a person be appointed as a debenture trustee?

A) If they hold shares in the company
B) If they are a promoter, director, or key managerial personnel of the company
C) If they have a pecuniary relationship with the company
D) If they have guaranteed the principal debts secured by the debentures
Answer: C

81: When can a casual vacancy in the office of a debenture trustee be filled by the Board?
A) Only with the written consent of the majority of debenture holders
B) Whenever the Board decides
C) After a waiting period of 30 days
D) Without any formal process
Answer: B
82: How can a debenture trustee be removed from office before the expiry of their term?
A) By the majority vote of debenture holders
B) By the company's Board of Directors
C) Automatically after a certain period
D) Only with the trustee's consent
Answer: A
83: What is the primary duty of a debenture trustee regarding the letter of offer for
debentures?
A) Ensuring it maximizes shareholder value
B) Verifying that it is consistent with the trust deed
C) Increasing the company's profitability
D) Distributing it to debenture holders
Answer: B
84: In what circumstances can a debenture trustee appoint a nominee director on the
company's Board?
A) In case of any default in interest payment
B) In case of two consecutive defaults in interest payment
C) In case of a decrease in share price
D) In case of shareholder complaints
Answer: B
85: What role does a debenture trustee play in the event of the security becoming
enforceable?
A) They initiate legal action against the company
B) They take control of the company's assets
C) They communicate with shareholders
D) They ensure the security is not enforced
Answer: D
86: When can a meeting of all debenture holders be convened?

A) At any time as deemed necessary by the debenture trustee
B) On the request of debenture holders holding at least one-tenth in value of the debentures
C) Only if approved by the company's Board of Directors
D) During the annual general meeting of the company
Answer: B

87: What is the minimum threshold for debenture holders' value required to requisition a
meeting of all debenture holders?
A) One-fifth in value of the debentures
B) One-tenth in value of the debentures
C) One-half in value of the debentures
D) Two-thirds in value of the debentures
Answer: B
88: What event can trigger the convening of a meeting of all debenture holders,
according to Rule 18(4)?
A) A change in the company's logo
B) A decrease in the company's share price
C) A breach of the trust deed covenants
D) A change in the company's CEO
Answer: C
89: What is the primary purpose of convening a meeting of all debenture holders?
A) To discuss company profitability
B) To approve new company policies
C) To resolve grievances of debenture holders
D) To elect new debenture trustees
Answer: C
90: What is the role of the debenture trustee regarding the trust deed's covenants?
A) To ensure they are favourable to the company
B) To call for their periodic review
C) To modify them without notice
D) To ignore them for the benefit of debenture holders
Answer: B
91: What is the primary purpose of earmarking a portion of the profit for the Debenture
Redemption Reserve (DRR)?
A) To increase dividends to shareholders
B) To fund future business expansion
C) To ensure funds are available for debenture redemption
D) To invest in government securities
Answer: C
92: How does the creation of a DRR affect the dividends available to shareholders?
A) It increases dividends
B) It reduces dividends
C) It has no impact on dividends
D) It depends on government regulations
Answer: B

93: What is the primary reason for introducing the concept of a Debenture Redemption
Reserve (DRR)?
A) To maximize company profits
C) To attract more investors
D) To fund marketing campaigns
Answer: B
94: What percentage of the amount of debentures maturing during the year must
companies invest or deposit as per Rule 18(7)?
A) 5%
B) 10%
C) 15%
D) 20%
Answer: C
95: Which of the following methods is NOT allowed for investments or deposits from the
Debenture Redemption Reserve?
A) Deposits with any scheduled bank
B) Unencumbered securities of the Central Government or any State Government
C) Unencumbered bonds issued by any other company
D) Investment in the company's own shares
Answer: D
96: When must a meeting of all the debenture holders be convened according to Rule
18(4)?
A) Whenever the company's CEO resigns
B) Whenever the company wants to discuss new products
C) Whenever requested by debenture holders holding at least one-fifth in value of the debentures
D) At the company's annual general meeting
Answer: C
97: What condition must be met for a debenture trustee to be removed from office before
the expiry of their term?
A) Approval by the company's Board of Directors
B) Written consent of the debenture trustee
C) Majority vote of debenture holders holding at least three-fourths in value of the debentures
D) Automatic removal after one year
Answer: C
98: What is the primary purpose of the Debenture Redemption Reserve (DRR)?
A) To finance company expansions
B) To provide liquidity to shareholders
C) To minimize the risk of default on debenture repayment
D) To invest in risky assets
Answer: C

99: What role does a debenture trustee play in ensuring that debentures are converted or
redeemed in accordance with the terms of the issue?
A) None
B) They actively facilitate the conversion or redemption process
C) They make suggestions but have no active role
D) They appoint a nominee director to oversee the process
Answer: A
100: What information must be disclosed in the Directors' Report regarding the
Debenture Redemption Reserve (DRR)?
A) The amount transferred as DRR
B) The names of debenture trustees
C) The company's share price
D) The company's annual revenue
Answer: A
101: What is the purpose of a debenture trust deed?

A) To attract new shareholders
B) To define the company's logo
C) To appoint a CEO
D) To appoint a debenture trustee and define their role
Answer: D
102: How many debenture trustees must a company appoint before offering debentures
for public subscription?
A) At least one
B) At least two
C) At least five
D) As many as the company wants
Answer: A
103: When must a company execute a debenture trust deed to protect the interest of
debenture holders?
A) Within 30 days of the allotment of debentures
B) Within 60 days of the allotment of debentures
C) Within 90 days of the allotment of debentures
D) Within 120 days of the allotment of debentures
Answer: B
104: What is the primary purpose of Section 71(8) of the Companies Act 2013?
A) To define the company's obligations
B) To define the role of the debenture trustee
C) To define the conditions for issuing debentures
D) To ensure companies pay interest and redeem debentures as per the terms and conditions
Answer: D

105: What is included in a Trust Deed in Form SH-12?

A) Company's annual revenue
B) CEO's salary details
C) Description of debenture issue, details of charge created, particulars of debenture trustee,
events of defaults, obligations of the company, miscellaneous
D) Details of company shareholders
Answer: C
106: According to Section 71(7) of the Companies Act, 2013, what happens to provisions
in a trust deed that attempt to exempt or indemnify a trustee against liability for breach
of trust?
A) They are considered valid and enforceable
B) They are void if the trustee is diligent
C) They are void, regardless of the trustee's diligence
D) They are void if the trustee is not a company employee
Answer: C
107: How can the liability of a debenture trustee be subject to exemptions?

A) Through a majority vote of debenture holders holding not less than three-fourths in value of
the total debentures
B) Through a majority vote of the company's Board of Directors
C) Through a majority vote of shareholders
D) Through automatic exemptions defined in the Companies Act
Answer: A
108: What rights do members or debenture holders have regarding the inspection of a
trust deed?
A) No rights to inspect it
B) They can inspect it, but only at the company's annual general meeting
C) They can inspect it in the same manner as the register of members, upon payment of a fee
D) They can only request a summary of the trust deed
Answer: C
109: When can a debenture trustee file a petition before the Tribunal in the event of
insufficient company assets?
A) At any time
B) After informing the company's CEO
C) When debenture holders holding at least one-third in value of the total debentures request it
D) When assets become insufficient to discharge the principal amount as and when it becomes
due
Answer: D
110: What happens if a company fails to redeem debentures on their maturity date or fails
to pay interest on the debentures when due?
A) The CEO is removed from office
B) Shareholders vote on new debenture terms

C) The Tribunal may order the company to redeem the debentures on payment of principal and
interest
D) The debenture trustee takes over the company
Answer: C
111: How can a contract with the company to take up and pay for any debentures of the
company be enforced?
A) Through negotiation with the company's CEO
B) Through a majority vote of shareholders
C) Through a decree for specific performance
D) Through automatic enforcement defined in the Companies Act
Answer: C
112: When do the provisions of Rule 18 of the Companies (Share Capital and Debentures)
Rules, 2014 not apply?
A) They always apply to all situations
B) They never apply to any situation
C) They do not apply to amounts received for commercial paper or foreign currency bonds
D) They do not apply to any financial transactions
Answer: C
113: What is the main purpose of a debenture trust deed?

A) To attract new investors
B) To appoint a CEO
C) To define the role of the Board of Directors
D) To protect the interest of debenture holders before offering debentures for public
subscription
Answer: D
114: How can a company raise funds according to the provided information?
A) By issuing debentures
B) By inviting deposits from the public
C) By appointing a CEO
D) By accepting loans only
Answer: B
115: Which sections of the Companies Act, 2013 regulate the receipt, invitation,
acceptance, and repayment of deposits by companies?
A) Sections 50 to 53
B) Sections 73 to 76
C) Sections 90 to 94
D) Sections 110 to 113
Answer: B

116: How is "deposit" defined according to Section 2(31) of the Companies Act, 2013?
A) Any payment received by a company in any form
B) Any receipt of money by way of deposit or loan or in any other form by a company, excluding
specific exclusions
C) Any amount received from shareholders
D) Any amount received from the Central Government
Answer: B
117: Which of the following is NOT excluded from the definition of "deposit" according
to Section 2(31) of the Companies Act, 2013?
A) Amount received from foreign Governments
B) Amount received from statutory authorities
C) Amount received from foreign banks
D) Amount received from a local authority
Answer: C
118: What is the maximum period within which securities applied for must be allotted,
according to the provided information?
A) 30 days
B) 45 days
C) 60 days
D) 90 days
Answer: C
119: Under what conditions would an amount received from a person who is a director of
the company or a relative of the director be considered a deposit?
A) If it is received for any purpose
B) If it is received without a written declaration
C) If it is not being given out of funds acquired by borrowing or accepting loans or deposits
from others
D) If it exceeds Rs. 10,000
Answer: C
120: When is an amount raised by the issue of bonds or debentures secured by a first
charge on assets NOT considered a deposit?
A) When it's secured by intangible assets
B) When the market value of the assets exceeds the amount
C) When it's not secured by any assets
D) When it's convertible into shares within five years
Answer: B
121: What is the minimum period for which an amount should be received in advance to
avoid being considered a deposit?
A) 30 days
B) 60 days
C) 180 days
D) 365 days

Answer: D
122: What is the main purpose of an eligible company in the context of accepting
deposits?
A) To generate more revenue
B) To attract more investors
C) To meet the specified net worth and turnover criteria
D) To eliminate the need for special resolutions
Answer: C
123: According to Section 73(1) of the Companies Act, 2013, what is the prohibition
regarding deposits?
A) No company can invite deposits from the public.
B) Companies can only accept deposits from the public.
C) Companies can invite, accept, or renew deposits without any restrictions.
D) Companies can only accept deposits from the Central Government.
Answer: A
124: What type of resolution is required for an eligible company to accept deposits?
A) Ordinary resolution
B) Written resolution
C) Unanimous resolution
D) Special resolution
Answer: D
125: Which regulator has the authority to frame regulations for collective investment
schemes mentioned in the provided information?
A) Reserve Bank of India
B) Securities and Exchange Board of India
C) Central Government
D) Foreign Exchange Management Authority
Answer: B
126: What is the maximum amount that a start-up company can receive by way of a
convertible note in a single tranche, according to the provided information?
A) Rs. 10 lakh
B) Rs. 1 crore
C) Rs. 10 crore
D) Rs. 25 lakh or more
Answer: D
127: According to the Companies Act, 2013, which entity guarantees the repayment of
certain amounts and is excluded from the definition of "deposit"?
A) Foreign banks
B) State Government
C) Local authorities
D) Shareholders

Answer: B
128: In the context of deposits, what is a "nidhi company"?

A) A company that specializes in making loans to other companies
B) A financial institution regulated by the RBI
C) A mutual fund company
D) A company that accepts deposits and loans to its members
Answer: D
129: Under what condition would an amount received as a loan or facility from a banking
institution be considered a deposit?
A) If it's provided by the State Bank of India
B) If it's received under long-term projects
C) If it's an advance for the supply of goods
D) If it's from a co-operative bank
Answer: B
130: What type of resolution is required for an eligible company to accept deposits within
the limits specified under clause (c) of sub-section (1) of section 180?
A) Special resolution
B) Ordinary resolution
C) Unanimous resolution
D) No resolution is required
Answer: B
131: What is the maximum time period within which deposits, whether secured or
unsecured, must be repayable under Rule 3 of the Companies (Acceptance of Deposits)
Rules 2014?
A) 6 months to 3 years
B) 1 year to 5 years
C) 6 months to 36 months
D) 3 months to 10 years
Answer: C
132: Under what condition can deposits be accepted in joint names according to the
provided information?
A) Not permitted under any circumstances
B) Up to three joint names are allowed with specific clauses
C) Up to five joint names are allowed without any clauses
D) Only in the case of government companies
Answer: B
133: What is the maximum percentage of the aggregate of paid-up share capital, free
reserves, and securities premium account that a non-eligible company can accept or
renew as deposits according to the provided data?
A) Up to 10%
B) Up to 25%

C) Up to 35%
D) Prohibited from accepting deposits
Answer: C
134: According to Rule 3(6), what is the maximum rate of interest or brokerage that a
company can pay on deposits?
A) No maximum rate specified
B) As per the company's discretion
C) Prescribed by the Reserve Bank of India
D) Double the market interest rate
Answer: C
135: According to Rule 3(7), can a company reserve the right to alter the terms and
conditions of deposits after the circular or advertisement is issued?
A) Yes, as long as it's mentioned in the circular
B) Yes, but only if it's approved by the Registrar of Companies
C) No, not directly or indirectly
D) Only if the depositors agree to it
Answer: C
136: How often must an eligible company obtain a credit rating for the deposits it
accepts according to Rule 3(8)?
A) Once every three years
B) At least once a year
C) Whenever there is a significant change in financial position
D) Only if requested by the Registrar of Companies
Answer: B
137: If a company fails to repay deposits or interest within the specified time under
Section 74(1) and 74(2), what is the potential punishment for the company?
A) Fine ranging from 10 lakh to 1 crore rupees
B) Fine ranging from 1 crore to 10 crore rupees
C) Fine of 5% of the deposit amount
D) Imprisonment for the company's directors
Answer: B
138: What does Section 75(1) state about the liability of officers in case of failure to repay
deposits?
A) They are not liable if the deposits were accepted with good intentions.
B) They are not liable if the company is unable to repay due to financial difficulties.
C) They are personally responsible for all losses if deposits were accepted with intent to defraud.
D) Their liability is limited to the amount of their salaries.
Answer: C
139: In which form should a company file a statement of all deposits accepted before the
commencement of the Act under Section 74(1)?
A) Form DPT-1

B) Form DPT-2
C) Form DPT-3
D) Form DPT-4
Answer: A
140: Under Section 75(2), who has the right to take action against officers responsible for
accepting deposits with fraudulent intent?
B) Company shareholders
C) Company auditors
D) Any person who incurred losses due to the deposit default
Answer: D
141: What does the term "Specified IFSC Public company" refer to, as per the provided
information?
A) Any public company operating within an International Financial Services Centre
B) Any public company listed on a recognized stock exchange
C) A public company with a net worth of at least 100 crore rupees
D) A public company exempt from deposit limits
Answer: A
142: Which type of private company is exempt from the maximum limit on deposits?
A) Private companies that are subsidiaries of other companies
B) Start-up private companies for ten years from incorporation
C) Private companies with borrowings less than three times their paid-up share capital
D) Private companies that are listed on a stock exchange
Answer: B
143: What is the purpose of the deposit repayment reserve account mentioned in Section
73(2)(c)?
A) To invest in the company's expansion projects
B) To pay dividends to shareholders
C) To cover operational expenses
D) To repay deposits
Answer: D
144: Under what circumstances can deposits be accepted for repayment earlier than six
months from the date of deposit or renewal?
A) Always, without any restrictions
B) Only if the company's auditor approves
C) For short-term fund requirements, subject to certain conditions
D) If the company is in financial distress
Answer: C

145: Which organization is responsible for specifying credit rating requirements for fixed
deposits, as mentioned in Rule 3(8)?
B) Securities and Exchange Board of India
C) Insurance Regulatory and Development Authority of India
D) Ministry of Finance
Answer: A
146: What is the maximum rate of interest or brokerage that a company can pay on
deposits according to Rule 3(6)?
A) The rate set by the Ministry of Finance
B) As per the company's discretion
C) Maximum rate set by Reserve Bank of India
D) Double the market interest rate
Answer: C
147: If a company fails to repay deposits within the specified time and it is proven that
deposits were accepted with intent to defraud, who is personally responsible for losses
incurred by depositors according to Section 75(1)?
A) The company's shareholders
B) The company's auditors
C) The company's directors and officers
Answer: C
148: What percentage of the aggregate of the paid-up share capital, free reserves, and
securities premium account can an eligible company accept as deposits from its
members?
A) Up to 10%
B) Up to 25%
C) Up to 35%
D) Up to 50%
Answer: B
149: If a company does not secure deposits or secures them partially, how are such
deposits termed according to the provided data?
A) Unsecured deposits
B) Protected deposits
C) Reserved deposits
D) Government deposits
Answer: A
150: How often should a company obtain a credit rating for deposits accepted according
to Rule 3(8)?
A) Once every two years
B) At least once every six months
C) At least once a year

D) Only when requested by the Registrar of Companies

Answer: C
151: According to Rule 6, what must a company provide as security for the due
repayment of the amount of deposit and interest thereon?
A) A pledge of company shares
B) A charge on intangible assets
C) A charge on assets as referred to in Schedule III of the Act
D) A guarantee from the government
Answer: C
152: What is the maximum limit for the amount of secured deposits and interest payable,
as assessed by a registered valuer, on the market value of assets?
A) Equal to the market value
B) Double the market value
C) Triple the market value
D) Quadruple the market value
Answer: A
153: According to Section 76(1), what are the two financial criteria that make a public
company eligible to accept deposits from persons other than its members?
A) Net worth of at least 50 crore rupees and turnover of 200 crore rupees
B) Net worth of at least 100 crore rupees and turnover of 500 crore rupees
C) Net worth of at least 25 crore rupees and turnover of 100 crore rupees
D) Net worth of at least 200 crore rupees and turnover of 1,000 crore rupees
Answer: B
154: According to Section 76(1), what is the purpose of obtaining a credit rating from a
recognized credit rating agency for a company accepting secured deposits from the
public?
A) To inform the government
B) To ensure compliance with taxation laws
C) To inform the public of the company's rating
D) To secure loans from banks
Answer: C
155: What is the time frame within which a company accepting secured deposits from the
public must create a charge on its assets in favor of the deposit holders?
A) 15 days from acceptance
B) 30 days from acceptance
C) 60 days from acceptance
D) 90 days from acceptance
Answer: B

156: What type of trustees must be appointed for depositors' security, according to Rule
7?
A) Trustees with financial expertise
B) Trustees related to the company's management
C) Trustees from a separate trust company
D) Trustees for depositors, independent of the company
Answer: D
157: In what form should a deposit trust deed be executed according to Rule 7?
A) Form DPT-1
B) Form DPT-2
C) Form DPT-3
D) Form DPT-4
Answer: B
158: Who cannot be appointed as a trustee for depositors, according to Rule 7?

A) Directors of the company
B) Company's auditor
C) Employees of the company
D) Shareholders of the company
Answer: A
159: When can a trustee for depositors be removed from office after the issuance of a
circular or advertisement?
A) With the consent of a majority of depositors
B) With the consent of all the directors
C) Without any consent, at any time
D) Only with the consent of the Registrar of Companies
Answer: B
160: Under Rule 8, when should a trustee for depositors call a meeting of all the
depositors?
A) When at least 50% of depositors request it
B) When at least 10% of depositors in value request it
C) When the company faces a financial crisis
D) When the company decides to repay deposits
Answer: B
161: According to Rule 10, what declaration should an intending depositor include in the
application form for deposit?
A) Declaration of being a shareholder
B) Declaration of not being a director
C) Declaration of not borrowing the deposit money
D) Declaration of not having any relationship with the company
Answer: C

162: Who can a depositor nominate under Rule 11 in the event of their death?
A) Any person of their choice
B) Only a family member
C) The company's CEO
D) Another company director
Answer: A
163: Within what period should a company furnish a receipt for the deposit amount
received, according to Rule 12?
A) 7 days from the date of deposit
B) 21 days from the date of deposit
C) 30 days from the date of deposit
D) 90 days from the date of deposit
Answer: B
164: What is the primary purpose of creating a deposit repayment reserve account, as per
Rule 13?
A) To invest in the company's expansion projects
B) To cover operational expenses
C) To repay deposits
D) To pay dividends to shareholders
Answer: C
165: How long must a company maintain the register(s) of deposits, as per Rule 14?
A) 2 years
B) 5 years
C) 8 years
D) 10 years
Answer: C
166: In the context of the specimen resolution, what is the purpose of issuing unsecured-
convertible debentures?
A) To raise capital by selling shares
B) To invite secured deposits from members
C) To accept deposits from the public
D) To raise capital through debt securities
Answer: D
167: Which sections of the Companies Act, 2013, are mentioned as the basis for issuing
unsecured-convertible debentures in the resolution?
A) Section 42, 71
B) Section 73, 76
C) Section 80, 92
D) Section 100, 112
Answer: A

168: What entity is authorized to receive debenture allotment monies and credit them to
the company's "Limited Debenture Account"?
B) Company Secretary
C) Bank mentioned in the resolution
D) Company's auditor
Answer: C
169: Who is authorized to issue the letters of allotment or letter of regret with refund
vouchers?
A) The Chairman
B) The Board of Directors
C) The Company Secretary
D) The shareholders
Answer: C
170: What is the maximum aggregate amount for unsecured deposits that can be
accepted as per the resolution?
A) 50% of aggregate of paid-up share capital
B) Rs. 10,00,000/-
C) Rs. 1,00,00,000/-
D) 100% of aggregate of paid-up share capital, free reserves, and securities premium account
Answer: D
171: According to the resolution, who are authorized to sign the fixed deposit receipts
and other documents on behalf of the company?
A) The Chairman and the CEO
B) The Company Secretary
C) Mr./Mrs. _________ and Mr./Mrs. _________ (designation)
Answer: C
172: In the context of the resolution, what is the purpose of the fixed deposit receipts?
A) To provide security for loans
B) To track the company's expenses
C) To issue to the depositors
D) To open a bank account
Answer: C
173: What is the primary purpose of the resolution regarding acceptance of deposits?
A) To raise capital through debentures
B) To invite deposits from members
C) To issue shares to the public
D) To approve the company's budget
Answer: B

174: In the context of the resolution, what does "ordinary resolution" refer to?
A) A resolution passed by the Board of Directors
B) A resolution passed by a simple majority of members present and voting
C) A resolution passed by a supermajority of members
D) A resolution passed by the government authorities
Answer: B
175: According to the resolution, what is the maximum aggregate outstanding amount
for unsecured deposits?
A) Rs. 10,00,000/-
B) Rs. 50,00,000/-
C) Rs. 1,00,00,000/-
D) Rs. 5,00,00,000/-
Answer: C
176: What is the purpose of the resolution regarding the Board of Directors'
authorization?
A) To appoint new directors
B) To invite shareholders to the annual general meeting
C) To delegate authority for various actions related to deposit acceptance
D) To approve the company's financial statements
Answer: C
177: According to the resolution, who is authorized to make necessary entries in the
register maintained for depositors?
A) The Chairman
B) The Board of Directors
C) Mr. _________
D) The Company Secretary
Answer: C
178: What is the purpose of the register mentioned in the resolution?

A) To track the company's expenses
B) To maintain records of depositors
C) To issue share certificates
D) To track employee attendance
Answer: B
179: According to the resolution, who has the authority to do acts, deeds, and things
necessary for the invitation, acceptance, renewal, and receipts of deposits?
A) The Chairman
B) The Reserve Bank of India
C) The Board of Directors
Answer: C

180: In the context of the resolution, what is meant by "renewal/receipts"?

A) Renewing company policies
B) Renewing leases for office space
C) Renewing deposit agreements
D) Renewing company registration
Answer: C

Lesson 7] Corporate Social Responsibility
1: What does CSR stand for?

a. Corporate Social Responsibility
b. Customer Service Representative
c. Company Strategic Reform
d. Community Support and Recognition
Answer: a. Corporate Social Responsibility
2: According to the text, what is the primary focus of Corporate Social Responsibility
(CSR)?
a. Maximizing profits for shareholders
b. Addressing the needs and impact on various stakeholders, including the environment and
communities
c. Minimizing business expenses
d. Maintaining a strong marketing presence
Answer: b. Addressing the needs and impact on various stakeholders, including the environment
and communities
3: How does the text describe the concept of CSR evolving over time?
a. From philanthropy to shareholder profit
b. From social responsibility to environmental protection
c. From community investment to strategic business opportunities
d. From global expansion to charitable activities
Answer: c. From community investment to strategic business opportunities
4: In the context of CSR, what is the "Triple-Bottom-Line Approach"?

a. Focusing on profit, loss, and expenses
b. Balancing economic, environmental, and social imperatives
c. Maximizing revenue, cost, and debt management
d. Concentrating on customer satisfaction, employee well-being, and supplier relationships
Answer: b. Balancing economic, environmental, and social imperatives
5: According to the United Nations Industrial Development Organization (UNIDO),

what does CSR generally involve?
a. Maximizing shareholder wealth
b. Integrating social and environmental concerns into business operations
c. Reducing labour costs
d. Increasing competition among stakeholders
Answer: b. Integrating social and environmental concerns into business operations
6: Who advocated the "Trusteeship Concept" in the context of CSR?

a. Mahatma Gandhi
b. Nelson Mandela
c. Martin Luther King Jr.

d. Albert Einstein
Answer: a. Mahatma Gandhi
7: How does the text describe the evolution of the concept of CSR in India?
a. From profit-driven to socially responsible
b. From traditional philanthropy to inclusive growth
c. From simple charity work to complex business strategies
d. From individual efforts to corporate partnerships
Answer: b. From traditional philanthropy to inclusive growth
8: What are the six principles of responsible business conduct as outlined in the
guidelines by the National Guidelines on Responsible Business Conduct (NGRBC)?
a. Integrity, Transparency, Accountability, Quality, Efficiency, Profitability
b. Ethical, Safe, Employee-Wellbeing, Stakeholder Respect, Human Rights, Environmental
Protection
c. Customer Satisfaction, Cost Reduction, Market Share, Sales Growth, Innovation, Leadership
d. Charity, Sponsorship, Public Relations, Promotion, Advertising, Events
Answer: b. Ethical, Safe, Employee-Wellbeing, Stakeholder Respect, Human Rights,
Environmental Protection
9: Which legislative act mandates annual statutory disclosures of CSR activities by

qualifying companies in India?
a. Companies Act 2002
b. Income Tax Act 1961
c. Securities and Exchange Board of India Act 1992
d. Companies Act 2013
Answer: d. Companies Act 2013
10: What is the main goal of CSR according to the Indian government's initiatives?
a. Minimizing business involvement in social and environmental issues
b. Promoting environmental protection and social welfare
c. Eliminating philanthropic activities
d. Maximizing shareholder returns
Answer: b. Promoting environmental protection and social welfare
11: What is the "Triple-Bottom-Line Approach" in CSR?

a. Focusing on profit, cost, and revenue
b. Balancing economic, environmental, and social imperatives
c. Prioritizing customer, employee, and shareholder interests
d. Ignoring social and environmental factors
Answer: b. Balancing economic, environmental, and social imperatives
12: How is the concept of CSR different today compared to the past?
a. It's less focused on ethical practices.
b. It's more philanthropic in nature.
c. It's integrated with business operations and sustainability.
d. It's primarily a marketing strategy.

Answer: c. It's integrated with business operations and sustainability.
13: What does CSR aim to achieve according to the text?

a. Maximizing profits for shareholders.
b. Reducing business expenses.
c. Balancing economic, environmental, and social concerns.
d. Minimizing stakeholder interests.
Answer: c. Balancing economic, environmental, and social concerns.
14: What national and international developments have influenced the focus on CSR?
a. Technological advances and the growth of the internet.
b. A decrease in consumer and investor interest in responsible business practices.
c. The elimination of corporate ethics standards.
d. A shift toward maximizing shareholder profits.
Answer: a. Technological advances and the growth of the internet.
15: What role does annual statutory disclosure play in CSR?

a. It encourages companies to focus solely on profits.
b. It promotes transparency and accountability in CSR activities.
c. It reduces the need for CSR activities.
d. It discourages businesses from engaging with consumers.
Answer: b. It promotes transparency and accountability in CSR activities.
16: What does the acronym NGRBC stand for?

a. National Guidelines for Responsible Business Contribution
b. National Guidelines on Responsible Business Conduct
c. National Governance of Responsible Business Corporations
d. National Growth of Responsible Business Commitments
Answer: b. National Guidelines on Responsible Business Conduct
17: What are the core principles of responsible business conduct outlined in the NGRBC
guidelines?
a. Financial Growth, Shareholder Returns, Profit Maximization, Market Dominance, Innovation
b. Ethical, Transparent, Accountable, Sustainable, Safe, Inclusive
c. Customer Satisfaction, Cost Reduction, Market Expansion, Sales Growth, Employee
Satisfaction
d. Public Relations, Brand Promotion, Sponsorship, Events, Charitable Contributions
Answer: b. Ethical, Transparent, Accountable, Sustainable, Safe, Inclusive
18: According to the text, what was the prime mover for bringing CSR provisions within
the statute in India?
a. United Nations Guiding Principles on Business & Human Rights (UNGPs)
b. Technological advances in communication
c. Increased focus on profit maximization
d. Decreased consumer interest in CSR
Answer: a. United Nations Guiding Principles on Business & Human Rights (UNGPs)

19: What is the primary goal of CSR according to the Indian government's initiatives?
a. Maximizing shareholder wealth
b. Promoting environmental protection and social welfare
c. Reducing labour costs
d. Expanding global operations
Answer: b. Promoting environmental protection and social welfare
20: What are the two main areas emphasized in the NGRBC guidelines for businesses to
conduct themselves with integrity?
a. Financial transparency and revenue growth
b. Ethical behaviour and environmental sustainability
c. Employee well-being and stakeholder respect
d. Charitable activities and corporate social events
Answer: b. Ethical behaviour and environmental sustainability
21: How is the concept of CSR in India different today compared to the past?
a. It focuses solely on maximizing shareholder profits.
b. It emphasizes traditional philanthropy.
c. It integrates social, environmental, and human development concerns.
d. It is mostly concerned with charity work.
Answer: c. It integrates social, environmental, and human development concerns.
22: What is the role of the Indian Ministry of Corporate Affairs regarding CSR?
a. To reduce corporate taxes
b. To encourage companies to prioritize shareholder profits
c. To ensure responsible business conduct and corporate governance
d. To limit businesses' engagement with consumers
Answer: c. To ensure responsible business conduct and corporate governance
23: According to the text, what are the six principles of responsible business conduct
outlined in the NGRBC guidelines?
Protection
24: How does the Indian government encourage CSR activities in businesses?
a. By imposing heavy fines on non-compliant companies
b. By providing tax incentives and obligations on qualifying companies
c. By directly funding CSR initiatives
d. By encouraging businesses to focus solely on profit maximization
Answer: b. By providing tax incentives and obligations on qualifying companies


b. Reducing business expenses
c. Balancing economic, environmental, and social concerns
d. Minimizing stakeholder interests
Answer: c. Balancing economic, environmental, and social concerns
26: What are the two main areas emphasized in the NGRBC guidelines for businesses to
conduct themselves with integrity?
a. Financial transparency and revenue growth
b. Ethical behaviour and environmental sustainability
c. Employee well-being and stakeholder respect
d. Charitable activities and corporate social events
Answer: b. Ethical behaviour and environmental sustainability
27: According to the Indian Ministry of Corporate Affairs, what obligation does the
Companies Act 2013 place on companies regarding CSR?
a. It mandates that companies must maximize profits at all costs.
b. It requires companies to share trade secrets with the government.
c. It mandates companies to disclose their CSR activities in their Annual Report.
d. It allows companies to avoid any involvement in CSR.
Answer: c. It mandates companies to disclose their CSR activities in their Annual Report.
28: How does the Indian government encourage CSR activities in businesses?
a. By imposing heavy fines on non-compliant companies
b. By providing tax incentives and obligations on qualifying companies
c. By directly funding CSR initiatives
d. By encouraging businesses to focus solely on profit maximization
Answer: b. By providing tax incentives and obligations on qualifying companies

b. Reducing business expenses
c. Balancing economic, environmental, and social concerns
d. Minimizing stakeholder interests
Answer: c. Balancing economic, environmental, and social concerns
30: What are the six principles of responsible business conduct as outlined in the
guidelines by the National Guidelines on Responsible Business Conduct (NGRBC)?
Protection

31: What is the purpose of introducing CSR (Corporate Social Responsibility) under the
A) To increase corporate profits
B) To encourage businesses to focus on national development
C) To reduce government regulations
D) To promote international trade
Answer: B) To encourage businesses to focus on national development
32: Which companies are obligated to take initiatives towards Social, Environmental, and
Economic Responsibilities under the Companies Act, 2013?
A) Companies with any net worth
B) All companies operating in India
C) Companies with a net worth of Rs. 500 crore or more
D) Companies with a turnover of Rs. 100 crore or more
Answer: C) Companies with a net worth of Rs. 500 crore or more
33: What is the threshold for the net worth of companies that fall under the CSR
provision?
A) Rs. 500 crore or more
B) Rs. 100 crore or more
C) Rs. 1000 crore or more
D) Rs. 10000 crore or more
Answer: A) Rs. 500 crore or more
34: According to the Companies (Corporate Social Responsibility Policy) Rules, 2014,
who is obligated to comply with CSR obligations?
A) Only holding companies
B) Holding and subsidiary companies
C) Foreign companies
D) Small businesses
Answer: B) Holding and subsidiary companies
35: What is the applicable criteria for a company to comply with CSR provisions?
A) The number of employees
B) The number of customers
C) The financial worth of the company
D) The location of the company's headquarters
Answer: C) The financial worth of the company
36: When does a company need to constitute a CSR Committee?

A) When they have more than 100 employees
B) When their net worth exceeds Rs. 500 crore
C) When they want to improve their public image
D) When they launch a new product
Answer: B) When their net worth exceeds Rs. 500 crore

37: How many directors are required in a CSR Committee according to Section 135(1) of
the Act?
A) One
B) Two
C) Three or more
D) Four
Answer: C) Three or more
38: When is a company not required to appoint an independent director in the CSR
Committee?
A) When it is a private company
B) When the company is foreign-based
C) When it has only two directors on the Board
D) When the company's net worth is below Rs. 100 crore
Answer: C) When it has only two directors on the Board
39: How many directors are required in the CSR Committee of a private company with
only two directors on the Board?
A) One
B) Two
C) Three
D) Four
Answer: B) Two
40: In the case of a foreign company, how many persons should the CSR Committee
comprise?
A) One
B) Two
C) Three
D) Four
Answer: B) Two
41: What must be disclosed in the Board's report regarding CSR?

A) The names of all employees involved in CSR
B) The composition of the Corporate Social Responsibility Committee
C) The company's future profit projections
D) The company's stock price history
Answer: B) The composition of the Corporate Social Responsibility Committee
42: What does CSR stand for?

A) Corporate Social Responsibility
B) Circular and Sanitation Rules
C) Care and Social Responsibility
D) Crisis and Safety Regulations
Answer : A) Corporate Social Responsibility

43: When was the General Circular related to CSR issued?

A) January 13, 2021
B) April 22, 2021
C) May 05, 2021
D) All of the above
Answer : D) All of the above
44: What does MCA stand for in the context of CSR?

A) Medical Care Act
B) Ministry of Corporate Affairs
C) Medical Circular Authority
D) Management of Corporate Assets
Answer : B) Ministry of Corporate Affairs
45: Which CSR activity is eligible under item no. (xii) relating to disaster management?
A) Educational programs
B) Vaccination for employees
C) Promoting health care
D) Disaster management
Answer : D) Disaster management
46: What is the eligible CSR activity for vaccination mentioned in the text?
A) Vaccination for employees and their families
B) Vaccination for everyone in the community
C) Vaccination for children
D) Vaccination for elderly people
Answer : A) Vaccination for employees and their families
47: Which Circular was related to preventive health care and sanitization?
A) General Circular No. 05/2021
B) General Circular No. 09/2021
C) General Circular No. 30/2021
D) General Circular No. 13/2021
Answer : A) General Circular No. 05/2021
48: What kind of activities can companies undertake using CSR funds?
A) Activities related to sports
B) Activities only in collaboration with the government
C) Activities only in collaboration with other companies
D) Activities directly or in collaboration with others
Answer : D) Activities directly or in collaboration with others
49: Under which item number is vaccination for persons other than employees and their
families considered an eligible CSR activity?
A) (i)
B) (xii)
C) (v)

D) (viii)
Answer : B) (xii)
50: What is the main focus of the Circular dated January 13, 2021?
A) Disaster management
B) Health care promotion
C) Educational programs
D) Preventive health care
Answer : D) Preventive health care
51: What organization issues the circulars related to CSR mentioned in the text?
A) WHO (World Health Organization)
B) UNICEF
C) MCA (Ministry of Corporate Affairs)
D) CDC (Centers for Disease Control and Prevention)
Answer : C) MCA (Ministry of Corporate Affairs)
52: What does CSR stand for in the context of this text?
A) Company Services Regulations
B) Corporate Sustainability Responsibility
C) Circular and Sanitation Rules
D) Crisis and Safety Regulations
Answer : B) Corporate Sustainability Responsibility
53: What threshold criteria must every company meet as per Section 135(1)?
A) Compliance with foreign regulations
B) Compliance with labour laws
C) As prescribed under Section 135(1)
D) Annual turnover exceeding $1 million
Answer : C) As prescribed under Section 135(1)
54: What is the focus of the CSR Rules for an Indian company?
A) Environmental conservation
B) Health and safety
C) Compliance with foreign laws
D) Compliance with labour laws
Answer : B) Health and safety
55: Which type of company is considered an Indian company in the text?

A) A company with branches in India
B) A company incorporated in India
C) A foreign company operating in India
D) A government-owned company
Answer : B) A company incorporated in India

56: What is the significance of the threshold criteria mentioned in the text?
A) It determines the eligibility of a company for CSR.
B) It specifies the minimum CSR spending.
C) It regulates foreign company operations.
D) It sets compliance standards.
Answer : A) It determines the eligibility of a company for CSR.
57: What is the criterion for a foreign company to comply with CSR Rules?
A) Operating in multiple countries
B) Having a branch or project in India
C) Having a significant global presence
D) Compliance with Indian labour laws
Answer : B) Having a branch or project in India
58: Which section of the Companies Act, 2013, is specifically mentioned in the text?
A) Section 198
B) Section 305
C) Section 381
D) Section 135
Answer : A) Section 198
59: What is the purpose of the section number (i.e., 135) mentioned in the text?
A) To define the compliance requirements
B) To determine tax liabilities
C) To identify eligible companies
D) To outline CSR guidelines
Answer : C) To identify eligible companies
60: Which type of companies are exempt from the CSR computation, as stated in the
text?
A) All foreign companies
B) Indian companies with foreign branches
C) Companies with a significant global presence
D) Companies that meet the prescribed criteria
Answer : D) Companies that meet the prescribed criteria
61: What is the penalty for non-compliance with CSR provisions as of January 22, 2021?
A) Imprisonment
B) Fine
C) Both A and B
D) No penalty
Answer : B) Fine
62: When did the penal provisions related to CSR come into force according to the
Companies (Amendment) Act, 2019?
A) 2015
B) 2018

C) 2019
D) 2021
Answer : D) 2021
63: What happens to unspent CSR funds if they relate to an ongoing project and are not
spent by the end of the fiscal year?
A) They must be transferred to a Fund
B) The company can use them for other projects
C) They are subject to imprisonment
D) The funds are confiscated
Answer : B) The company can use them for other projects
64: In case the registration of a trust is not mandatory, what constitutes a "Registered
Trust"?
A) Trust registered under the Companies Act, 2013
B) Trust registered under the Income Tax Act, 1961
C) Any charitable organization
D) Trust registered under the State government
Answer : B) Trust registered under the Income Tax Act, 1961
65: When is impact assessment required for CSR projects?

A) For all CSR projects
B) For projects with a budget of over Rs. 1 crore
C) Only for new CSR projects
D) Impact assessment is not required
Answer : B) For projects with a budget of over Rs. 1 crore
66: What should the Board disclose on the company's website regarding CSR?
A) Composition of the CSR Committee
B) Company financials
C) Employee salaries
D) CSR Committee's meeting minutes
Answer : A) Composition of the CSR Committee
67: What type of projects are subject to impact assessment?

A) All projects
B) Only projects in certain states
C) Projects with budgets of Rs. 10 lakhs
D) Projects with budgets of Rs. 1 crore or more
Answer : D) Projects with budgets of Rs. 1 crore or more
68: What is the focus of CSR impact assessments?

A) Assessing the financial impact
B) Evaluating the social and environmental impact
C) Measuring the company's profits
D) None of the above
Answer : B) Evaluating the social and environmental impact

69: Where should the details of CSR activities be made available?

A) In the company's annual report
B) On the company's website
C) Both A and B
D) In a separate CSR report
Answer : C) Both A and B
70: What shift occurred regarding CSR compliance from 'comply or explain' to 'comply
or suffer'
A) The introduction of imprisonment as a penalty
B) The removal of prosecution provision
C) The amendment of Section 135(7)
D) The focus on non-mandatory CSR
Answer 10: A) The introduction of imprisonment as a penalty
71: What law should companies avoid contravening while undertaking Corporate Social
Responsibility activities?
A) Companies Act, 2013
B) Land Acquisition Act
C) Tax Act
D) Labor Laws
Answer: A) Companies Act, 2013
72: According to the provided text, what should companies avoid when involving
employees in CSR activities?
A) Encouraging employee participation
B) Monetization of pro bono services
C) Compliance with prevailing laws
D) Encouraging volunteering
Answer: B) Monetization of pro bono services
73: Which of the following does NOT count as CSR expenditure under the Companies
Act?
A) Land Acquisition
B) Encouraging employee participation
C) Contributions to the Prime Minister’s Relief Fund
D) Supporting social initiatives
Answer: A) Land Acquisition
74: What does COTPA stand for in the text?

A) Companies' Outstanding Tax Penalty Act
B) Cigarettes and Other Tobacco Products Act
C) Corporate Taxation Policy Act
D) CSR Organizational Taxation Act
Answer: B) Cigarettes and Other Tobacco Products Act

75: According to the text, what is the focus of the National CSR Awards?
A) Recognizing the companies that spend the most on CSR
B) Recognizing companies for their contributions to political campaigns
C) Recognizing companies that made a positive impact on society through innovative CSR
initiatives
D) Recognizing companies for their advertising campaigns
Answer: C) Recognizing companies that made a positive impact on society through innovative
CSR initiatives
76: In which act is the provision of CSR activities mentioned in the provided text?
A) Cigarettes and Other Tobacco Products Act
B) Land Acquisition Act
C) Companies Act, 2013
D) Taxation Act
Answer: C) Companies Act, 2013
77: What is the main purpose of involving employees in CSR activities, according to the
text?
A) To reduce CSR expenditure
B) To maximize corporate profits
C) To generate interest in Socially Responsible Corporate (SRC)
D) To discourage employees from participating in CSR activities
Answer: C) To generate interest in Socially Responsible Corporate (SRC)
78: According to the text, how many separate awards are designated for micro, small,
and medium enterprises (MSMEs) under the National CSR Awards?
A) Four
B) Five
C) Eleven
D) Zero
Answer: A) Four
79: Which act is mentioned as not counting as CSR expenditure under the Companies
Act in the provided text?
A) COTPA
B) Labor Laws
C) Companies Act, 2013
D) Tax Act
Answer: A) COTPA
80: What is the focus of the CSR Portal mentioned in the text?
A) Managing corporate taxation
B) Promoting land acquisition
C) Providing data related to Corporate Social Responsibility
D) Encouraging tobacco products
Answer: C) Providing data related to Corporate Social Responsibility

81: According to the text, what does Tata Steel aspire to be?
A) A Global Bank
B) A Global Technology Leader
C) A Global Benchmark in sustainability
D) A Global Steel Monopoly
Answer: C) A Global Benchmark in sustainability
82: How does Tata Steel support the community, according to the text?
A) By offering free medical aid
B) By providing low-cost housing
C) By monetizing services of employees
D) By selling products at discounted rates
Answer: A) By offering free medical aid
83: What was the shift in Tata Steel's approach regarding CSR activities?
A) Focusing on political campaigns
B) Giving technical support instead of monetary donations
C) Encouraging employee donations
D) Reducing social responsibilities
Answer: B) Giving technical support instead of monetary donations
84: According to the text, who believed that industries should discharge their social
responsibilities to the community?
A) J R D Tata
B) The United Nations
C) The Ministry of Corporate Affairs
D) The Chairman of Tata Steel
Answer: A) J R D Tata
85: In what way does Tata Steel give back to the community?
A) Through financial support
B) Through political involvement
C) Through marketing campaigns
D) Through international partnerships
Answer: A) Through financial support
86: According to the text, what organization does Tata Steel support and propagate the
principles of?
A) United Nations Global Compact
B) World Health Organization
C) Confederation of Indian Industry
D) Tata Steel Global Foundation
Answer: A) United Nations Global Compact
87: What is of utmost importance to the way of life at Tata Steel?

A) Employee benefits
B) Social and economic factors

C) Environmental sustainability
D) Weather conditions
Answer: B) Social and economic factors
88: Where do Tata Steel's CSR activities in India reach?

A) Just in Jamshedpur
B) Across India
C) Limited to the city of Jamshedpur
D) Across multiple states
Answer: D) Across multiple states
89: In what form does community involvement usually take place for Tata Steel?
A) Political campaigns
B) Social media campaigns
C) Financial support
D) Employee donations
Answer: C) Financial support
90: Which policy guides Tata Steel in its CSR activities?

A) International Trade Policy
B) Health and Safety Policy
C) Corporate Social Responsibility and Accountability Policy
D) Environmental Protection Policy
Answer: C) Corporate Social Responsibility and Accountability Policy
91: What percentage of CSR expenditure is prescribed under the Companies Act for
companies like Tata Steel?
A) 5%
B) 2%
C) 10%
D) 1%
Answer: B) 2%
92: In which year did Tata Steel institute an eight-hour workday?

A) 1915
B) 1917
C) 1920
D) 1912
Answer: D) 1912
93: What is the main principle that guides Tata Steel in its corporate social responsibility
efforts?
A) Maximizing profits
B) Combining social, environmental, and economic elements
C) Reducing social responsibilities
D) Donating a fixed percentage of profits
Answer: B) Combining social, environmental, and economic elements

94: Tata Steel's CSR activities reach out to which states in India, as mentioned in the
text?
A) All states in India
B) West Bengal and Jharkhand
C) Jharkhand, Odisha, and Chhattisgarh
D) Karnataka and Andhra Pradesh
Answer: C) Jharkhand, Odisha, and Chhattisgarh
95: Which organization's principles does Tata Steel support and propagate?
A) International Monetary Fund
B) World Bank
C) United Nations Global Compact
D) Red Cross
Answer: C) United Nations Global Compact
96: What was the primary focus of Tata Steel's CSR programs after the shift in approach?
A) Political lobbying
B) Providing free housing
C) Offering technical support
D) Reducing CSR expenditure
Answer: C) Offering technical support
97: In which city does Tata Steel primarily operate and support the community?
A) Delhi
B) Kolkata
C) Mumbai
D) Jamshedpur
Answer: D) Jamshedpur
98: What is the primary focus of Tata Steel's CSR activities?

A) Maximizing shareholder returns
B) Creating shareholder value
C) Enhancing the quality of life of people
D) Marketing and branding
Answer: C) Enhancing the quality of life of people
99: Which department at Tata Steel focuses on sports?

A) Human Resources
B) Education
C) Medical Services
D) Sports Department
Answer: D) Sports Department
100: Which organization is mentioned in the text as a partner with Tata Steel in its CSR
efforts?
A) The United Nations

B) The Ministry of Corporate Affairs

C) The World Health Organization
D) The Government and local NGOs
Answer: D) The Government and local NGOs
101: What was the main violation committed by Apurvanatvar & Company India (P)
Limited as per Section 135 of the Companies Act, 2013?
A) Violation of Section 135(5)
B) Failure to disclose details in the Financial Year 2014-15
C) Failure to constitute a CSR Committee
D) Violation of Section 134(3)(o)
Answer: B) Failure to disclose details in the Financial Year 2014-15
102: According to Section 135(5) of the Act, when are companies required to spend on
corporate social responsibility (CSR)?
A) If they have net worth of Rs. Five Hundred Crore or more
B) If their turnover is Rs. One thousand crore or more
C) If they have net worth of Rs. One thousand crore or more
D) If their turnover is Rs. Five Hundred Crore or more
Answer: A) If they have net worth of Rs. Five Hundred Crore or more
103: What was the amount the company was required to spend towards its Corporate
Social Responsibility objectives in the F.Y. 2015-16 as per Section 135 of the Act?
A) Rs. 5,26,047.30
B) Rs. 1,000,000
C) Rs. 10,000
D) Rs. 100,000
Answer: A) Rs. 5,26,047.30
104: What was the default error committed by the company in the Financial Year 2015-
2016, and how did they rectify it?
A) Failure to spend the required amount; rectified by sending a reply to the ROC
B) Failure to constitute the CSR Committee; rectified by amending the CSR policy
C) Failure to disclose details in the Financial Year 2014-15; rectified by making the necessary
disclosures
D) Failure to spend on CSR objectives; rectified by constituting the CSR Committee
Answer: C) Failure to disclose details in the Financial Year 2014-15; rectified by making the
necessary disclosures
105: What is the penalty for companies that fail to spend on corporate social
responsibility as per Section 135 of the Companies Act, 2013?
A) Imprisonment for the directors
B) A fine for the company
C) Suspension of business operations
D) Revocation of the company's registration
Answer: B) A fine for the company

106: According to Section 134(3)(o), what is the requirement if a company fails to comply
with the provision of Section 135(5)?
A) The Board shall specify the reasons for non-compliance
B) The Board shall suspend CSR activities
C) The company's registration will be revoked
D) The company's net worth will be reduced
Answer: A) The Board shall specify the reasons for non-compliance
107: What was the date of creation or acquisition of the capital asset(s) mentioned in the
text?
A) February 1, 2018
B) December 16, 2017
C) February 9, 2018
D) January 3, 2018
Answer: B) December 16, 2017
108: What are the consequences of failing to attach the CSR Policy of the Company to the
Director's Report for the Financial Year 2015-2016?
A) Fines for the directors
B) The company's net worth will decrease
C) The company will be dissolved
D) None, it's considered an inadvertent error
Answer: D) None, it's considered an inadvertent error
109: Who is responsible for making the default good?

A) The Registrar of Companies
C) The CSR Committee
D) The CEO of the company
Answer: B) The Ministry of Corporate Affairs
110: What was the purpose of the notice dated December 8, 2017, received by the
Company from ROC?
A) To inform the Company of its successful CSR activities
B) To inform the Company of a violation of CSR provisions
C) To request information on the company's revenue
D) To issue a notice of dissolution
Answer: B) To inform the Company of a violation of CSR provisions
111: How did the Company rectify the default as per Section 135(5)?
A) By paying the required amount
B) By amending the CSR policy
C) By specifying the reasons for non-compliance
D) By revoking its registration
Answer: B) By amending the CSR policy

112: What was the amount spent by the Company in the Financial Year 2015-16 for
creation or acquisition of capital assets?
A) Rs. 5,26,047.30
B) Rs. 1,000,000
C) Rs. 10,000
D) Rs. 100,000
Answer: A) Rs. 5,26,047.30
113: When was the notice dated January 3, 2018, received by the Applicants from ROC?
A) December 8, 2017
B) December 16, 2017
C) February 1, 2018
D) January 1, 2018
Answer: A) December 8, 2017
114: What kind of error did the Company rectify in order to avoid default?
A) Failure to spend the required amount
B) Failure to constitute the CSR Committee
C) Failure to disclose details
D) Failure to pay fines
Answer: C) Failure to disclose details
115: What was the date of the Board Meeting where the default was made good?
A) July 18, 2014
B) September 2, 2015
C) February 9, 2018
D) February 1, 2018
Answer: A) July 18, 2014
116: What was the violation that led to the notice dated December 8, 2017, from ROC?
A) Failure to spend the required amount
B) Failure to constitute the CSR Committee
C) Failure to disclose details
D) Failure to pay fines
Answer: C) Failure to disclose details
117: What did the Company send to the Registrar of Companies on December 16, 2017?
A) A notice of dissolution
B) A CSR Policy
C) A reply enclosing the Director's Report
D) A request for information
Answer: C) A reply enclosing the Director's Report
118: What was the status of the project according to the table provided?
A) Completed
B) Ongoing
C) Not specified

D) Cancelled
Answer: B) Ongoing
119: Which section of the Companies Act requires the Board to specify reasons for not
spending on CSR if the company fails to comply with Section 135(5)?
A) Section 135(5)
B) Section 135(2)
C) Section 134(3)(o)
D) Section 380(1)
Answer: C) Section 134(3)(o)
120: What is the primary consequence for companies that fail to spend on CSR as per the
Act?
A) Imprisonment for the directors
B) Fines for the company
C) Loss of net worth
D) Revocation of the company's registration
Answer: B) Fines for the company
121: What was the response of the Company to the ROC's notice dated January 3, 2018?
A) Sent another violation notice
B) Made default good
C) Denied any wrongdoing
D) Dissolved the company
Answer: B) Made default good
122: Which authority received a reply from the Company on February 9, 2018, regarding
the violation of Section 134(3)(o)?
A) Ministry of Corporate Affairs
B) Registrar of Companies
C) CSR Committee
D) The Board of Directors
Answer: B) Registrar of Companies
123: What action did the Company take on February 1, 2018, after receiving the notice
from ROC dated January 3, 2018?
A) Made default good
B) Paid the required fine
C) Committed further violations
D) Dissolved the company
Answer: A) Made default good
124: What did the Company send to ROC on February 9, 2018?

A)A violation notice
B) A request for more time
C) A notice of dissolution
D) A letter informing of the violation

Answer: D) A letter informing of the violation
125: What is the requirement under Section 135(5) for companies with a certain net worth
or turnover?
A) Spending on CSR is mandatory
B) They are exempt from CSR
C) They must have foreign partnerships
D) They are required to pay a fine
Answer: A) Spending on CSR is mandatory
126: What is the primary requirement for companies that fail to spend on CSR, according
to Section 134(3)(o)?
A) They must dissolve the company
B) They must pay a fine
C) They must specify the reasons for not spending
D) They must increase net worth
Answer: C) They must specify the reasons for not spending
127: What was the action taken by the Board in its Board Meeting held on July 18, 2014,
as mentioned in the text?
A) Imprisoned the directors
B) Framed the CSR Policy
C) Suspended business operations
D) Revoked the company's registration
Answer: B) Framed the CSR Policy
128: According to Section 134(3)(o), what must the Board specify in its report if the
company fails to comply with Section 135(5)?
A) The reasons for not spending
B) The actions taken by the CSR Committee
C) The revenue of the company
D) The number of employees
Answer: A) The reasons for not spending
129: Who received a notice dated December 8, 2017, from ROC stating a violation of CSR
provisions?
A) The CSR Committee
C) The Company
Answer: C) The Company
130: According to Section 134(3)(o), what should the Board of Directors specify if the
company fails to comply with Section 135(5)?
A) The reasons for non-compliance
B) The date of incorporation
C) The number of employees

D) The turnover of the company

Answer: A) The reasons for non-compliance
131: Which company is the subject of the provided text?

A) Agrawal Family
B) Chhattisgarh
C) Hira Power & Steels Limited
D) Ministry of Corporate Affairs
Answer : C) Hira Power & Steels Limited
132: What is the main business interests of Hira Power & Steels Limited?
A) Real Estate
B) Information Technology
C) Ferro Alloys, Power, and Mining
D) Hospitality
Answer : C) Ferro Alloys, Power, and Mining
133: In which Indian state are the manufacturing facilities of Hira Power & Steels
Limited located?
A) Maharashtra
B) Tamil Nadu
C) Chhattisgarh
D) Karnataka
Answer : C) Chhattisgarh
134: What regulatory body is mentioned in the text in relation to CSR compliance?
B) Ministry of Corporate Affairs
C) National Company Law Tribunal
D) Securities and Exchange Board of India
Answer : B) Ministry of Corporate Affairs
135: Why did Hira Power & Steels Limited fail to comply with CSR spending for the
financial year 2014-15?
A) Due to a deliberate mistake
B) Ambiguity in the implementation of CSR provisions
C) Lack of financial resources
D) Lack of commitment
Answer : B) Ambiguity in the implementation of CSR provisions
136: What year did Hira Power & Steels Limited constitute the CSR Committee?
A) 2014
B) 2015
C) 2016
D) 2017
Answer : B) 2015

137: Which section of the Companies Act, 2013 is mentioned in relation to CSR
compliance?
A) Section 134 (3) (o)
B) Section 135 (5)
C) Section 136 (2)
D) Section 137 (4)
Answer : A) Section 134 (3) (o)
138: What does the text say about the defaulters' understanding of their CSR spending?
A) They had perfect clarity from the beginning.
B) They were unsure about the actual position of the CSR amount.
C) They had no idea about CSR compliance.
D) They deliberately ignored the CSR provisions.
Answer : B) They were unsure about the actual position of the CSR amount.
139: What is the reason cited in the text for making the committed default?
A) Lack of intent
B) Ambiguity in regulations
C) Mismanagement of funds
D) Non-compliance with the law
Answer : B) Ambiguity in regulations
140: What is the company's request to the authorities in the text?

A) A full waiver of the CSR spending requirement
B) To increase the CSR spending requirement
C) To impose a minimum compounding fee
D) To shut down the company
Answer : C) To impose a minimum compounding fee
141: What does the provided text primarily discuss?

A) Amendments to labour laws
B) Corporate social responsibility (CSR)
C) Company losses
D) Tax deductions
Answer 1: B) Corporate social responsibility (CSR)
142: According to the text, why was the company found liable for spending on CSR
activities?
A) The company made significant profits.
B) The company failed to constitute a CSR committee.
C) The company exceeded the threshold of Rs. 5 crores.
D) The company showed high revenue in the preceding year.
Answer : B) The company failed to constitute a CSR committee.

143: In which city is the National Company Law Tribunal (NCLT) mentioned in the
text?
A) New Delhi
B) Mumbai
C) Chennai
D) Bangalore
Answer : C) Chennai
144: According to Section 135(5) of the Act, what must the Board of every company
covered under Section 135(1) ensure?
A) Minimum wage for employees
B) Environmental sustainability
C) Compliance with labour laws
D) Spending on CSR in accordance with CSR Policy
Answer : D) Spending on CSR in accordance with CSR Policy
145: What is the threshold limit mentioned in the text for companies to be covered under
Section 135(1) of the Act?
A) Rs. 1 crore
B) Rs. 2 crores
C) Rs. 5 crores
D) Rs. 10 crores
Answer : C) Rs. 5 crores
146: What is the company's contention regarding the expenditure for CSR in the three
preceding years?
A) The company exceeded the required expenditure.
B) The company is not covered under Section 135(1).
C) The company had losses in those years.
D) The company did not have a CSR committee.
Answer : C) The company had losses in those years.
147: What is the major modification made by NCLAT to the impugned order?
A) It reduces the amount to be spent on CSR.
B) It holds the appellant not liable for CSR compliance.
C) It prescribes a method of calculation for CSR expenditure.
D) It increases the threshold limit for Section 135(1).
Answer : C) It prescribes a method of calculation for CSR expenditure.
148: What is the net result for the company regarding its CSR compliance, according to
NCLAT?
A) The company is not liable to comply with CSR.
B) The company is liable to constitute a CSR committee.
C) The company must spend more on CSR.
D) The company has a significant profit.
Answer : B) The company is liable to constitute a CSR committee.

149: What was the main issue discussed in the text?

A) Environmental regulations
B) Labor law compliance
C) CSR committee formation
D) Applicability of Section 135(1) of the Act
Answer : D) Applicability of Section 135(1) of the Act
150: In which financial year did the company make the default related to CSR
compliance?
A) 2013-14
B) 2014-15
C) 2015-16
D) 2016-17
Answer : B) 2014-15

8] Accounts, Audit and Auditors
1: What does "Books of Account" include as per section 2(13) of the Act?
a) Only records of money received and expended.
b) Records of sales and purchases of goods and services.
c) Assets and liabilities of the company.
d) All of the above.
Answer : d) All of the above.
2: According to the Act, what is the requirement for maintaining books of account in
electronic form?
a) They must be stored only within India.
b) They must include an audit trail of every transaction.
c) They cannot be maintained on cloud.
d) Both a and b.
Answer : b) They must include an audit trail of every transaction.
3: Where should the backup of electronic records be kept, according to the Act?
a) Servers physically located outside India.
b) Servers physically located in India.
c) On cloud servers anywhere in the world.
d) External hard drives.
Answer : b) Servers physically located in India.
4: What must be included in the electronic record of a document?

a) Internet protocol address of the service provider.
b) Location of the service provider.
c) Audit trail of each transaction.
5: Who is authorized to inspect the books of account and papers of a subsidiary of the
company?
a) Any shareholder of the subsidiary.
b) The Board of Directors.
c) Only a person authorized by the Act.
d) Any external auditor.
Answer : c) Only a person authorized by the Act.
6: What is the definition of "Financial Year" as per the Act?

a) The period ending on 31st December every year.
b) The period ending on 1st April every year.
c) The period ending on 31st March every year.
d) The period ending on 1st January every year.
Answer : c) The period ending on 31st March every year.

7: According to Section 128(1) of the Act, where should the branches of the company
keep their books of account?
a) In a centralized location.
b) In a foreign country.
c) In the same location as the company's headquarters.
d) In the same location where they operate.
Answer : a) In the same location as the company's headquarters.
8: What must be present in the accounting software used for maintaining books of
account?
a) A feature to record an audit trail of each transaction.
b) The capability to create an edit log for changes made in books of account.
c) The ability to ensure the audit trail cannot be tampered with.
9: What does the term "Book and paper" include as per the Act?
a) Only books of account.
b) Deeds and vouchers.
c) Writings and documents.
10: Who is authorized to do the inspection in respect of any subsidiary of the company?
a) Any qualified accountant.
b) Any person holding a senior position in the company.
c) Any person authorized by the Board of Directors.
d) A person authorized by the Act.
Answer : d) A person authorized by the Act.
11: According to section 128(6) of the Act, who is responsible for taking reasonable steps
to secure compliance with the provisions of Section 128?
a) Managing Director
b) Any director of the company
c) Chief Financial Officer
d) Any person charged by the Board with such duty
Answer : d) Any person charged by the Board with such duty
12: What is the penalty for not complying with the provisions of Section 128?
a) Fine
b) Imprisonment
c) Fine and imprisonment
d) Warning letter
Answer : a) Fine

13: What is the main purpose of maintaining financial statements under Section 129 of
the Act?
a) To mislead stakeholders
b) To provide transparency and accurate information
c) To avoid paying taxes
d) To protect the interests of the Board
Answer : b) To provide transparency and accurate information
14: Which companies need to comply with the format for maintaining financial
statements as provided in Schedule III?
a) All companies
b) Only public limited companies
c) Only private limited companies
d) It depends on the company's size and nature of operations
Answer : d) It depends on the company's size and nature of operations
15: What happens if a company does not disclose matters required by the relevant
governing law?
a) The company is exempt from compliance
b) The company will face penalties
c) The company's accounts may not present a true and fair view
d) Nothing happens, it's optional
Answer : c) The company's accounts may not present a true and fair view
16: In the context of the Insurance Act, 1938, what should an insurance company disclose
in its financial statements?
a) Only matters related to profits
b) Only matters related to losses
c) Any matters required by the Insurance Act, 1938
d) Matters required by the Banking Regulation Act, 1949
Answer : c) Any matters required by the Insurance Act, 1938
17: In the case of a company engaged in the generation or supply of electricity, what
should it disclose in its financial statements?
a) Anything relevant to its business
b) Any matters required by the Electricity Act, 2003
c) Profit margins only
d) Its future expansion plans
Answer : b) Any matters required by the Electricity Act, 2003
18: What is the consequence if a company doesn't comply with the accounting standards
referred to in Section 129 (1)?
a) The company must pay a fine
b) The company will be shut down
c) The company's accounts may not present a true and fair view
d) The directors of the company will be removed
Answer : c) The company's accounts may not present a true and fair view

19: Who is responsible for ensuring that the company complies with accounting
standards?
a) The shareholders
b) The Board of Directors
c) The government
d) The auditors
Answer : b) The Board of Directors
20: What is the main objective of maintaining financial statements as per the provided
information?
a) To generate profits
b) To disclose every detail about the company
c) To provide transparency and a true and fair view
d) To make the company appear successful
Answer : c) To provide transparency and a true and fair view
21: Who are the persons responsible for securing compliance with Section 129 of the Act?
A) Managing Director
B) CFO
C) Any person of a company charged by the Board
D) All of the above
Answer: D) All of the above
22: Under what circumstances can the Central Government exempt companies from
complying with Section 129 requirements?
A) If it deems the company to be financially unstable
B) If it is considered necessary to grant such exemption in the public interest
C) If the company is a wholly-owned subsidiary
D) If the company's securities are listed on a stock exchange
Answer: B) If it is considered necessary to grant such exemption in the public interest
23: What is the penalty for the failure to secure compliance or contravention of provisions
of Section 129 of the Act?
A) Fine
B) Community service
C) Imprisonment
D) Warning
Answer: C) Imprisonment
24: In which schedule are the financial statements provided?

A) Schedule I
B) Schedule II
C) Schedule III
D) Schedule IV
Answer: C) Schedule III

25: Which companies are required to prepare consolidated accounts according to the
A) Only public companies
B) All companies
C) Only private companies
D) Only foreign companies
Answer: B) All companies
26: What provisions of the Companies Act, 2013 are applicable to the preparation,
adoption, and audit of the statements of a holding company?
A) Sub-section 2 of Section 129
B) Sub-section 3 of Section 129
C) Sub-section 4 of Section 129
D) Sub-section 5 of Section 129
Answer: B) Sub-section 3 of Section 129
27: In what manner should a holding company prepare consolidated accounts?

A) In the same manner as its own financial statements
B) According to its own standards
C) In a manner different from its own financial statements
D) It is not required to prepare consolidated accounts
Answer: A) In the same manner as its own financial statements
28: Under what conditions can a company not present consolidated financial statements?
A) If it is a publicly traded company
B) If it is a foreign-owned subsidiary
C) If it is a wholly-owned subsidiary, and no members object
D) If it is a partially-owned subsidiary
Answer: C) If it is a wholly-owned subsidiary, and no members object
29: When does the Central Government exempt companies from complying with Section
129 requirements?
A) When requested by any company
B) When it is considered necessary for business growth
C) When it deems the company financially unstable
D) When it is considered necessary in the public interest
Answer: D) When it is considered necessary in the public interest
30: Under what condition is a company exempt from presenting consolidated financial
statements?
A) If it is a publicly traded company
B) If it is a private company
C) If it is a foreign-owned subsidiary
D) If it is a wholly-owned subsidiary
Answer: D) If it is a wholly-owned subsidiary

31: What section of the Companies Act deals with the re-opening or re-casting of books
of accounts?
A. Section 129A
B. Section 130
C. Section 131
D. Section 134
Answer : B. Section 130
32: In which situation can the Tribunal order the re-opening of accounts under Section
130?
A. The company's accounts were maintained in an efficient manner.
B. The relevant earlier accounts were prepared fraudulently.
C. There was no mismanagement of the company's affairs.
D. The Central Government requests it.
Answer : B. The relevant earlier accounts were prepared fraudulently.
33: Who can make an application for re-opening of accounts under Section 130?
A. Any shareholder of the company.
B. The company's auditor.
C. Any person concerned, including the Central Government.
D. Only the Income-tax authorities.
Answer : C. Any person concerned, including the Central Government.
34: What is the minimum period for which books of accounts can be re-opened under
Section 130?
A. Less than five years.
B. Eight years.
C. Ten years.
D. No minimum period is specified.
Answer : D. No minimum period is specified.
35: In which situation can the Tribunal order the re-opening of accounts under Section
130?
A. If the Tribunal feels like it.
B. If the affairs of the company were well-managed during the relevant period.
C. If the relevant earlier accounts were prepared fraudulently.
D. If the company is in financial trouble.
Answer : C. If the relevant earlier accounts were prepared fraudulently.
36: Who is required to be given notice by the Tribunal before re-opening accounts under
Section 130?
A. The company's shareholders.
B. The public.
C. The Central Government, Income-tax authorities, and others concerned.
D. The company's management.
Answer : C. The Central Government, Income-tax authorities, and others concerned.

37: When considering the re-opening of accounts under Section 130, the Tribunal must
take into consideration the representations made by which parties?
A. The company's shareholders.
B. The public.
C. The Central Government and the Income-tax authorities.
D. The company's management.
Answer : C. The Central Government and the Income-tax authorities.
38: Under what circumstances can the Tribunal not make an order for re-opening of
accounts under Section 130?
A. If the Tribunal has a hunch.
B. If the relevant earlier accounts were prepared fraudulently.
C. If the Central Government has ordered books to be maintained for over eight years.
D. If the Central Government makes an application.
Answer : C. If the Central Government has ordered books to be maintained for over eight years.
39: In the matter of Hari Sankaran (Appellant) vs. Union of India & Ors., what did the
Supreme Court of India observe regarding the re-opening of accounts?
A. The Tribunal can order re-opening of accounts for any reason.
B. The Tribunal can order re-opening of accounts only if the company's affairs were well-
managed.
C. The Tribunal can order re-opening of accounts if it suspects fraudulent preparation of earlier
accounts.
D. The Tribunal has no authority to order re-opening of accounts.
Answer : C. The Tribunal can order re-opening of accounts if it suspects fraudulent preparation
of earlier accounts.
40: What did the Supreme Court of India conclude about the order passed by NCLAT
under Section 130?
A. The order was unreasonable.
B. The order was illegal.
C. The order was upheld.
D. The order was irrelevant.
Answer : C. The order was upheld.
41: What does Section 131 of the Companies Act deal with?
A. The re-opening of accounts.
B. Voluntary revision of financial statements or board's report.
C. The signature of financial statements.
D. Dissolution of companies.
Answer : B. Voluntary revision of financial statements or board's report.
42: Who must the Tribunal give notice to under Section 131 when dealing with voluntary
revision of financial statements?
A. Only the company's management.
B. The Central Government and the Income-tax authorities.
C. The shareholders.

D. The public.
Answer : B. The Central Government and the Income-tax authorities.
43: In what situation can the Tribunal order the revision of financial statements under
Section 131?
A. If the company voluntarily decides to revise them.
B. If the shareholders request it.
C. If it finds that the financial statements are incorrect or fraudulent.
D. If there is a change in management.
Answer : C. If it finds that the financial statements are incorrect or fraudulent.
44: What is the minimum period for which financial statements can be revised under
Section 131?
A. One year.
B. Five years.
C. No minimum period is specified.
D. Ten years.
Answer : C. No minimum period is specified.
45: When the Tribunal considers the revision of financial statements under Section 131,
whose representations must it take into consideration?
A. The company's management.
B. The shareholders.
C. The Central Government and the Income-tax authorities.
D. The competitors.
Answer : C. The Central Government and the Income-tax authorities.
46: What is required before the Tribunal can pass an order for the revision of financial
statements under Section 131?
A. A court order.
B. A management decision.
C. A public referendum.
D. A notice to the Central Government and Income-tax authorities.
Answer : D. A notice to the Central Government and Income-tax authorities.
47: Which section of the Companies Act deals with the signature of financial statements?
A. Section 129A
B. Section 130
C. Section 131
D. Section 134
Answer : D. Section 134
48: Who is responsible for signing the financial statements under Section 134?
A. Only the CEO of the company.
B. The managing director and CFO.
C. The chairman of the company.
D. The CEO, managing director, and CFO, or in their absence, any director of the company.

Answer : D. The CEO, managing director, and CFO, or in their absence, any director of the
company.
49: Under Section 134, who receives the signed financial statements?
A. The shareholders.
B. The Tribunal.
C. The Income-tax authorities.
D. The company's auditor.
Answer : D. The company's auditor.
50: What happens if the financial statements are not signed in accordance with Section
134?
A. The company is dissolved.
B. The auditors are held responsible.
C. The Tribunal orders a revision of the statements.
D. The statements are considered invalid.
Answer : D. The statements are considered invalid.
51: According to Section 136 of the Companies Act, copies of audited financial
statements must be sent to which individuals or entities?
A. Every shareholder
B. Every employee
C. Only the company's directors
D. Every creditor
Answer : A. Every shareholder
52: Under what circumstances can copies of financial statements be sent less than
twenty-one days before the date of the meeting?
A. No circumstances allow this.
B. It is allowed if an intimation is sent through a public notice in a local newspaper.
C. It's allowed if the company's auditors consent.
D. It's allowed if a majority of shareholders agree.
Answer : B. It is allowed if an intimation is sent through a public notice in a local newspaper.
53: Which companies are required to comply with Companies (Indian Accounting
Standards) Rules, 2015?
A. Only government-owned companies.
B. Only private limited companies.
C. All companies.
D. Only companies listed on recognized stock exchanges.
Answer : D. Only companies listed on recognized stock exchanges.
54: How should listed companies provide copies of documents to shareholders with
dematerialized shares whose email addresses are registered with the depository for
communication?
A. By personal delivery.
B. By sending hard copies through postal mail.

C. By electronic mode.
D. By fax.
Answer : C. By electronic mode.
55: When can a listed company send copies of documents to its members less than
twenty-one days before the meeting?
A. Never.
B. If the majority of shareholders agree.
C. Only if the auditors consent.
D. If an intimation is sent through a public notice in a local newspaper.
Answer : A. Never.
56: What should a company do if it has a subsidiary or subsidiaries?

A. Combine the audited accounts with its own financial statements.
B. Prepare separate audited accounts for each subsidiary.
C. Ignore the subsidiaries' financial statements.
D. Send the subsidiaries' financial statements only to the government.
Answer : B. Prepare separate audited accounts for each subsidiary.
57: How should a listed company that has a foreign subsidiary (incorporated outside
India) fulfil the requirements regarding the subsidiary's financial statements?
A. Send the subsidiary's statements by fax.
B. Publish them on its website.
C. Send them to the shareholders' homes.
D. Combine them with the parent company's financial statements.
Answer : B. Publish them on its website.
58: What right does every member and trustee of debenture holders have concerning a
company's financial documents?
A. The right to demand an annual report.
B. The right to receive copies of the documents.
C. The right to request a presentation of the documents.
D. The right to vote on the documents.
Answer : B. The right to receive copies of the documents.
59: What penalty may a company face if it fails to comply with the provisions of Section
136 of the Act?
A. Criminal charges against the CEO.
B. Cancellation of the company's registration.
C. A fine or penalty.
D. A warning letter.
Answer : C. A fine or penalty.
60: Which of the following is NOT a required recipient of copies of audited financial
statements under Section 136 of the Companies Act?
A. Every member of the company.
B. Every trustee for debenture holders.

C. Every employee of the company.

D. Any other person entitled to receive them.
Answer : C. Every employee of the company.
61: What is the deadline for filing the financial statement with the Registrar of
Companies?
a) Within 60 days
b) Within 45 days
c) Within 30 days
d) Within 15 days
Answer: c) Within 30 days
62: Which form should be filed along with the financial statement with the Registrar of
Companies?
a) Form AOC-1
b) Form AOC-2
c) Form AOC-3
d) Form AOC-4
Answer: d) Form AOC-4
63: What additional form should be filed with the Registrar of Companies if the
company has subsidiaries incorporated outside India?
a) AOC-1
b) AOC-4 (CFS)
c) AOC-4 XBRL
d) None
Answer: b) AOC-4 (CFS)
64: Which rule governs the filing of financial documents in XBRL format in 2015?
a) Rule 1
b) Rule 2
c) Rule 3
d) Rule 4
Answer: c) Rule 3
65: Which companies are required to file financial documents in XBRL format?
a) All companies
b) Only companies listed with stock exchanges in India
c) Companies with a turnover of one hundred crore rupees or above
d) Only private limited companies
Answer: b) Only companies listed with stock exchanges in India
66: Which accounting standards are applicable to the filing of financial documents?
a) IFRS
b) GAAP
c) IFRS and GAAP
d) Indian Accounting Standards

Answer: d) Indian Accounting Standards
67: How many days are allowed for the adjourned annual general meeting?
a) 15 days
b) 30 days
c) 45 days
d) As prescribed by the Registrar
Answer: d) As prescribed by the Registrar
68: Which form is to be filed if a subsidiary has been incorporated outside India?
a) Form AOC-1
b) Form AOC-2
c) Form AOC-3
d) Form AOC-4 XBRL
Answer: d) Form AOC-4 XBRL
69: What should be attached along with the financial documents?

a) Statement of facts
b) Statement of accounts
c) Statement of reasons
d) Statement of facts and reasons for not holding an annual general meeting
Answer: d) Statement of facts and reasons for not holding an annual general meeting
70: Where can you find the Taxonomy for filing financial documents in XBRL format?
a) Annexure-I of the Companies Act
b) Annexure-II of the Companies Act
c) Annexure-III of the Companies Act
d) Annexure-II A of the Companies Act
Answer: d) Annexure-II A of the Companies Act
71: What is the primary responsibility of the National Financial Reporting Authority
(NFRA)?
A. Oversee the quality of service of professionals associated with ensuring compliance with
standards.
B. Recommend accounting and auditing standards for adoption.
C. Initiate proceedings against misconduct.
D. Audit financial reports of companies.
Answer: B. Recommend accounting and auditing standards for adoption.
72: Who is responsible for maintaining the books of account and other records of NFRA?
A. The Auditor General of India
B. The Central Government
C. The Chairperson of NFRA
D. The National Authority for Financial Reporting
Answer: B. The Central Government

73: Under which section of the Companies Act, 2013, was the National Financial
Reporting Authority (NFRA) introduced?
A. Section 132
B. Section 137
C. Section 1956
D. Section 132 and 137
Answer: A. Section 132
74: What authority does NFRA have in relation to Code of Civil Procedure, 1908?
A. It can enforce penalties.
B. It has no authority.
C. It can initiate investigations.
D. It has powers similar to a civil court.
Answer: D. It has powers similar to a civil court.
75: What can no other institute or body do in cases of misconduct when NFRA has
initiated an investigation?
A. Continue any proceedings
B. Initiate similar investigations
C. Appeal to the Central Government
D. Form a committee for recommendations
Answer: A. Continue any proceedings
76: Who is required to audit the accounts of NFRA?

A. Comptroller and Auditor General of India
B. National Financial Reporting Authority
C. Central Government
D. Chairperson of NFRA
Answer: A. Comptroller and Auditor General of India
77: What is the primary objective of NFRA?

A. Investigating professional misconduct
B. Overseeing the quality of accounting services
C. Formulating accounting and auditing standards
D. Recommending improvements in quality of service
Answer: C. Formulating accounting and auditing standards
78: Which body is governed by subsection (4) of section 132 of the Companies Act, 2013?
A. National Financial Reporting Authority
B. Central Government
C. Committee for recommendations
D. Comptroller and Auditor General of India
Answer: A. National Financial Reporting Authority

79: What should the National Financial Reporting Authority do in cases of misconduct
under Section 132?
A. Enforce penalties
B. Recommend actions to the Central Government
C. Initiate investigations
D. Continue legal proceedings
Answer: B. Recommend actions to the Central Government
80: What power does NFRA have concerning investigation into misconduct?
A. It can only investigate on its own initiative.
B. It has no power to investigate.
C. It can investigate only with a reference from the Central Government.
D. It can initiate investigations and receive references.
Answer: D. It can initiate investigations and receive references.
81: Who has the authority to prescribe accounting standards in India?

A. The National Financial Reporting Authority
B. The Institute of Chartered Accountants of India
C. The Ministry of Corporate Affairs
D. The Central Government
Answer: D. The Central Government
82: Which act established the Institute of Chartered Accountants of India?

A. Companies Act, 1956
B. Chartered Accountants Act, 1949
C. Indian Accounting Standards Act, 2007
D. Financial Reporting Authority Act, 2010
Answer: B. Chartered Accountants Act, 1949
83: When were the Indian Accounting Standards (Ind AS) introduced?
A. 2005
B. 2015
C. 2016
D. 2017
Answer: B. 2015
84: Which companies are mandatorily required to comply with Indian Accounting
Standards (Ind AS) beginning from April 1, 2017?
A. Companies listed on any stock exchange with a net worth of more than Rs. 100 crore
B. Unlisted companies with a net worth of less than Rs. 250 crore
C. Companies with no subsidiaries
D. All companies incorporated after 2016
Answer: A. Companies listed on any stock exchange with a net worth of more than Rs. 100 crore
85: Small and Medium sized Companies (SMCs) follow which accounting standards?
A. Indian Accounting Standards (Ind AS)
B. Companies (Accounting Standards) Rules, 2021

C. Companies Act, 1956

D. Companies (Indian Accounting Standards) Rules, 2015
Answer: B. Companies (Accounting Standards) Rules, 2021
86: Which type of companies are exempted from the Companies (Indian Accounting
Standards) Rules, 2015?
A. Banking Companies
B. Foreign Companies
C. Holding Companies
D. All companies are subject to these rules
Answer: A. Banking Companies
87: Who is responsible for prescribing accounting standards for Small and Medium sized
Companies (SMCs)?
A. Reserve Bank of India (RBI)
B. Institute of Chartered Accountants of India (ICAI)
C. Ministry of Corporate Affairs (MCA)
D. Securities and Exchange Board of India (SEBI)
Answer: C. Ministry of Corporate Affairs (MCA)
88: Which section of the Companies Act, 2013, deals with the eligibility criteria for
auditors?
A. Section 134
B. Section 139
C. Section 145
D. Section 151
Answer: B. Section 139
89: What type of entities are eligible to be appointed as auditors under the Companies
Act, 2013?
A. Individual persons only
B. Body corporate including Limited Liability Partnerships (LLPs)
C. Government entities only
D. Charitable organizations only
Answer: B. Body corporate including Limited Liability Partnerships (LLPs)
90: Who is not eligible to be appointed as an auditor under the Companies Act, 2013?
A. A body corporate, except LLP
B. A government employee
C. A shareholder of the company
D. A foreign national
Answer: B. A government employee
91: In case of a private company, a person is ineligible to be appointed as an auditor if

they are holding the appointment as an auditor of more than twenty companies other
than one person companies, dormant companies, small companies, and private
companies having paid-up capital of less than:

A) 10 lakh rupees
B) 20 lakh rupees
C) 50 lakh rupees
D) 1 crore rupees
Answer : B) 20 lakh rupees
92: What is the minimum period that must have elapsed from the date of conviction for a
person to be ineligible for appointment as an auditor due to a conviction involving fraud?
A) 5 years
B) 7 years
C) 10 years
D) 15 years
Answer : C) 10 years
93: According to section 141(4) of the Act, what should be the maximum number of
companies an individual auditor can be appointed for (excluding specific categories of
companies)?
A) 5 companies
B) 10 companies
C) 15 companies
D) 20 companies
Answer : D) 20 companies
94: The term "directly or indirectly" in the context of providing services to a company,
as mentioned in the explanation clause, refers to:
A) Services provided through third parties
B) Services provided by the individual only
C) Services provided through any entity in which the individual has an interest
D) Services provided by the individual's close relatives
Answer : C) Services provided through any entity in which the individual has an interest
95: In case of an individual auditor, who can provide services to the company as
mentioned in section 144, directly or indirectly?
A) Only the individual
B) The individual or their close relatives
C) Any person associated with the individual
D) Any entity in which the individual has an interest
Answer : D) Any entity in which the individual has an interest
96: What action should be taken if no auditor is appointed or re-appointed at any annual
general meeting?
A) The existing auditor continues to serve
B) The company is dissolved
C) A government auditor is appointed automatically
D) The company is fined
Answer : A) The existing auditor continues to serve

97: Under section 139 of the Act, who is responsible for appointing the first auditor of a
company within 60 days of incorporation?
A) The Board of Directors
B) The Registrar of Companies
C) The Comptroller and Auditor General
D) The shareholders in a general meeting
Answer : C) The Comptroller and Auditor General
98: In the case of a government company, if the Comptroller & Auditor General fails to
appoint the first auditor, who is responsible for making the appointment within the next
30 days?
A) The Board of Directors
B) The Ministry of Finance
C) The President of India
Answer : A) The Board of Directors
99: What action should the Board of Directors take if they fail to appoint an auditor
within 30 days of incorporation, as per the Act?
A) The auditor is automatically appointed by the government
B) The company is dissolved
C) The Board must inform the shareholders who will appoint the auditor
D) The Board is removed from their positions
Answer : C) The Board must inform the shareholders who will appoint the auditor
100: How is the appointment of an auditor in an existing Government Company

regulated in terms of subsequent auditors, according to the Act?
A) The Comptroller & Auditor General appoints all subsequent auditors
B) The Board of Directors appoints all subsequent auditors
C) The shareholders appoint all subsequent auditors
D) The Audit Committee recommends subsequent auditors
Answer : B) The Board of Directors appoints all subsequent auditors
101: Who is subject to the rotation of auditors under Section 139(2) of the Companies Act,
2013?
A) All companies
B) Only listed companies
C) Unlisted public companies with a paid-up share capital of rupees 10 crore or more
D) Private limited companies with paid-up share capital of rupees 50 crore or more
Answer: B) Only listed companies
102: How long is an individual ineligible for re-appointment as an auditor in the same
company after serving for consecutive years?
A) 3 years
B) 4 years
C) 5 years
D) 6 years

Answer: C) 5 years
103: What action should a company take if it appoints two or more persons as joint
auditors?
A) Rotate each joint auditor separately
B) All joint auditors should complete their terms together
C) Rotate only one joint auditor
D) Joint auditors cannot be rotated
Answer: B) All joint auditors should complete their terms together
104: In the case of a casual vacancy due to an auditor's resignation, when should the
appointment of the new auditor be approved?
A) At the next board meeting
B) Within 6 months of the recommendation of the Board
C) At a general meeting convened within 3 months of the recommendation of the Board
D) Only in the next annual general meeting
Answer: C) At a general meeting convened within 3 months of the recommendation of the
Board
105: Which section of the Companies Act, 2013 deals with the re-appointment of retiring
auditors?
A) Section 139(8)
B) Section 139(9)
C) Section 139(10)
D) Section 139(11)
Answer: B) Section 139(9)
106: What happens if a company fails to appoint or re-appoint an auditor at the annual
general meeting?
A) The company is dissolved
B) The existing auditor's term is automatically extended
C) The Comptroller appoints an auditor
D) The company is penalized
Answer: B) The existing auditor's term is automatically extended
107: How many years is an individual ineligible for re-appointment as an auditor in the
same company after serving for consecutive years in the case of rotation of auditors
under Section 139(3)?
A) 3 years
B) 4 years
C) 5 years
D) 6 years
Answer: C) 5 years
108: What is the purpose of the rotation of auditors under Section 139(3)?
A) To prevent any audit in the company
B) To maintain continuity with the same auditor

C) To ensure fresh perspectives and independence in auditing

D) To reduce the workload of auditors
Answer: C) To ensure fresh perspectives and independence in auditing
109: If a casual vacancy occurs due to the resignation of an auditor, who approves the
appointment of a new auditor?
A) The company's CEO
B) The Comptroller and Auditor General
C) Shareholders in the next general meeting
Answer: C) Shareholders in the next general meeting
110: When should an auditor be reappointed at an annual general meeting?

A) Only if shareholders pass a special resolution
B) Automatically, without any need for reappointment
C) If no other auditor is available
D) In most cases, except for some specific situations
Answer: D) In most cases, except for some specific situations

10] An overview of Inter-Corporate Loans Investments,

Guarantees and Security Related Party Transactions
1. What section of the Companies Act, 2013 provides the Board of Directors with the
power to invest company funds?
A) Section 186
B) Section 179
C) Section 2(43)
D) Section 2(64)
Answer: B) Section 179
2. Under the Companies Act, 2013, what is the overall limit for loans and investments as a
percentage of paid-up share capital and free reserves?
A) 50%
B) 60%
C) 70%
D) 100%
Answer: B) 60%
3. What is the definition of "free reserves" as per Section 2(43) of the Companies Act,
2013?
A) Unrealized gains
B) Notional gains
C) Reserves available for distribution as dividend
D) Change in carrying amount of assets
Answer: C) Reserves available for distribution as dividend
4. What does "paid-up share capital" include according to Section 2(64) of the
A) Only the amount received as paid-up for shares issued
B) Amount credited as paid-up for shares and other amounts received for such shares
C) Any income generated from shares
D) Dividends on shares
Answer: B) Amount credited as paid-up for shares and other amounts received for such shares
5. According to Section 2(11) of the Companies Act, 2013, what does "body corporate" or
"corporation" include?
A) All registered co-operative societies
B) Only companies incorporated outside India
C) Only Indian companies
D) Both A and B
Answer: B) Only companies incorporated outside India

6.What is the key difference between a loan and an advance in the context of Section 186
of the Companies Act, 2013?
A) Loans have interest, and advances do not.
B) Loans are adjusted against supply of goods and services, while advances are not.
C) Loans require repayment, while advances do not.
D) Loans are always given to employees, and advances are not.
Answer: B) Loans are adjusted against supply of goods and services, while advances are not.
7. In the context of Section 186 of the Companies Act, 2013, what are "infrastructural
projects" or "infrastructural facilities" related to?
A) Water management
B) Telecommunication
C) Transportation
D) Agriculture
Answer: C) Transportation
8. What does "Infrastructure related to storage facilities" pertain to, as mentioned in

Schedule VI?
A) Storage of processed agro products
B) Storage of raw agricultural products
C) Storage of construction materials
D) Storage of industrial goods
Answer: A) Storage of processed agro-products
9.According to the provided information, which of the following is NOT considered part
of "infrastructural projects" or "infrastructural facilities"?
A) Rail system
B) Aviation
C) Telecommunication
D) Banking
Answer: D) Banking
10. What is the overall limit for investments in the form of shares, debentures, or other
securities as a proportion of a company's gross income, as per the Schedule VI definition
of "investment company"?
A) 50%
B) 60%
C) 70%
D) 75%
Answer: B) 60%
11. Which of the following is NOT listed as part of the categories of development and
maintenance described in the provided information?
A) Real estate development
B) Power generation
C) Tourism
D) Water management

Answer: B) Power generation
12.What does the term "layer" refer to in the context of Section 186(1) of the Companies
Act, 2013?
A) A level of power generation
B) A level of government securities
C) A subsidiary or subsidiaries of a holding company
D) A layer of infrastructure facilities
Answer: C) A subsidiary or subsidiaries of a holding company
13.According to Section 186(1) of the Companies Act, 2013, how many layers of
investment companies can a company use for making investments?
A) One
B) Two
C) Three
D) Unlimited
Answer: B) Two
14. If Company A Ltd. holds 51% shares in Company B Ltd., and Company B Ltd. holds
51% shares in Company C Ltd., is it allowed for Company A Ltd. to make investments
through Company C Ltd.?
A) Yes
B) No
C) Only with permission
D) Depends on the country
Answer: B) No
15.According to Section 186(1) of the Companies Act, 2013, under what conditions is a
company allowed to acquire another company incorporated outside India with more
than two layers of investment subsidiaries?
A) When the company is a subsidiary company
B) When it meets the requirements of Indian laws
C) Without any conditions
D) Never allowed
Answer: B) When it meets the requirements of Indian laws
16. What is the definition of "securities" as per Section 2 of the Securities Contracts
(Regulation) Act, 1956?
A) Only shares and stocks
B) Only government securities
C) A wide range of marketable securities, including bonds and derivatives
D) Insurance policies
Answer: C) A wide range of marketable securities, including bonds and derivatives

17.According to the explanation provided, which instrument is explicitly excluded from

the definition of "securities"?
A) Shares of a pooled investment vehicle
B) Unit linked insurance policy
C) Derivatives
D) Government securities
Answer: B) Unit linked insurance policy
18. What is the key purpose of Section 186 in the Companies Act, 2013?
A) To regulate the power generation industry
B) To limit the number of subsidiaries a company can have
C) To regulate investments made by companies
D) To define the term "securities"
Answer: C) To regulate investments made by companies
19. Under Section 186(1) of the Companies Act, 2013, how many layers of investment
companies are allowed to make investments?
A) One
B) Two
C) Three
D) No restriction
Answer: B) Two
20. Which instrument can be declared as "securities" by the Central Government, as per
the Securities Contracts (Regulation) Act, 1956?
A) Government securities
B) Shares and stocks
C) Any instrument it chooses to declare
D) Insurance policies
Answer: C) Any instrument it chooses to declare
21. What does Section 186(2) of the Companies Act, 2013 restrict companies from doing
directly or indirectly?
A) Giving loans to individuals
B) Providing security for investments
C) Giving loans, guarantees, or securities and acquiring securities of other companies
Answer: C) Giving loans, guarantees, or securities and acquiring securities of other companies
22. Under Section 186(2), what is the maximum percentage of the company's paid-up
share capital, free reserves, and securities premium account that can be used for giving
loans, guarantees, or securities?
A) 50%
B) 60%
C) 75%
D) 100%
Answer: B) 60%

23. According to Section 186(2), is an individual who is employed by the company

considered a "person" for the purpose of these restrictions?
A) Yes
B) No
C) It depends on the individual's role
D) Not specified
Answer: A) Yes
24. What is the meaning of the term "Investments" in the context of Section 186(2)?
A) Any property or right in which money is invested
B) Investments in real estate
C) Investments in research and development
D) Investments in employee benefits
Answer: A) Any property or right in which money is invested
25. Who has the power to invest the funds of the company, as stated in the provided
information?
A) Shareholders
B) The general public
C) Board of Directors
D) The government
Answer: C) Board of Directors
26. What action can giving corporate guarantees or security be equivalent to, according
to the information?
A) Taking a loan
B) Issuing shares
C) Acquiring assets
Answer: A) Taking a loan
27. How does Section 186(5) specify that loans, investments, guarantees, or securities
must be approved by the Board of Directors?
A) By a simple majority vote
B) With the consent of all directors present at the meeting
C) By a unanimous decision of all directors
D) By the chairman of the company
Answer: B) With the consent of all directors present at the meeting
28. What additional approval is required for loans, investments, guarantees, or securities,
as per Section 186(3)?
A) Approval from the government
B) Shareholder approval at the general meeting by way of a special resolution
C) No additional approval is needed
D) Approval from the company's auditors
Answer: B) Shareholder approval at the general meeting by way of a special resolution

29. What is the role of Rule 13 of the Companies (Meetings of Board and its Powers)
Rules, 2014, as mentioned in the information?
A) It imposes additional restrictions on loans and investments
B) It empowers the company to make decisions about loans and investments
C) It regulates the conduct of general meetings
D) It provides guidelines for hiring directors
Answer: B) It empowers the company to make decisions about loans and investments
30. Under Section 186(3), when is prior authorization by a special resolution in a general
meeting required for loans, investments, guarantees, or securities?
A) For any amount
B) Only if the company has free reserves
C) When the amount exceeds certain limits specified in the Act
D) Only if the company is publicly traded
Answer: C) When the amount exceeds certain limits specified in the Act
31. What is the purpose of disclosing information regarding loans, guarantees, and
securities in a company's Board's Report?
A) To satisfy legal requirements
B) To attract investors
C) To improve corporate governance
D) To maintain transparency
E) All of the above
Answer: D) To maintain transparency
32. According to Section 186(5) of the Act, what is required for a company to make
investments, provide loans, or guarantees?
A) Approval from the shareholders
B) Resolution passed at a Board meeting with unanimous consent
C) Approval from Public Financial Institutions
D) Consent from the Central Government
Answer: B) Resolution passed at a Board meeting with unanimous consent
33. Under what circumstances does a company not require prior approval from Public
Financial Institutions for loans and investments?
A) When the company is in good financial standing
B) When the loan amount is less than a certain threshold
C) When the Central Government holds the majority of shares
D) When the loans are for Industrial Research and Development projects
Answer: C) When the Central Government holds the majority of shares
34. What is the interest rate that loans given under Section 186 must carry?
A) Fixed rate determined by the Reserve Bank of India
B) Higher than the prevailing market rate
C) Not lower than the prevailing yield of one year, three
D) Lower than the prevailing yield of one year, three
Answer: C) Not lower than the prevailing yield of one year, three

35. In the case of section 8 companies, what additional requirement applies under
Section 186 (7) of the Act?
A) They cannot give loans at all
B) They must provide security for all loans
C) They can only fund charitable activities
D) They can provide loans for Industrial Research and Development projects
Answer: D) They can provide loans for Industrial Research and Development projects
36. When is a company prohibited from giving loans, guarantees, or making

acquisitions?
A) When the company is not in good financial standing
B) When there is a default in repayment of deposits
C) When the company's shareholders object
D) When the company is involved in a legal dispute
Answer: B) When there is a default in repayment of deposits
37. What is the purpose of the Register of Loans Made, Guarantees Given, Securities
Provided, and Investments Made?
A) To track employee loans
B) To maintain records for tax purposes
C) To ensure compliance with Section 186 of the Act
D) To monitor the company's share price
Answer: C) To ensure compliance with Section 186 of the Act
38. How often should entries be made in the Register of Loans Made, Guarantees Given,
Securities Provided, and Investments Made?
A) Monthly
B) Annually
C) Quarterly
D) Within seven days of each transaction
Answer: D) Within seven days of each transaction
39. Who is responsible for authenticating entries in the register?

A) The CEO of the company
B) An external auditor
C) The Company Secretary or authorized person
D) The company's legal department
Answer: C) The Company Secretary or authorized person
40. In what forms can the register be maintained as per Rule 12 of the Companies
(Meetings of Boards and its Powers) Rules, 2014?
A) Manual only
B) Electronic only
C) Both manual and electronic
Answer: C) Both manual and electronic

41. In which situations does Section 186 not apply to loans, guarantees, securities, or
investments?
A) Loans provided to government entities
B) Loans made by banking institutions
C) Investments in shares allotted by a body corporate
D) All of the above
E) None of the above
Answer: D) All of the above
42. When can a company pass a resolution to exempt itself from Section 186
requirements?
A) When it obtains approval from a government department
B) Only at the annual general meeting
C) When the company is publicly listed
D) When it has no share capital
Answer: A) When it obtains approval from a government department
43. What is the condition for a company with no share capital to be exempt from Section
186 requirements?
A) It must have significant free reserves
B) It must be a government company
C) It must have a substantial amount of debt
D) It must be a private limited company
Answer: A) It must have significant free reserves
44. Under what circumstances can a company pass a resolution to be exempt from
Section 186?
A) Only at the annual general meeting
B) At a meeting of the Board of Directors
C) Through a unanimous vote of all shareholders
D) When the Central Government mandates it
Answer: B) At a meeting of the Board of Directors
45. Which government companies engaged in defence production are exempt from
Section 186?
A) All government companies
B) Only those listed on the stock exchange
C) All except the ones administratively in charge of the Central Government
D) All government companies with share capital
Answer: C) All except the ones administratively in charge of the Central Government
46. Which type of companies are exempt from Section 186 for acquiring securities under
Chapter IIIB of the Reserve Bank of India Act, 1934?
A) Listed companies
B) Investment companies
C) Government companies
D) All companies

Answer: B) Investment companies
47. How can a company pass a resolution to be exempt from Section 186 requirements?
A) By obtaining approval from the Reserve Bank of India
B) By passing a unanimous resolution at a general meeting
C) By passing a resolution at a meeting of the Board of Directors or through resolutions passed
by circulation
D) By obtaining approval from the Ministry of Finance
Answer: C) By passing a resolution at a meeting of the Board of Directors or through resolutions
passed by circulation
48. When is a company not required to comply with the provisions of Section 186?
A) When it has a substantial share capital
B) When it has a government director on its board
C) When there is no share capital, and it has no significant free reserves
D) When it operates in the defence sector
Answer: C) When there is no share capital, and it has no significant free reserves
49: What is the penalty for contravention of Section 186 for a company?
(a) Rs. 1 lakh
(b) Rs. 5 lakhs
(c) Rs. 10 lakhs
(d) Rs. 15 lakhs
Answer : (c) Rs. 10 lakhs
50: In Illustration 01, what is the authorized share capital of ABC Ltd.?
(a) Rs. 6 crores
(b) Rs. 15 crores
(c) Rs. 10 crores
(d) Rs. 4 crores
Answer : (b) Rs. 15 crores
51: According to Section 187(1) of the Companies Act, 2013, what should investments be
made and held by a company in?
(a) In the name of a depository
(b) In the name of the company itself
(c) In the name of a nominee
(d) In the name of a scheduled bank
Answer : (b) In the name of the company itself
52: In Illustration 02, does the investment made by A Ltd. in X, a Limited Liability
Partnership, violate Section 186 of the Companies Act, 2013?
(a) Yes
(b) No
(c) Cannot determine from the information given
(d) Not applicable
Answer : (c) Cannot determine from the information given

53: According to Section 187(2) of the Companies Act, 2013, what does the Act allow a
company to do with its shares or securities?
(a) Hold them in the name of a nominee
(b) Deposit them with a bank for collection of dividends
(c) Transfer them to another company
(d) All of the above
Answer : (d) All of the above
54: In Illustration 05, does Investa India Ltd. need approvals for giving loans to Investa
LLP?
(a) Yes
(b) No
(c) Depends on the amount of the loan
(d) Not mentioned in the text
Answer : (a) Yes
55 : What is the main focus of Section 186 of the Companies Act, 2013?
(a) Investments made by one corporate body in another
(b) Loans given to directors and employees
(c) Guarantees and security provided by companies
(d) Related party transactions
Answer : (b) Loans given to directors and employees
56: According to the proviso to Section 187(1) of the Companies Act, 2013, in what
circumstances can a company hold shares in its subsidiary company in the name of a
nominee?
(a) To reduce the number of members of the subsidiary company
(b) To facilitate the transfer of shares
(c) Only if required by the statutory limit
(d) Never
Answer : (c) Only if required by the statutory limit
57: What is the consequence if a company does not transfer shares or securities
deposited with a bank within 6 months?
(a) The company must pay a penalty
(b) The bank becomes the owner of the shares
(c) The shares or securities are forfeited
(d) The company must re-deposit the shares in its own name
Answer : (d) The company must re-deposit the shares in its own name
58: In Illustration 03, how much paid-up capital does P Ltd. have?
(a) Rs. 2,00,000
(b) Rs. 2 crores
(c) Rs. 2 lakhs
(d) Rs. 2 billion
Answer 10: (a) Rs. 2,00,00

59: According to sub-section (3) of section 187 of the Act, when is a company required to
maintain a register for securities not held in the name of the company?
A) When the investments are held in the name of a depository.
B) When the investments are held in the name of the company.
C) When the investments are held in the name of a third party.
D) When the investments are held in the name of a shareholder.
Answer : A) When the investments are held in the name of a depository.
60: What should a company do if shares or securities are not held in its own name
according to section 187(2)(d) of the Act?
A) Maintain a register and record the reasons.
B) Sell the shares immediately.
C) Inform the government.
D) Do nothing.
Answer : A) Maintain a register and record the reasons.
61: Rule 14 of the Companies (Meetings of Board and its Powers) Rules, 2014, requires
every company to maintain a register in which form?
A) Form MBP-2
B) Form MBP-3
C) Form MBP-4
D) Form MBP-5
Answer : B) Form MBP-3
62: What information should be recorded in the register mentioned in Rule 14 of the
Companies (Meetings of Board and its Powers) Rules, 2014?
A) Only the names of the shareholders.
B) Reasons for not holding the investments in the company's name.
C) Names of board members.
D) Upcoming meeting dates.
Answer : B) Reasons for not holding the investments in the company's name.
63: According to section 187(4) of the Act, what happens if a company is in default in
complying with the provisions of this section?
A) It is exempt from any punishment.
B) It may be subject to punishment.
C) It will receive a warning.
D) It will be audited.
Answer : B) It may be subject to punishment.
64: According to Section 2(76) of Companies Act 2013, who is considered a related party
concerning a company?
A) Any shareholder.
B) The company secretary.
C) A director or his relative.
D) The company's customers.
Answer : C) A director or his relative.

65: What is the term "related party" defined as in Section 2(76) of the Companies Act
2013?
A) Any company's customer.
B) A stranger to the company.
C) A director or his relative.
D) An unrelated shareholder.
Answer : C) A director or his relative.
66: Under Section 2(76) of the Companies Act 2013, who is NOT considered a related
party?
A) A key managerial personnel.
B) A private company with a director who is a member.
C) A public company with a director holding more than 2% of its paid-up share capital.
D) A random third-party individual.
Answer : D) A random third-party individual.
67: According to Section 2(77), what is the definition of "relative" in the context of the
Companies Act 2013?
A) Only family members.
B) Father, mother, son, and daughter.
C) People who work in the same company.
D) Close friends of a director.
Answer : B) Father, mother, son, and daughter.
68: A person shall be deemed to be the relative of another if they are related to another in
the following manner, except:
A) Brother includes the step-brother.
B) Sister includes the step-sister.
C) Son includes the step-son.
D) Daughter includes the step-daughter.
Answer : D) Daughter includes the step-daughter.
69: What is the purpose of Rules, 2014, as mentioned in the text?

A) To regulate company names.
B) To define corporate governance.
C) To specify accounting standards.
D) To provide additional guidelines on company meetings.
Answer : D) To provide additional guidelines on company meetings.
70: What is the Explanation for the term "the investing company or the venturer of a
company" as mentioned in the text?
A) It is not explained in the text.
B) It refers to a company that invests in another company and becomes an associate company.
C) It refers to a non-profit organization.
D) It refers to a governmental body.
Answer : B) It refers to a company that invests in another company and becomes an associate
company.

71: What does Section 188 of the Companies Act, 2013 deal with?
A) Corporate Governance
B) Related Party Transactions
C) Mergers and Acquisitions
D) Taxation
Answer : B) Related Party Transactions
72: Under Section 188, which of the following is NOT a type of related party transaction?
A) Leasing of property
B) Sale of goods
C) Investments in other companies
D) Rendering of services
Answer : C) Investments in other companies
73: According to Rule 15 of the Companies (Meetings of Board and its Powers) Rules,
2014, in what situations does a company need approval from the Board of Directors for
related party transactions?
A) All related party transactions
B) Only those not in the ordinary course of business
C) Only those on an arm's length basis
Answer : B) Only those not in the ordinary course of business
74: What information should be disclosed in the agenda of a Board meeting for related
party transactions according to Rule 15?
A) Name of the related party and nature of relationship
B) Detailed financial statements
C) Market analysis
D) Marketing strategies
Answer : A) Name of the related party and nature of relationship
75: If a director is interested in a related party transaction, what action should they take
during the Board meeting?
A) They must leave the meeting immediately.
B) They can participate in discussions and voting.
C) They should propose the transaction.
D) They should challenge the transaction.
Answer : A) They must leave the meeting immediately.
76: Under the first proviso to Section 188 (1) of the Act, when is a resolution by the
company not required for related party transactions?
A) For all transactions
B) When transactions involve buying property
C) When transactions are with wholly-owned subsidiaries
D) When transactions are in the ordinary course of business
Answer : C) When transactions are with wholly-owned subsidiaries

77: What is the threshold for sale, purchase, or supply of goods or materials, beyond
which a resolution is required for related party transactions?
A) Rs. 2.50 lakh
B) 1% of net worth
C) Rs. 1 lakh
D) No threshold
Answer : A) Rs. 2.50 lakh
78: Which of the following is NOT a condition for entering into related party
transactions according to Rule 15?
A) Manner of determining pricing
B) Value of the transaction
C) Size of the Board of Directors
D) Details of factors not considered
Answer : C) Size of the Board of Directors
79: What does the first proviso to Section 188 (1) state regarding related party
transactions?
A) All transactions require shareholder approval.
B) Only transactions with key managerial personnel are allowed.
C) Certain transactions do not require shareholder approval.
D) All transactions are prohibited.
Answer : C) Certain transactions do not require shareholder approval.
80: What should be placed before the shareholders at a general meeting for approval to
exempt related party transactions from the resolution requirement?
A) Detailed financial statements
B) Market analysis
C) Consolidated accounts of a wholly owned subsidiary
D) Regulatory compliance reports
Answer : C) Consolidated accounts of a wholly owned subsidiary
81. What is the second proviso to Section 188(1) of the Act about?
a) Voting by related parties
b) Contracts with government companies
c) Ordinary course of business
d) Transactions on an arm's length basis
Answer: a
82. The second proviso to Section 188(1) of the Act doesn't apply to which type of
companies?
a) Public companies
c) Government companies
d) Listed companies
Answer: b

83. What does "ordinary course of business" refer to?

a) Unusual business practices
b) Transactions at a loss
c) Usual business transactions
d) Government-related contracts
Answer: c
84. How is the phrase "in the ordinary course of business" defined?
a) In the Memorandum of Association
b) By comparable prices
c) Continuous and normal business activities
d) In the Audit Committee's decision
Answer: c
85. What is an "arm's length transaction" in business terms?

a) A transaction between close relatives
b) A transaction between unrelated parties
c) A transaction with favourable terms
d) A transaction with government agencies
Answer: b
86. What is the significance of the phrase "at arm's length" in business transactions?
a) Indicates an intimate relationship
b) Implies equal bargaining power
c) Suggests government involvement
d) Refers to long-term contracts
Answer: b
87. What is a critical factor in determining whether a transaction is arm's length?

a) Comparable prices of competitors
b) Nature of the product
c) Approval by the Audit Committee
d) Terms and conditions of the transaction
Answer: d
88. In the context of related party transactions, what is the purpose of determining an
"arm's length price"?
a) To set a benchmark for pricing
b) To ensure a loss-free transaction
c) To favor one of the related parties
d) To promote government contracts
Answer: a
89. What question does the determination of "arm's length price" seek to answer?
a) What would have been the price in a government contract?
b) What is the minimum price for a transaction?
c) What is the market price for the product?

d) What would have been the price if the transaction were between unrelated parties?
Answer: d
90. Who is responsible for determining whether a transaction is in the ordinary course of
business?
b) The Audit Committee
c) The government authorities
d) The shareholders
Answer: b
91. In the absence of an Audit Committee, who decides whether a transaction is in the
ordinary course of business?
a) The shareholders
b) The government authorities
c) The Board of Directors
d) The related parties involved
Answer: c
92. What is the primary purpose of documentation in a related party transaction?

a) To highlight favourable terms
b) To prove commercial considerations
c) To showcase government involvement
d) To justify related party transactions
Answer: b
93. What does "in the ordinary course of business" mean in the context of related party
transactions?
a) Standard business practices
b) Irregular transactions
c) Government contracts
d) Complex financial deals
Answer: a
94. What is the primary consideration for determining an "arm's length price"?
a) The company's profitability
b) The market price of the product
c) The financial stability of related parties
d) The terms and conditions of the transaction
Answer: d
95. What does "at arm's length" imply in a business transaction?

a) Close family ties
b) Equal bargaining power
c) Government control
d) Exclusive rights
Answer: b

96. What does the second proviso to Section 188(1) of the Act apply to?
a) Government companies
c) Public companies
d) Listed companies
Answer: a
97. What is the objective of Section 188(1) of the Act?

a) To restrict related party transactions
b) To encourage more government contracts
c) To promote family businesses
d) To benefit shareholders
Answer: a
98. In what situations does the second proviso to Section 188(1) of the Act apply?
a) All related party transactions
b) Only if the transaction is below market price
c) Only if the transaction is in the ordinary course of business
d) Only if the transaction is between close relatives
Answer: c
99. What is the purpose of the second proviso to Section 188(1) of the Act?
a) To provide government contracts
b) To restrict related party transactions
c) To encourage favourable terms in transactions
d) To facilitate mergers and acquisitions
Answer: b
100. Which parties are exempt from the second proviso to Section 188(1) of the Act?
a) Listed companies
c) Public companies
d) Government companies
Answer: d
101. In the context of Section 188 of the Companies Act, 2013, which of the following
items of remuneration received by a director is not covered by the proviso?
a) Salary
b) Fee
c) Commission
d) Profit-sharing
Answer: d
102. Under what condition does Section 188 of the Act apply to related party transactions?
a) If terms and conditions are not comparable
b) If the director obtains consent from the Board
c) If the transaction is in the ordinary course of business

d) If it's with government agencies

Answer: a
103. Which committee's approval is required for related party transactions, as provided
under Section 197 of the Act?
a) Audit Committee
b) Nomination & Remuneration Committee
c) Shareholders Committee
d) Ethics Committee
Answer: b
104. What is the primary objective of Section 314 of the 1956 Act (corresponding to
Section 188 of the Companies Act, 2013)?
a) To promote related party transactions
b) To protect the interests of shareholders
c) To encourage mergers and acquisitions
d) To provide rent-free accommodations
Answer: b
105. Which form is used to disclose related party transactions in the Board's Report?
a) Form AOC-1
b) Form AOC-2
c) Form MGT-14
d) Form DIR-12
Answer: b
106. When should a contract or arrangement with a related party be disclosed as a related
party transaction?
a) In any case
b) If it's with a director
c) Only if it's not on an arm's length basis
d) If it's in the ordinary course of business
Answer: c
107. What happens if a contract or arrangement with a related party is not disclosed
within three months?
a) It becomes void
b) The Audit Committee approves it
c) Shareholders have no say
d) Directors indemnify the company
Answer: a
108. Who is authorized to proceed against a director or employee who entered into a
contract or arrangement in contravention of related party transaction provisions?
a) Shareholders
b) Employees
c) The company

d) The government
Answer: c
109. What is the consequence of a director being convicted of an offence dealing with
related party transactions?
a) Immediate removal from the board
b) Mandatory disclosure to the shareholders
c) Loss of indemnification by the company
d) Enhanced remuneration
Answer: c
110. Will a payment of salary to an employee who is a relative of a Director require

disclosure as a related party transaction in the Board's Report if it's in the ordinary
course of business and on arm's length?
a) Yes
b) No
Answer: b
111. What is the key term used to determine if a transaction needs disclosure in Form
AOC-2?
a) Material
b) Extraordinary
c) Exceptional
d) Routine
Answer: a
112. Which committee's approval is not required if a related party transaction is in the
ordinary course of business and on arm's length?
a) Audit Committee
b) Nomination & Remuneration Committee
c) Ethics Committee
d) None, approval is always required
Answer: d
113. Which Section of the Companies Act, 2013 deals with related party transactions?
a) Section 197
b) Section 314
c) Section 188
d) Section 164
Answer: c
114. What should related party transactions aim for to avoid Section 188 scrutiny?
a) Government contracts
b) Terms and conditions identical to competitors
c) Irregular business practices
d) Favourable deals for the company
Answer: b

115. Which form should be signed by the persons who have signed the Board's Report?
a) Form AOC-1
b) Form AOC-2
c) Form MGT-14
d) Form DIR-12
Answer: b
116. Under which condition will a related party transaction be protected under the
proviso to Section 197(4) of the Act?
a) If terms and conditions are not comparable
b) If the transaction is in the ordinary course of business
c) If there's no Audit Committee approval
d) If it's with government agencies
Answer: b
117. What is the purpose of Form AOC-2?

a) To report Board's meetings
b) To disclose related party transactions in the Board's Report
c) To file annual returns with the government
d) To obtain shareholder approval
Answer: b
118. Which section of the Act allows the company to proceed against a director or
employee for recovery of loss due to contravention of related party transaction
provisions?
a) Section 188(4)
b) Section 197(2)
c) Section 314(1)
d) Section 164(1)(g)
Answer: a
119. What does "arm's length basis" in related party transactions mean?
a) Transactions with government agencies
b) Deals with unrelated parties
c) Exclusive deals for directors
d) Deals with government companies
Answer: b
120. What type of transactions fall under the fourth proviso to Section 188(1) of the Act?
a) Transactions not on an arm's length basis
b) All related party transactions
c) Transactions with government agencies
d) Transactions in the ordinary course of business
Answer: d

Question 121: What section of the Act deals with penalties for non-compliance in the
case of unauthorized contracts or arrangements?
A. Section 177(4)(iv)
B. Section 188(5)
C. Section 6A
D. Section 177(2)
Answer : B. Section 188(5)
122: Which companies are required to constitute an Audit Committee according to the
provided data?
A. Public Companies with a paid-up share capital of Rs.10 Crore or more
B. Private Companies with a turnover of Rs.100 Crore or more
C. Listed Companies
D. Companies with outstanding loans, debentures, and Rs. 50 Crore
Answer : C. Listed Companies
123: What responsibility does the Audit Committee have regarding related party
transactions?
A. They are responsible for making financial decisions.
B. They are responsible for auditing the company's financial records.
C. They are responsible for approving the transactions of the company with related parties.
D. They are responsible for marketing the company's products.
Answer : C. They are responsible for approving the transactions of the company with related
parties.
124: What is the provision for making omnibus approval for related party transactions
according to Rule 6A?
A. Omnibus approval is not allowed.
B. Omnibus approval is subject to the Audit Committee's discretion.
C. Omnibus approval is required for all transactions.
D. Omnibus approval is subject to specified conditions.
Answer : D. Omnibus approval is subject to specified conditions.
125: What criteria should the Audit Committee specify for making omnibus approval
according to Rule 6A?
A. Only the year of the transaction
B. Repetitiveness of the transactions and year of the transaction
C. Repetitiveness of the transactions
D. The size of the transaction
Answer : B. Repetitiveness of the transactions and year of the transaction
126: Which factor does the Audit Committee consider while specifying the criteria for
making omnibus approval?
A. The colour of the transaction
B. The profitability of the company
C. The repetitiveness of the transactions
D. The company's age

Answer : C. The repetitiveness of the transactions
127: According to Section 177(4)(iv), what is one of the terms of reference of the Audit
Committee?
A. Approving all financial transactions
B. Specifying criteria for omnibus approval
C. Auditing the company's financial records
D. Marketing the company's products
Answer : B. Specifying criteria for omnibus approval
128: Which companies are required to constitute an Audit Committee according to

Section 177?
A. All companies
B. Public Companies with a paid-up share capital of Rs.10 Crore or more
C. Private Companies with a turnover of Rs.100 Crore or more
D. Companies with outstanding loans, debentures, and Rs. 50 Crore
Answer : B. Public Companies with a paid-up share capital of Rs.10 Crore or more
129: According to the provided data, what is the responsibility of any director or
employee who violates the contract or arrangement provisions?
A. They receive a warning letter.
B. They are exempt from any penalties.
C. They shall be subject to penalties.
D. They receive a bonus.
Answer : C. They shall be subject to penalties.
130: What does Section 188(5) of the Act deal with?

A. Criteria for omnibus approval
B. Penalties for non-compliance
C. Audit Committee responsibilities
D. Company's outstanding loans
Answer : B. Penalties for non-compliance
131: What does SEBI's definition of "related party transaction" include?

A. Only transactions where a price is charged.
B. Transactions between listed entities and unrelated parties.
C. Services or obligations between a listed entity and a related party, regardless of whether a price
is charged.
D. Transactions involving brand usage or royalty.
Answer: C
132: Who is deemed to be a related party if they belong to the promoter or promoter
group and hold 20% or more of shareholding in a listed entity?
A. Any individual or entity.
B. Only individuals.
C. Only entities.
D. No one is deemed a related party.

Answer: A
133: What is the condition for a transaction with a related party to be considered
"material"?
A. If the transaction has a price charged.
B. If the transaction involves services or obligations.
C. If the transaction is repetitive in nature.
D. If the transaction is in the interest of the listed entity.
Answer: C
134: What is the role of the audit committee regarding related party transactions?
A. To review all related party transactions.
B. To grant omnibus approval for all related party transactions.
C. To vote on resolutions related to related party transactions.
D. To lay down criteria for granting omnibus approval.
Answer: D
135: How often should the policy on related party transactions be reviewed by the board
of directors?
A. At least once every year.
B. At least once every three years.
C. Whenever there is a related party transaction.
D. Never.
Answer: B
136: Who approves all material related party transactions?

A. The shareholders.
B. The board of directors.
C. The audit committee.
D. The related parties.
Answer: A
137: In which cases are the provisions of sub-regulations (2), (3), and (4) not applicable?
A. In transactions between two government companies.
B. In transactions between holding companies and their subsidiaries.
C. In all cases.
D. In transactions between unrelated parties.
Answer: A
138: What happens if a related party transaction cannot be foreseen and details are not
available for approval?
A. The transaction is automatically approved.
B. The audit committee reviews it quarterly.
C. The audit committee may grant omnibus approval.
D. The transaction is rejected.
Answer: C

139: What should be reviewed by the audit committee on a quarterly basis?

A. The policy on related party transactions.
B. The shareholding structure of the company.
C. The details of related party transactions entered into by the listed entity.
D. The financial statements of the listed entity.
Answer: C
140: Who is prohibited from voting to approve resolutions related to material related
party transactions?
A. All shareholders.
B. Related parties.
C. Board of directors.
D. The CEO of the company.
Answer: B
141: In terms of SEBI (LODR) Regulation, 2015, where should companies make the
required disclosures related to Related Party Transactions (RPTs)?
A) In their quarterly financial statements.
B) In compliance with the Accounting Standard on RPTs.
C) In their Annual Reports.
D) In their press releases.
Answer: C
142: When should companies disclose transactions with entities holding 10% or more
shareholding in the listed entity belonging to the promoter group?
A) On a need-to-know basis.
B) Only during shareholder meetings.
C) In the annual results.
D) In the quarterly reports.
Answer: C
143: Who is responsible for providing observations in MR-3 regarding non-compliances

for entering into RPTs?
A) Statutory Auditor.
B) Secretarial Auditor.
C) Chief Financial Officer.
D) Company Secretary.
Answer: B
144: What regulatory body is responsible for regulating and monitoring Related Party
Transactions in India?
A) SEBI (Securities and Exchange Board of India).
B) RBI (Reserve Bank of India).
C) IRDAI (Insurance Regulatory and Development Authority of India).
D) NSE (National Stock Exchange of India).
Answer: A

145: What were the proceedings initiated by Leela under the Corporate Debt
Restructuring (CDR) package?
A) Liquidation of assets.
B) Litigation against the majority lenders.
C) A financial restructuring process.
D) An insolvency resolution process.
Answer: C
146: What mechanism did ITC argue SEBI should have invoked to restrict the
appellant's voting rights?
A) Takeover Regulations.
B) NCLT Regulations.
C) Company Act.
D) Bankruptcy Code.
Answer: A
147: What was the main argument of the respondents against the appellant's objection to
the transactions?
A) The transactions were not at arm's length.
B) The appellant was a rival company trying to interfere.
C) The transactions violated NCLT regulations.
D) The appellant had a personal agenda.
Answer: B
148: What was the basis for SEBI's argument that the transactions were not related party
transactions?
A) Lack of disclosure by the companies.
B) The transactions were in the interest of investors.
C) The majority lenders' consent.
D) Regulatory intervention.
Answer: B
149: What did SEBI hold with respect to the appellant's objections to voting rights?
A) SEBI supported the appellant's objection.
B) SEBI denied the appellant's objection.
C) SEBI proposed a compromise.
D) SEBI referred the matter to court.
Answer: B
150: What action did the majority lenders take after the failed CDR package?
A) Liquidated Leela's assets.
B) Assigned the debt to another lender.
C) Initiated bankruptcy proceedings.
D) Declared bankruptcy themselves.
Answer: B

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CS Executive New Syllabus Company Law MCQ

1] Introduction to Company Law

2.Which was the first Companies Act passed in India?

3.What was the objective of the Companies Act, 2013 in India?

4.Who chaired the Expert Committee on Company Law in India in 2004?

6.What is the primary objective of the Companies Act, 2013?

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7.Ultra vires acts refer to activities performed by a company that are:

9.What is the purpose of the Doctrine of Ultra Vires?

11.Which committee submitted a report recommending a significant shift from the

12.What is the purpose of the Companies (Amendment) Act, 2015?

13.Which term is NOT associated with the Companies Act, 2013?

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c. Joint Stock Company Act, 1850

14.The Companies Act, 2013 aims to enhance:

17.The Doctrine of Ultra Vires relates to actions that:

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Answer: c. Official Gazette

24.What does the Latin term "ultra vires" mean?

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26.What is the main purpose of the Doctrine of Ultra Vires?

31)What is the significance of Section 6 of the Companies Act, 2013?

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39.The doctrine of ultra vires is primarily intended to:

42.According to Justice Shah in A. Lakshmanaswami Mudaliar v. L.I.C., when can a

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52.The doctrine of ultra vires is primarily intended to:

54.According to Justice Shah in A. Lakshmanaswami Mudaliar v. L.I.C., when can a

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60.What is the primary concern regarding an ultra vires borrowing by a company?

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63.What is the significance of implied powers in a company's operations?

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68.What is the primary purpose of the doctrine of "constructive notice" in relation to a

70.What is a crucial exception to the doctrine of indoor management?

72.What is the primary purpose of a company, organization, or entity set up to provide a

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75.What is the primary purpose of implied powers in a company's operations?

77.In what scenario is the doctrine of "indoor management" not applicable?

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81.Which doctrine protects outsiders against actions taken by a company?

82.When can an outsider invoke the doctrine of "indoor management"?

83.In what scenario does the doctrine of "constructive notice" operate?

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86.Which type of power is NOT implied in a company's operations and should be

88.What is the primary purpose of the doctrine of "constructive notice" in relation to a

89.What does the doctrine of constructive notice entail in companies law?

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Answer: b. It assumes that everyone knows a company's Memorandum and Articles of

93.What does the doctrine of indoor management protect?

95.What is the consequence of an outsider deliberately refraining from making inquiries

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Answer: a. They will be treated as having notice of the company's documents.

100.What is the primary purpose of the doctrine of alter ego?

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106.When are courts generally reluctant to lift the corporate veil?

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110.Why did Vodafone challenge the tax demand in court?

113.What is the doctrine of constructive notice?

115.What is the primary purpose of lifting or piercing the corporate veil?

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d. To reveal the true character of a company's actions or ownership.