QUESTION BANK-COMPANY LAW

UNIT I
1. How many members should sign the MOA in case of public company?
A) 1
B) 5
C) 3
D) 7

Ans. D
2. …………………conceives the idea of the business.
A) Promoters
B) Auditors
C) Directors
D) Shareholders
Ans. A

3. Shares of ……………..company are freely transferable.

A) Private company
B) Public company
C) Both (a) & (b)
D) None of the above

Ans. B
4. Life Insurance Corporation Ltd. is formed under………….
A) Companies Act, 2018
B) Special Act of Parliament
C) Both (a) and (b)
D) None of the above
Ans. B
5. Company’s corporate personality was brought forward in the case of…………
A) Macaura V. Northern Assurance Co. Ltd.
B) Jons V. Lip ran.
C) CIT V. Meenakshi Mills Ltd.
D) Salomon V Salomon and Co. Ltd.
Ans. D

6. Which of the following are not the disadvantage of incorporation?

A) Formalities and expenses
 B) Corporate disclosure
C) Limited liability
D) Both (a) and (b)

Ans. C
7. Which of the following is not the advantage of incorporation?
A) Separate property
B) Unlimited liability
C) Capacity to sue
D) Flexibility & autonomy
Ans. B

8. A company is a ……………..on the other hand a club is a……………..

A) Trading association, non trading association.
B) Non trading association, trading association.
C) Trading association, trading association.
D) None of these.
Ans. A

9. In Private Company, member of the company should not be less than…………….

A) Seven
B) Ten
C) Two
D) Eight

Ans. C
10. In public company, the members of the company should not be less than………..
A) Two
B) Seven
C) Ten
D) Twenty
Ans. B

11. Which of the following statement is correct?

A) Partners are the agents of the firm but member of company are not its agents
B) Partner cannot contract with his firm but a member of a company can
C) Both (a) and (b)
D) None of these is correct

Ans. C
12. A word corporation is derived from latin term “corpus” which means……..
A) Body
B) Legal Person
C) Artificial Person
D) None of the above

Ans. A
13. Which of the following are the characteristics of a company?
A) Corporate Personality
B) Limited Liability
C) Perpetual Succession
D) All of the above
Ans. D

14. Which of the following is a non trading association?

A) Company
B) Partnership firm
C) Club
D) HUF

Ans. C
15. What are the limits of number of members in a Private Company?
A) Fifty
B) Seven
C) Twenty
D) Two hundred
Ans. D

16. If XYZ is the holding company of P&R Ltd. then, which of the following statement is not
true in this regard.
A) XYZ Ltd. controls the composition of Board of P&R
B) XYZ Ltd. holds more than 50% of the nominal value of the equity shares
C) Both (a) & (b)
D) None of the above

Ans. D
17. Which of the following is not a stage of the development of company?
A) Promotion
B) Production
C) Incorporation
 D) Commencement of Business
Ans. B

18. Which of the following company/companies are registered by the Companies Act, 2013?
A) Government Company
B) Private Company
C) Public Company
D) All of the above

Ans. D
19. A public company must have at least…………. directors whereas a private company must
have at least ………. directors.
A) 3;2
B) 2;3
C) 2;5
D) 8;10
Ans. A

20. A subsidiary of a government company is also treated as a……………………

A) Government Company
B) Public Company
C) Private Company
D) All of the above

Ans. A
21. The……………. of a government company is appointed or reappointed by the Comptroller
and Auditor General of India.
A) Auditor
B) Company Secretary
C) Both (a) and (b)
D) None of the above
Ans. A

22. …………….. is neither an agent, nor a trustee of a company.

A) Directors
B) Company Secretary
C) Employees
D) Promoters
 Ans. D
23. The whole process of the company formation may be divided into three direct stages, the
sequence is…………….
A) Promotion, incorporation by registration, commencement of business.
B) Incorporation by registration, commencement of business, promotion.
C) Commencement of business, promotion, incorporation by registration.
D) Commencement of business, incorporation by registration, promotion.

Ans. A
24. Advantage of incorporated company is………….
A) Corporate disclosures
B) Common seal
C) Capacity to sue
D) Winding up procedure

Ans. C
25. Government company comes under section…………….of Companies Act, 2013.
A) 2(46)
B) 2(44)
C) 2(43)
D) 2(45)
Ans. D

26. Lifting of corporate veil is permitted……

A) By statue
B) Voluntary
C) Any time
D) None of these

Ans. A
27. The term company is defined under which section of the act………..
A) Sec 2(20)
B) Sec 4(2)
C) Sec 2(4)
D) Sec 1(3)
Ans. A
28. Property of a company belongs to……..
A) Company
B) Share Holder
 C) Member
D) Promoters

Ans. A
29. Which section provides for the formation of a company?
A) Section 7
B) Section 2
C) Section 3
D) Section 4
Ans. C
30. Which of the following is an example of statutory company?
A) ONGC
B) RBI
C) PGCIL
D) NTPC
Ans. B

31. Maximum number of members in case of a Public Company ……….

A) Two
B) Seven
C) Two hundred
D) No limit

Ans. d
32. Maximum number of directors in a Private Company should be……….
A) Two
B) Three
C) Fifteen
D) Twenty
Ans. C

33. An association non for profit registered under Companies Act, 2013 is also known as………
A) Section 8 companies
B) Illegal Association
C) Co-operative Societies
D) Holding Companies
Ans. A
34. The minimum paid up share capital in case of a public company and private company
is……………………
A) 1 lac
B) 5 Lacs
C) 10 Lacs
D) No limit on paid up capital
Ans. D

35. Limited liability means liability of its members is ……………

A) Limited by Guarantee
B) Unlimited liability
C) Limited upto the amount unpaid
D) None of the above
Ans. C

36. A public limited company can offer pre-emptive rights only to the…….
A) Managing Directors
B) Shareholders
C) Promoters
D) Creditors

Ans. B
37. Under which sec. a private company can voluntary converted into public company?
A) 14 (1)
B) 15 (1)
C) 16 (1)
D) 17(1)
Ans. A

38. The term company is defined under which sec of the Act?
a) Sec 3(1)
b) Sec4 (2)
c) Sec2 (20)
d) Sec1 (3)

Ans. c

39. Property of the company belongs to_______

a) Company
b) Shareholders
c) Members
 d) Promoters

Ans. a

40. Minimum number of members in case of public company_______

a) 1
b) 2
c) 5
d) 7

Ans. d

41. Minimum number of members in case of private company is

a) 1
b) 2
c) 3
d) 6

Ans- b

42. Maximum no. of members in case of private company is

a) 50
b) 100
c) 150
d) 200

Ans. d

43. Maximum no .of members in case of public company is

a) 0
b) Unlimited
c) 50
d) 100

Ans. b

44. Minimum subscription should be received with in ______days

a) 120
b) 125
c) 130
d) 135

Ans. a

45. If minimum subscription is not received application money should be

refunded with in ______days
a) 20
b) 25
c) 30
d) 10

Ans. c

46. Minimum paid up share capital in case of a private company is _______

a) 1 Lakh
b) 2 Lakhs
c) 3 Lakhs
d) No such limit

Ans. d

47. Minimum no. of Directors in case of a public company is __________

a) 1
b) 2
c) 3
d) 4

Ans.3

48. Minimum no. of Directors in case of private company is _______

a) 1
b) 2
c) 3
d) 4

Ans. c

49. The liability of members if company is limited by guarantee.

a) Unpaid value of shares
b) Guarantee amount
c) Unlimited liability
d) None of the above

Ans. b

50. The liability of members if company is limited by shares

a) Unpaid value of shares
b) Guarantee amount
c) Unlimited liability
 d) None of the above

Ans. A

51. Transfer of shares in the public company is

a) Restricted
b) Freely transferable
c) Prohibited
d) None of these

Ans. b

52. Generally Company liability is

a) Limited
b) Unlimited
c) Situation does not arise
d) None of the above

Ans. A

53. Generally rights and obligations of the company are regulated in

a) A.O.A
b) M.O.A
c) Partnership deed.
d) None of these
Ans. B

54. Generally rights and obligations of the Partnership firm are regulated in
a) A.O.A
b) M.O.A
c) Partnership deed.
d) None of these
55. A company is named as govt. company if it is holds ______% of paid up share capital
a) More than 30
b) More than 40
c) More than 50
d) None

Ans. c

56. Central Government permission is required in case of _______ conversion.

a) Private to public
 b) Public to private
c) Both (a) or (b)
d) None of the above

Ans. b

57. ________% of shares should be held by a company in another company so as to become its
holding company.
a) More than 50
b) More than 40
c) More than 30
d) More than 20

Ans.a

58. .The companies which are formed under special charter granted by the king or queen of
England are called
a) Statutory companies
b) Registered companies
c) Chartered companies
d) None of these

Ans. c

59. .The companies which are formed under special Act of parliament are called
a) Chartered companies
b) Statutory companies
c) Registered companies
d) None of these

Ans. b

60. If the guarantee Co. having no share capital the liability of shareholders
will be
a) To the extent of guarantee
b) Unpaid value of shares
c) Unlimited
d) None of the above

Ans. a

UNIT II
61. Which of the following is correct with respect to Shelf Prospectus?
 A) It does not need a separate prospectus for each offering.
B) It is a prospectus that lacks complete particulars about the quantum or price of the
securities.
C) The validity period of the shelf prospectus cannot exceed more than 2 years.
D) A and C
Ans. A
62. Which of the following section in the Companies Act,2013 mentions about Red Herring
Prospectus?
A) Section 30
B) Section 31
C) Section 32
D) Section 33.
Ans. C
63. Variation of the terms of contract or objects in prospectus is mentioned in which of the
following sections of Companies Act,2013?
A) Section 27
B) Section 25
C) Section 29
D) Section 32
Ans. A

64. Number of clauses in Memorandum of Association is………..

A) 5.0
B) 6.0

C) 7.0
D) 8.0

Ans. B
65. How many members should sign the MOA in case of public company?
A) 1
B) 5
C) 3
D) 7
Ans. D
66. Provisions related to accounts, winding up, calls on shares, forfeiture, etc. are contained
in……………………
 A) Articles of Association
B) Memorandum of Association
C) Prospectus
D) Statement in lieu of prospectus
Ans. A

67. Which one of the following is not a main clause of memorandum of association?
A) Name clause
B) Capital clause
C) Object clause
D) Director clause
Ans. D
68. Liability clause in MOA is required by:
A) Company limited by shares
B) Company limited by guarantee
C) Company limited by both shares and guarantee
D) All of the above
Ans. D
69. The registered office clause of memorandum of association contains….
A) The name of the state in which the registered office of the company is to be situated.
B) The name of the city/town only and not that of the state.
C) The name of registrar of companies
D) The complete postal address.
Ans. A
70. Which documents contains the regulations relating to the internal management of a
company?
A) Memorandum of Association
B) Articles of Association
C) Both (a) and (b)
D) None
Ans. B
71. Which documents contains the constitution of a company?
A) Memorandum of Association
B) Articles of Association
C) Both (a) and (b)
D) None of these
Ans. A
72. Foreign company must issue prospectus…….
 A) True
B) Partly true
C) False
D) None of these
Ans. C

73. The Company Nationality is decide by..

A) Shareholder
B) Registered office
C) Place at Books of accounts are kept.
D) None of the above.
Ans. B
74. The first step in the formation of a company is to prepare a document called the __________.
A) MOA
B) AOA
C) Prospectus
D) None
Ans. A
75. While the doctrine of ‚_______________________‚seeks to protect the company against the
outsiders, the principal of ‚__________________operates to protect the outsiders against the
company.
A) Constructive notice‚ indoor management
B) Constructive notice, corporate veil
C) Indoor management, Substantive theory
D) None
Ans. A
76. The ____________ do not confer any _____________ even upon a member in a capacity
other than that of a member.
A) Articles, contractual rights
B) Articles, MOA
C) AOA, MOA
D) None
Ans. A
77. Every person dealing the company is deemed to have a ‚__________________‚(to) of the
contents of its memorandum and articles.
A) Constructive notice
B) Indoor Management.
C) Lifting of corporate veil.
D) None
 Ans. A
78. The doctrine of ____________ protects third parties who are entitled to an assurance that all
procedural aspects of a transaction are carried out.
A) Indoor management
B) Constructive notice
C) Lifting of corporate veil.
D) None
Ans. A

79. The members can get an _______________ to restrain the company wherein ultra vires act
has been or is about to be under taken.
A) Injunction
B) Substitution
C) Subrogation
D) None
Ans. A

80. The name of the Company can be changed by ---------------------

A) Ordinary resolution
B) Special resolution
C) With approval of Union Government
D) A special resolution with approval of Central Government
Ans. D

81. An act of the company must not be beyond the object clause otherwise it will be ---------------
------------- and cannot be ratified even if all the member wish to ratify.
A) ultra vires and therefore, void
B) voidable
C) illegal
D) intra vires.
Ans. A

82. A company can become a member of another company if it is so authorized by______

A) MOA
B) AOA
C) Both (a) & (b)
D) None of the above
Ans. A

83. Proxies cannot vote on________

A) Show of hands
 B) Poll
C) Both (a) & (b)
D) None of the above
Ans. A

84. Abridged prospectus means__________

A) The standards of accounting or any addendum thereto for companies or class of
companies referred to in section 133
B) The articles of association of a company as originally framed or as altered from time to
time or applied in pursuance of any previous company law or of this Act
C) A memorandum containing such salient features of a prospectus as may be specified by
the Securities and Exchange Board by making regulations in this behalf
D) The standards of auditing or any addendum thereto for companies or class of companies
referred to in sub-section (10) of section 143
Ans. C
85. The memorandum of a company is dealt under?
A) section 12
B) section 15
C) section 6
D) section 4
Ans. D
86. In the MOA there are 6 clauses, we can alter all clauses expect one clause. What is that
clause?
A) Objects clause
B) Name clause
C) Association clause
D) None of these
Ans. C

87. In the incorporation of Company, which of these is considered as a first step?

A) Registration
B) Filing of Memorandum
C) Issuing Certificate
D) None of the above
Ans. B

88. Which chapter contains provisions in the context of prospectus?

A) Chapter III
B) Chapter IV
C) Chapter V
D) Chapter VI
 Ans. A
89. Among the following, which information needs to be included in Prospectus?
A) Dates of opening and closing
B) Details about underwriting of the issue
C) Procedure and time schedule for allotment and the issue of certificate
D) All the above
Ans. D

90. What is maximum time period for validity of Shelf prospectus?

A) Six months
B) Nine months
C) One year
D) Two years
Ans. C

91. For mis-statement in prospectus, a person is liable for……

A) Criminal Liability
B) Civil Liability
C) Both A and B
D) None of these
Ans. C

92. ………….prospectus is to be issued prior to the issue of a prospectus.

A) Shelf Prospectus
B) Red Herring Prospectus
C) Deemed Prospectus
D) None of the above.
Ans. B

93. Advertisement of prospectus must not include………

A) Objects of the company
B) Amount of share capital
C) Number of shares subscribed by Signatories
D) Bonus issue of Shares
Ans. D

94. Memorandum of Association of a Company defines the relationship of the company

with…….
A) Members
B) Outside World
C) Subscribers
D) Lenders
 Ans. B
95. Articles of Association of a Company defines the relationship of the company with…….
A) Members
B) Outside World
C) Subscribers
D) Lenders
Ans. A

96. The MOA and AOA are drafted by ……

A) Promoters
B) Registrar
C) Shareholders
D) Creditors
Ans. A

97. Alteration of Memorandum of Association must only be done by………

A) Ordinary resolution
B) Special resolution
C) Ordinary resolution with approval of ROC
D) Special resolution with approval of ROC
Ans. C

98. Alteration of Articles of Association must only be done by………

A) Ordinary resolution
B) Special resolution
C) Ordinary resolution with approval of ROC
D) Special resolution with approval of ROC
Ans. B

99. The Articles of Association needs to be signed by ………..

A) All proposed directors of Company
B) Registrar of companies
C) Promoters
D) Subscribers of MOA
Ans. D

100. Which of the following company need not to have their own Articles of Association?
A) Unlimited Companies
B) Companies limited by guarantee
C) Private company limited by shares
D) Public company limited by shares
Ans. D
101. The MOA and AOA is open to inspection by ………..
A) Members of company
B) Creditors of company
C) Registrar of company
D) Everyone
Ans. C
102. The succession clause is only applicable for……….
A) Private Companies
B) Public Companies
C) OPC (one person company)
D) Small companies
Ans. C
103. Alteration of AOA is stated under which section?
A) 44
B) 2
C) 14
D) 32
Ans. C

104. The ______and______of the registered office shall be mentioned in all letter
heads, business letter, notices and common seal of the company.
a. Size, Area
b. Logo , Tagline
c. Name , Address
d. None of these
Ans.C
105. Every company must have a registered office either from the day it begins to carry on
business or within 30 days of its incorporation , whichever is earlier
a. True
b. False
c. Partially True
d. None of the above
Ans. A
106. A company may change it's name by passing a _______resolution and with the
approval of central government signified in writing.
a. Special
b. Ordinary
c. Both A and B
 d. None of these
Ans. A

107. A company passes an ordinary resolution for the alteration of name clause on the
order of _________.
a. State government
b. Central government
c. Both A and B
d. None of the above
Ans. B
108. The alteration of the share capital and the power to make such alteration is
provided in
a. MOA
b. AOA
c. Can’t say
d. Both A and B
Ans. B
109. Prospectus is defined under which section ?
a. Section 45
b. Section 2(70)
c. Section 69
d. Section 55
Ans. B
110. Contents of prospectus includes ?
a. Information & Report section
b. Declaration Section
c. Other matters
d. All of the Above
Ans. D

UNIT III

111. “A share is a share in the share capital of a company, and includes stocks.” This
definition of shares is defined in:
A. Section 2(81)
B. Section 2(82)
C. Section 2(83)
D. Section 2(84)
 Ans. D
112. As per section ___ of sale of Goods Act, 1930, a share is regarded as ____.
A. 2(5), Actionable claims
B. 2(6), Goods
C. 2(7), Goods
D. 2(8), Actionable claims
Ans. C
113. “The aggregate of fully paid-up shares of a member merged into one fund of equal value”
A. Share Capital
B. Stock
C. Share Certificate
D. None of these
Ans.B
114. Under which section can a company, through a resolution passed in the general meeting,
convert all the fully paid-up shares into stock.
A. Section 61
B. Section 62
C. Section 63
D. Section 64
Ans. A

115. Which of the following are the types of share capital .

A. preference share capital
B. equity share capital
C. both a &b
D. none of the above
Ans. C

116. “For the shares to be redeemed “ they must be fully paid up .

A. true
B. false
C. partially true
D. none of the above
Ans.A

117. Equity shares are defined in section _____ of Companies Act 2013.
A. 41
 B. 42
C. 43
D. 44
Ans. C

118. Which of the following is the way of raising capital

A. private placement
B. allotment to issue houses
C. public calls
D. all of the above
Ans. D

119. What is the minimum subscription ?

A. 90% of share capital
B. 90% of the offer through offer document
C. 90% of the installment amount
D. 95% of the offer through offer document
Ans.B

120. ESOS stands for

A. employee share option service
B. employee stock option service
C. employee share option scheme
D. employee stock option scheme
Ans.D

121. A scheme under which a company offer share to employee , as part of public issue or
otherwise ,or through a trust where the trust may undertake secondary acquisitions for the
purpose
A. employee stock option scheme
B. employer stock option scheme
C. employee stock purchase scheme
D. employee share purchase scheme
Ans. C

122. What is the minimum vesting period in case of SAR scheme

 A. 18months
B. 12months
C. 6months
D. 9months
Ans. B

123. As per sec 11 of companies rule 2014 the application money shall be repaid
Within a period of ____days from the closure of the issue .
A. 10
B. 20
C. 15
D. 25
Ans. C

124. Which section of the companies act 2013 , prohibition companies having share capital
from buying its own shares.
A. Sec 67(2)
B. Sec 69(2)
C. Sec 68
D. Sec 67(4)
Ans. A

125. Which section of companies act , 2013 allows companies to buy back its shares .
A. sec 67(1)
B. sec 67(2)
C. sec 68
D. sec 67(4)
Ans. C

126. for a company to purchase its own shares

A. the buyback should be less than 30% of aggregate share capital
B. less than 20% of aggregate share capital
C. less than 25% of aggregate share capital
D. less than 27% of aggregate share capital
Ans.C

127. Which of the following is NOT a type of Preference Shares.

A. Participative
B. Cumulative
 C. Contractable
D. Redeemable
Ans. C

128. ____ means the stated value of shares or Face value.

A. Original Value
B. True Value
C. Cost Value
D. Par Value
Ans. D

129. A company can raise capital only through-

A. Issue houses
B. Private Placements
C. By public offers
D. All of these
Ans. D

130. Which of the following in not a general rule regarding allotment of shares.
A. Allotment must be made by proper authority
B. Allotment should be made within reasonable time.
C. Minimum Subscription
D. It Must be communicated.
Ans. C
131. Which of the following are the sources of buy back.
A. Free Reserve
B. Profit and loss statement
C. Share Capital
D. Ultra vires Borrowing
Ans. A
132. Which of the following are the contents of Share certificate.
A. Name of the Company
B. Share certificate number
C. Quantum and price
D. All of the above
Ans. D
133. Which of these is not a characteristic of a share certificate.
A. Non- Negotiable Instrument
B. Evidence of title of allottee or Transferee
C. Prima facie Evidence
D. Transferable through mere delivery
Ans. D
134. Which regulation and Schedule of Companies Act, 2013 provides that the board of
directors cannot cancel the forfeiture after the shares are reissued.
A. Regulation 31 (1), Table F, schedule 1
B. Regulation 31(2), Table E, Schedule 2
C. Regulation 31(1), Table E, Schedule 1
D. Regulation 31(2), Table F, Schedule 1
Ans. D
135. Who is the person elected by shareholders to direct conduct manage or Supervise the
affairs of the company.
A. Members
B. Director
C. Debtor
D. Creditor
Ans. B
136. Which of the following section talks about appointment of directors.
A. Section 151
B. Section 152
C. Section 153
D. Section 154
Ans.B
137. Section 165 states-
A. Max. number of directorships a person can hold
B. Max. number of memberships a person can hold
C. Max. number of shares a shareholder can hold
D. None of these
Ans.A
138. Which of the following is not the reason for reduction in capital.
A. Increasing shareholders value
B. Eliminating Profits
C. Returning of surplus to shareholder
D. Efficient capital structure
Ans.B
139. Form ______is used to intimate the RoC regarding the increase or reducing the capital.
A. Form NH-7
B. Form SH-7
C. Form NH-6
D. Form SH-6
Ans. B
140. Rights shares are considered an obligation, and are mandatory to be purchased.
A. true
B. False
Ans. B
141. A share call means –
A. Any call for payment of instalments and includes application money only
B. Any call for payment of instalments and includes allotment money
C. Any call for payment other than application and allotment
D. Any call for payment and includes both application and allotment
Ans.C
142. Which of the following are essentials of a valid call
A. Board resolution
B. Call for company’s benefits
C. Article of Association
D. all of these
Ans. D
143. A voluntary act of shareholders under which the shares are returned to the company for
cancellation.
A. Surrender of shares
B. Forfeiture of shares
C. Both A&B
D. None of these
Ans. A
144. Which of the following are the effects of forfeiture of shares.
A. Cessation of membership
B. Continuation Of liability
C. Free from Liability as past member
D. All of these
Ans. A

145. Which one of the following statements is incorrect?

A. The statutory minimum age of a director is 18.

B. There is no statutory maximum age of directors

C. A company can be a director of another company
D. There is no legal qualification necessary for becoming a director
Ans.A
146. What is the time limit for a company to deliver the share certificate after the application of
transfer of shares is made.
A. 15 days
B. 30 days
C. 45 days
D. 60 days
Ans.B
147. The term whole time director is defined in Sec.____ of the Companies Act 2013.
A. 2(25)
B. 2 (94)
C. 3 (25)
D. 3(24)
Ans. B
148. An _______ can be either a whole-time director of the company or a Managing Director.
A. Executive Director
B. Non-Executive Director
C. First Director
D. Residential director
Ans. A
149. A person shall hold office as a director in __ companies as per the Companies Act,2013.
A. 5 companies
B. 10 companies
C. 20 companies
D. 15 companies
Ans. C
150. Minimum number of directors in a public company is
A. 1
B. 2
C. 3
D. 4
Ans. C
151. Every listed public company shall have at least ____ of the total number of directors as
independent directors.
A. 1/3rd of the total no. of directors
B. 20% of the total no. of directors
C. 1/4th of the total no. of directors
D. none of these
Ans. A
152. The appointment of subsequent directors of a company is made in the
A. Annual General meeting
B. Extraordinary General meeting
C. Class meeting
D. None of the Above
Ans.A
153. Qualification shares for a director are provided in the
A. MoA
B. AoA
C. Prospectus
D. None of the above
Ans.B
154. Maximum remuneration to a managing director cannot exceed 5% of the net profit,
A. true
B. false
Ans. B
155. Minimum no. of directors in a private company,
A. 1
B. 2
C. 3
D. 4
Ans. B
156. Which of the following is NOT included in the process of increasing authorized capital.
A. Betting of MoA & AoA
B. Holding of board Meeting
C. Intimation to Promoter
D. Hold shareholder’s meeting
Ans. C
157. The person who transfers his rights and duties is called
A. Promisor
B. Promisee
C. Transferor
D. Transferee
Ans. C
158. Company is managed by
A. Shareholders

B. Directors
C. Partners

D. Promoters
Ans. B

159. Maximum managerial remuneration which can be paid by a private company is-
A. 11% of Net Profit
B. 11%of turnover

C. 5% of share capital
D. None of the above

Ans. D
160. What is the liability of an expert for mismanagement?
A. Fine of Rs. 50,000
B. Imprisonment – 2years
C. Both A& B
D. None of the above
Ans. A

UNIT IV and V
161.Section 180 (1) provides that the Board of Directors of a company shall exercise the
power by obtaining consent via …………..resolution.
A) Ordinary
B) General
C) Special
D) Absolute
Ans. C

162.According to the provision related to Borrowing, A…………. Company can accept the
deposit from general public without being restricted by the provisions of Section 180 of
Companies Act.
A) Private Company
B) Section 8 Company
C) Public Company
D) Banking Company

Ans. D
163. Temporary Loans means loans payable within ………………
A) Six Months
B) Three Months
C) One Year
D) None of the above
Ans. A

164.Limit Imposed on the borrowing power of the company is provided under which section?
A) Section 180
B) Section 186
C) Section 182
D) Section 171
Ans. A

165.Debenture holders are……………..

A) Debtors of the Company
B) Creditors of the Company
C) External users
D) Owners of the Company
Ans. A
166.Debentures indicate the………….
A) Short-term Borrowings of a Company
B) Directors’ shares in a company
C) The Investment of Equity-Shareholders
D) Long-term Borrowings of a Company
Ans. D
167.In debenture, interest payable is………………
A) Transferred to general reserve
B) Transferred to falling fund investment account
C) Charged against the firm’s profits
D) Appropriation of the company’s profits
Ans. C
168.The owner of the debenture is qualified for………..
A) Fixed-rate interest
B) Company’s voting rights
C) Firm’s Profits share
D) Fixed dividend
Ans. A
169.When a company is liquidated, the debenture holders have a prior right for………
A) principal amount
B) interest
C) both (a)and (b)
D) none of these
Ans. C
170.Which of the below-mentioned statement is not true?
A) The issue price and redemption value of debentures cannot differ
B) Interest on debenture is a charge against profits
C) It is common to prefix debentures with the agreed interest rate
D) A debenture is a kind of public borrowing
Ans. A
171.Point out the false statements.
A) A firm can buy its own debentures and shares.
B) A Company can issue convertible debentures.
C) A business can issue debentures with voting rights.
D) An organisation can issue redeemable debentures.
Ans. C
172.Of the following which one is not a characteristic of Bearer Debentures.
A) They are transferable by mere delivery.
B) The interest on it is paid to the holder irrespective of identity.
C) They are treated as negotiable instruments.
D) Their transfer requires a deed of transfer
Ans. D
173.The form of a discount on issue of Debentures is in the nature of……..
A) Deferred Revenue Expenditure
B) Capital loss
C) Revenue loss
D) None of the above
Ans. B
174.Annual General Meetings should be held at
A) Company
B) Registered office
C) Corporate office
D) None of these
Ans. B
175.The time gap between two Annual General Meetings shall not exceed.
A) 15 months
B) 18 months
C) 16 months
D) None of these
Ans. A
176.First Annual General Meetings must be held within __________ from the incorporation of the company.
A) 15 months
B) 18 months
C) 12 months
D) None of these
Ans. B
177.Every Annual General Meetings must be held within ___________ from the date of the Balance
Sheet.
A) 4 months
B) 6 months
C) 9 months
D) None of these
Ans. C
178.First Annual General Meetings must be held within ____________ from the date of the balance sheet
A. 6 months
B. 9 months
C. 5 months
D. None of these
Ans. B
179.……….is the proper authority to call annual general meeting.
A) promoters
B) manager
C) board of directors
D) secretary
Ans. C
180.Provision related to Annual General Meeting in Companies Act, 2013 is?
A) Section 92
B) Section 183
C) Section 96
D) Section 98
Ans. C
181. Quorum for AGM in case of a Public Company if the members are between 1000-
5000………..
A) 5
B) 10
C) 15
D) 30
Ans. C
182.Punishment for default in case of AGM is given under which section of Companies Act,
2013?
A) 96
B) 97
C) 98
D) 99
Ans. D
183.If the default continues what will be the fine for each day default in case of violation of
provisions for AGM?
A) Rs. 500
B) Rs. 1000
C) Rs. 10000
D) Rs. 100000
Ans. B
184.The rule of “majority rule principle was inferred from which case
A. Reyland v/s fletcher
B. bailfom v/s bailfom
C. Mohinibibis v/s dharmodas
D. foss v/s harbottle
Ans. D
185.Which rule states that a wrong done to a company be vindicated by the company alone
A. Majority rule principle
B. Proper plantiff rule
C. both a&b
D. none of the above
Ans. B
186.Individual rights can be
A. Under contract from his membership
B. Under general law
C. Both a &b
D. None of the above
Ans.C
187.Oppression is defined under which section
A. [241(1)(a)]
B. [ 241(1)(b)]
C. [240(1)(b)]
D. [240(1)(a)]
Ans. A
188.Which is the act not held as oppressive .
A. Failure to distribute amount of compensation
B. Notholding meeting of directors
C. Non maintenance / non filing of records
D. Both b&c
Ans. D
189.Section 242(1) states
A. Application to tribunal
B. power of tribunal
C. Class actions
D. oppression
Ans. B
190.Sec248(1 )states
A. Publication of notice in office gazette
B. Striking the name of company of registrar
C. Notice to company and all director
D. None of the above
Ans. C

191.Which of the following is not a ground of winding up

A. Default in filing p/l acoount and balance sheet or annual return
B. Inability to pay debts
C. Fraudelnt of affairs
D. None of the above
Ans.B

192.Official liquidator is appointed by the :

a. Central govt. c. creditors
b. Tribunal d. company

Ans. B

193.Which of the following is not the duty of a liquidator

a. To take over company’s asset for realisation
b. To submit report to tribunal
c. To keep proper books /accounts
d. None of the above
e. Ans. D
194.The report on process of winding up has to be submitted by company liquidator to the
tribunal
a. Monthly c. yearly
 b. Quarterly d. half yearly

Ans. B

195.In case of a company having share capital how many members can appeal to the tribunal
against oppression and mismanagement
A. 100 members or 1/10 of total whichever is less
B. 100 members or 1/10 of total whichever is more
C. 50 members of 1/18 of total whichever is less
D. 50 members on 1/18 of total whichever is more

Ans. A

196.At any time after the presentation of winding up petition and before the making of a
winding up order ,the tribunal may appoint .
A company liquidation B Provisional liquidation
C. Board of directors D All of the above

Ans.B

197.The winding of committee shall monitor the following aspects related to liquidation
proceeding
A. Examination of statement of affairs
B. Sales of assets
C. Compromise , and settlement of claims
D. All of the above

Ans. D

198.With whom shall the Director Identification Number be filed with?

A. Central Government
B. Registrar
C. State Government
D. Bothe A & B

Ans. A

199.Does the following acts by the board amount to oppression?

(i) Denial of inspection of books of accounts.

(ii) Not holding board meeting in timely manner.

(iii) Non declaration of dividend

(iv) Company is incurring looses for last 3 years

 A. (i), (ii), (iii) - Amount to oppression

B. (i), (ii)- Amount to oppression

C. (iii), (iv)- Amount to oppression

D. None of the above is oppression

Ans. D

200.In which of the following cases majority rule does not prevail?
A. Where the act is ultra vires the company

B. Where the act is illegal to the company

C. Where the act infringes personal rights

D. All of above

Ans. D

201.The Registrar of Company can approach the central government to accord sanction to present a
petition to the tribunal if financial statements are defaulted for a period
A. Two consecutive years
B. Four consecutive years
C. Five Consecutive Years
D. Any Five years

Ans. C

202. Company once proposes to borrow Rs.10 cr from Bank wherein MOA&AOA permitted
borrowing only uptil Rs. 5 crore.70% directors approved to such vote rest 30% could not
approve. Whose voting shall prevail?

A) Majority shall prevail

B) Minority shall prevail
C) Permission of chairperson
D) Permission of Manager
Ans: A
203. In which of the following cases majority rule does not prevail?

A) Where the act is ultra vires the company

 B) where the act is illegal to the company
C) where the act infringes personal rights
D) all of the above
Ans: D
204. Which of the following acts can amount to oppression?

A) Not calling general meeting

B) depriving member of the right to dividend
C) Refusal to register transmission under will
D) All of the above

Ans: D
205. Who can present a petition for winding up of a company to the Tribunal?

A) The contributory of contributories

B) The Registrar or any person authorized by the Central Government.
C) The company
D) All the options are correct (i.e. any of the above may present petition before the Tribunal)

Ans: D
206. The winding up committee shall comprise of the following persons:

A) A professional nominated by the Tribunal

B) Official Liquidator attached to the Tribunal
C) Nominee of secured creditors
D) All of the above

Ans: D

207. The order for the winding up of a company shall operate in favour of:

A) All contributories of the company

B) All the creditors
C) Central/State Government
D) Only A and B are correct
Ans: D
208. When the winding up of a company by the Tribunal under the Companies Act, 2013 shall be
deemed to commence:

A) At the time of the presentation of the petition for the winding up.
B) At the time of the passing of the order of the winding up petition.
 C) At the time of the acceptance of the petition for the winding up.
D) None of the above.

Ans: A
209. Who shall constitute the National Company Law Tribunal:

A) The Supreme Court

B) The Central Government
C) The Registrar of Companies
D) The Insolvency and Bankruptcy Board of India

Ans: B
210. For which company the Central Government may order for winding up by summary procedure:

A) Where the company has assets of book value not exceeding Rs. Ten crore rupees.
B) Where the company has assets of book value not exceeding Rs. One lakh.
C) Where the company has assets of book value not exceeding Rs. Ten Lakh.
D) Where the company has assets of book value not exceeding Rs. One crore rupees.
Ans: D

211. Any person aggrieved by an order of the Tribunal may prefer an appeal to the:

A) The Supreme Court

B) No appeal is allowed
C) The Appellate Tribunal
D) The High Court

Ans: C

212. In how many days a person aggrieved by any order of the Appellate Tribunal may file an appeal
to the Supreme Court:

A) Within 60 days from the date of receipt of the order of the Appellate Tribunal to him on any
question of law arising out of such order.
B) Within 90 days from the date of receipt of the order of the Appellate Tribunal to him on any
question of law arising out of such order.
C) Within 45 days from the date of receipt of the order of the Appellate Tribunal to him on any
question of law arising out of such order.
D) Within 30 days from the date of receipt of the order of the Appellate Tribunal to him on any
question of law arising out of such order.

Ans: A
213. The grounds on which an application for oppression can be filed is provided under which
section?

A) Section 240
B) Section 241
C) Section 242
D) Section 243

Ans: B

214. Which section provides for class action against mismanagement by company?

A) Section 245
B) Section 247
C) Section 248
D) None of the above

Ans: A

215. Who may be appointed as the provisional liquidator or the Company Liquidator, by the Tribunal:

A) The insolvency professionals registered under the Insolvency and Bankruptcy Code, 2016.
B) The Chartered Accountant
C) The Advocate
D) The company secretary

Ans: A

216. How can a company may suo moto file an application to the Registrar for removing its name
from the register of companies on all or any of the grounds specified in section 248(1)?

A) By obtaining consent of seventy-five per cent members in terms of paid-up share capital.
B) By passing a special resolution after extinguishing all its liabilities.
C) Any of the options mentioned at A and B
D) None of the above.

Ans: C

217. Where the Tribunal has made a winding up order or appointed a Company Liquidator, within
how much days, such liquidator shall, submit to the Tribunal, a report:

A) Within 90 days from the order

 B) Within 30 days from the order
C) Within 120 days from the order
D) Within 60 days from the order

Ans: D

218. Share capital of a company means ______________.

A. equity share capital .
B. preference share capital
C. equity and preference share capital .
D. equity and preference share capital and debentures

Ans. C

219.In the case of an annual general meeting, all business to be transacted thereat shall be deemed
special, other than:
A. the consideration of financial statements and the reports of the Board of Directors and auditors
B. the declaration of any dividend
C. the appointment of, and the fixing of the remuneration of, the auditors
D. All of above

Ans. D

220.Which statement is correct for the quorum of a General Meeting?

A. In case of a public company 10 members, personally present if the number of members as on
the date of meeting is not more than one thousand
B. In case of public company 50 members personally present if the number of members as on the
date of the meeting exceeds five thousand
C. In case of public company 30 members personally present if the number of members as on the
date of the meeting exceeds five thousand
D. In case of public company 75 members personally present if the number of members as on the
date of the meeting exceeds five thousand

Ans. C