NATURE AND TYPES OF COMPANTES -+ 49

(c) The copies of No objection letters of member and creditors

'
(d) The latest andired Balance Sheet with Statement of Profit and Loss.
(iv) Certific~te fr_o ~ the Registrar of Companies : On being satisfied, the Registrar of
Companies will issue the certificate for the conversion.

PRACTICAL PROBLEMS WITH SOLUTIONS

1. 6 perso~s _are the only members of a private company. All the members went on a boat
for pleasure tnp m the open sea. The boat capsized. All of them were drowned and died. Was
the private company ceased to exist ?
► Solution : No, because the company has perpetual succession i.e., company never dies. In
other words, the members may come and go, but the company can go on forever.
2. 'A', 'B ' and ' C' were the only members on a private limited company named Garden Silk
Co. Pvt. Ltd. They hold all the shares of the company. All of them were shot dead by dacoits.
Does the company also die with them ?
► Solution : No, because the company has a perpetual succession. It continues to exist.
3. During the period of war, all the members of a private company, while in general meeting,
were killed by a bomb. Does the company cease to exist because all the members died ? State
reasons.
► Solution· : No, because the company has a pepetual succession.
4. The paid-up capital of ABC Pvt. Ltd. is Rs. 40 lakhs consisting of 4,00,000 shares of
Rs. 10 each fully paid. XYZ Pvt. Ltd and its subsidiary PQR Pvt. Ltd are holding 1,20,000 and
1,00,000 shares of ABC Pvt. Ltd.
State with reference to the provisions of the companies Act, 2013, whether ABC Pvt. Ltd. is
a subsidiary ofXYZ Pvt. Ltd. Would your answer be different if PQR Pvt. Ltd. is holding 2,20,000
shares in ABC Pvt. Ltd. and no shares are held by XYZ Pvt. Ltd. in ABC Pvt. Ltd.
Hints to Answer :
(a) As per Section 2(87) (i) ABC Pvt. Ltd. is subsidiary of XYZ Pvt. Ltd. (b) As per Section
2(87), (ii) ABC Pvt. Ltd is subsidiary of XYZ Pvt. Ltd.

s J>./i:/:;/1~;~~~~1 llll:1! :l~l~~::1 r

11
!/li

A. Multiple Choice Questions (MCQs)

1. The history of the Indian Company Law began in the year of'.-
(a) 1850 (b) 1913
(c) 1956 (d) 2013
2. The privilage of limited liability was introduced in the Indian Company Law, in the year of:
(a) 1850 (b) 1857
(c) 1956 (d) 2013
st
3. The Joint Stock Companies Act of 1950 was passed in lines with the English Joint ock
Companies Act of'.-
(a) 1844 (b) 1840

(c) 1848 (d) 1849

 1 ..
C,
.,
50 ♦ U)MJ>ANY LAW

4 A comprehensive Indian Companies Act .

relating to incorporation, reg 1ation
. . t· . d . u
m- and 'itlndi
of trading companies and other assoc1a 10ns was passe
(b) 1866 ng ,p
(a) 1860
(d) 1850
(c) I 857
5. ender whose Chairmanship an<:! in which year the Company Law Com .
to report on the working of the Companies Act, 1913 : mittee Was app
on,~
1

(a) H.C. Bhabha, Oct. 25, 1914 (b) H.C. Bhabha, Oct. 25, 1950
(c) H.C. Bhabha, Oct. 25, 1952 (d) H.C. Bhabha, Oct. 25, 1956
6. The benefit of limited liability was not extended to the Banking and Insuran ce Comp .
an,es uubJ
the Act of-
(a) 1850 (b) 1857
(c) 1860 (d) 1844
i .
7. The recommendations of the Bhabha Committee became a compelling force
of Companies Act- or •ntroductio1

(a) 1956 (b) 1936

(c) 1960 (d) 2000
8. On which of the folJowing dates the Companies Act, 2013 was published in
the Official G
lUHt
.
of In d1a on-
(c1) 8th Auguest, 2013 (b) 29th August, 2013
(c) 30th August, 2013 (d) 18th December, 2012
9. Prior to enactment of the Companies Act, 2013 which Companies Act w.as in force
in India-

(a) The Indian Companies Act, 1913 (b) The Indian Companies Act, 1956
(c) The Indian Companies.Act, 1866 (d) The Indian Partnership Act, 1932
10. The Companies Act, 2013 extends to tbe-
(a) Whole of India
(b) Whole of India except the State of Jammu & Kashmir
(c) Whole of India except the State of Nagaland
(d) States of both (b) and (c)
11. The provisions of the Companies Act, 2013 shall not apply to-
(a) Companies incorporated under this Act of under any previous company law t Authority ACl
(b) Insurance companies incorporated under the Insurance Regulatory and Developmen
1999
(c; Companies engaged in the generation or supply of electric!ty
aoits
(d) None of the above ~~~
.
12. The Central Government decided to repeal the Companies Act, 1956 and en
Act, 20U-
(a) to provide for new provisions
(b) to meet the socio-encomic needs of our country
{c) both (a) and (b)
(d) none of these
 NATIJRE AND TYPES OF COMPANIES -+- 51

13. The Companies Act, 2013 has-

(a) 470 Sections · (b) 658 Sections
(c) 480 Sections (d) 490 Sections
14. The
, Companies Act, 2013 has been divided into-
(a) 26 ~hapters (b) 29 Chapters
(c) 39 thapters (d) 59. Chapters
15. The Companies Act, 2013 has been divided into-
(a) IV Schedules (b) V Schedules
(c) VI Schedules (d) VII Schedules
16. About 98 Sections of the Companies Act, 2013 were made effective on and from-
(a) 30 August, 2013 (b) 12th September, 2013
(c) 1st January, 2014 (d) ISt April, 2014
17. The Companies Act, 2013 does not ~pply to-
(a) Companies established under Special Acts of Parliament
(b) Trusts governed by the Indian Trust Act, 1882
(c) Societies governed by the Societies Registration Act, 1860
(d) All of these.
18. The administration of the Company Law in India is in the hands of- . .
(a) The High Court (b) The Company Law Tribunal
(c) The Central Government (d) None of these
19. The limit of maximum number of members in a private company bas been increased to-
(a) I00 (b) 150
(c) 200 (d) 250
20. Which one of the following concept has been introduced in the Companies Act, 2013 :
(a) At least one woman director shall be on the Board
(b) All listed companies shall have at least one-third of the Board as Independent directors
(c) Appointment of Key Managerial Personnel
(d) All of these
21. E-governance has been introduced for various company procedures like-
(a) Maintenance and inspection of documents in electronic form,
(b) Financial Statements to be placed on Company's Website
(c) Voting through electronic means
(d) All of the above
22. According to the Companies Act, 2013, every company shall constitute a corporate Social
Responsibility Committee if its-.
(a) net worth is Rs. 500 crore or more during any financial year
(b) turnover is Rs. 1,000 crore or more during any financial year
(c) net profit is Rs. 5 crore or more during any financial year
(d) either (a) or (b) or (c)
r- --
52 + COMP ANY LAW

23. The corpo rate Socia l Resp onsib ility Com mitte e of every comp
S .hitll . ensu
8
· I
· every fimanc1a year m · corpo ratany
· purs uanc e o f its
comp· any spen ds m e 0 c1a1 Jl te lb
.
net profit s of the comp any made durin g th esl>onsibii·at tv,
(a) at least 2% of the average e 3 irn lfy I}
. · rnediate!y ~Olit}
financial years ·
g the financi· a1 Year Precedin,
(b) at least 3% of the net profits· of company made durin ~
any made durin .
(c) at least 5% of the average net profits of the comp g 3 1rnrned·iately p
· I years
financia tecCd·1
na
(d) None of these
comp any shalf lbave at least
24. Acco rding to the Com panie s Act, 2013 every nt di
year for a total pe ·r,odneofReside
who has staye d in India in the previ ous calen dar r1 not I r,ttii,
(b) 182 days ess than-...
(a) 180 days
(c) 190 days (d) 200 days
a publ ic comp any shall be-
25. A priva te comp any which_ is a subsi diary of
(a) a private comp any (b) a public company
(c) deemed to be a public company (d) none of these
ept has been introduced in th e new Act
-26. For the first time, whic h one of the follow ing conc
(b) Small Company -
(a) One Person Comp any
(c) Appointment of Independent Director (d) All of these
any, mea ns-
27. Key Man ageri al Perso nnel, in relat ion to a comp
(a) the Chie f Executive Officer (b) the Chie f Financial Officer
(c) the Whole-time Director (d) all of the above

B. Mult iple Choi ce Ques tions (MC Qs)

1. Acco rding to Secti on 2(20) of the Com panie
s Act, 2013 'Com pany ' mea ns-
(a) a company incorporated under this Act
any law
(b) a comp any incorporated under any previous comp
(c) either (a) or (b)
(d) none of the abov e
2. A Com pany is-
(b) A statutory association for profit
(a) A voluntary association for profit
(c) A compulsory association for profit (d) None of the above
it has -
. 3. A Com pany is an artifi cial person as beca use
(a) No body or soul like us (b) No physical existence
(c) No conscience (d) All of the above
succ essio n-
4. A Com pany is a juris tic perso n with a perp etual
(a) As such it never dies •
(b) Its life depends on the life of its mem bers ocess of 1av11
. to an end only by a pr
(c) It 1s created by a process of law and can be put
(d) Both (a) and (c)
orate form of organisation_is-: debt
5. 'Phe privi lege of doin g busin ess unde r the corp
(a) Limited liability of business debt (b) Unlimited liability of buSines
(c) No liability of business debt (d) None of the above

l
 NATVllE AND TYPES OF COMPANIES + 53

6. A company form of business organisation is a popular form of business as it bas-

(a) Corporate personality (b) Capacity to sue and be sued
(c) Perpetual succession (d) All of the above
7. A company remains to exist even on the--
(a) Death of all its members (b) Insolvency of any member
(c) Retirement of any member (d) All of the above
8. A husband and wife, who were the only 2 members of a private company, ;re shot dead by
dacoits. As a result the existence of the company-
(a) comes to an end
(b) never dies as because it has perpetual succession
(c) continues to exist
(d) both (b) and (c)
9. Company Law in India has been modelled on the--
(a) US Law (b) Eng)jsh Law
(c) Both ( ~) and (b) (d) None of these
10. Under the Companies Act, 2013 as amended by Companies (Amendment) Act, 2015--
(a) A company may not have a common seal and it has become optional
(b) The Articles of Association may provided or Board of Directors may resolve to have-a common
seal_for the company. ·
(c) Thaj;common seal is the official signature of a company
(d) Both (a) and (b)
11. A company formed _and registered under the Companies Act, 2013 has a separate legal existence
entirely different 'and independent from its-
,
(a) Board of Directors (b) Promoters
(c) Members (d) None of the above
12. The property of the company-
(a) is the property of the company (b) is the property of the shareholders
(c) is not the property of the shareholders (d) is not the property of the company
13. A company is a legal person and has independent existence. As such the--
(a) Company can file suits against others in its own name;
(b) a suit against the company can also be filed in company's name
(c) both (a) and (b)
(d) none of the above
14. As a consequence of separate corporate personality of a company
(a) No shareholder has insurable interest in the property of the company
(b) When the majority shareholders die, the company comes to an end
(c) The nationality of the company does not-depend on the nationality of any shareholder
(d) None of the above
15. A company has a-
(a) Residence (b) Domicile
(c) Nationality (d) All of the above
 ~ -itS(r~
54 ♦ COMPANY LAW
-...
•
16. According to the consitution of India or the Citizenship Act, J95S a c o r n ~
Pany_
(a) is a citizen of India
· (b) is not a citizen of India
(c) being an artificial person cannot be recognised as citizen
(d) both (b) and (c)
17. According to Article 14 of the constitution of India, a company can clairn th
e ProtectioII
(a) Fundamental rights Ok

(b) Right to Equality

(c) Rights which are available to all persons whether citizens or not
(d) Both (b) and (c)
18. A company limited by shares--
(a) has unlimited liability
(b) has limited liability
(c) has a liability to the extent of nominal value of shares
(d) both (b) and (c)
19. In case of a company limited by guarantee, the liability of the members can be enfon:ed-
(a) at any time when the company so decides
(b) only at the time of winding up of c0mpany
(c) only by the order of court
(d) only by an order of Tribunal
20. The term 'lifting of corporate veil' means--
(a) ignoring the separate legal entity of the company
(b) the company and its members are treated as one person
(c) a company is a separate legal entity, independent and different from its members
(d) both (a) and (b)
21. The courts will lift the veil of corporate entity- .
. . . f h rporate fictton
(a) to find out the persons behmd the company who are the real benefic1ar1es o t e co
. r conduct or
(b) when the corporate personality of a company is misused for fraudulent or 1mprope
for doing things against tl'!e public policy
( c) to pull off the mask and to see what really lies behind
(d) all of the above cases
22. On which of the cases the corporate personality of the company is ignored- ities of
. fi0 r the secur
(a) When a prospectus has been issued with intent to defraud the apphcants
a company 5
peccus
(b) If the application money is not repaid within 30 days from the date .o f issue of pro
(c) If the company is formed for some fraudulent or improper purpose
( d) All of the above cases
23. The term 'body corporate' or corporation is derived from the Latin wofd--
(a) ' Corpus' (b) 'Cropus'
(c) ' Crpoas' (d) none of the above
 NATIJRE AND TYPES OF COMPANIES + 55

24. The term 'body corporate' or 'corporation' includes a company incorporated-

(a) Under same statute and which has a perpetual succession, a commor. seal and legal enti!y apart
from its members
(b) In India under the Companies Act, 2013
(c) Not only in India but also a foreign company
(d) All of the above
25. 'Body Corporate' or 'Corporation' includes-
(a) A public financial institution
(b) A Nationalised bank
(c) Corporations fonned under the Act of Parliament
(d) All of the above
26. 'Body Corporate' or 'Corporation' does not include-
(a) a corporate sole (b) a corporation aggregate
(c) a registered co-operative society (d) a company incorporated outside India
27. A corporation sole refers to-
(a) a single person constituted as a corporation in respect of some office enjoying perpetual succession
and separate legal entity
(b) a single person constituted as a corporation in respect of some function enjoying perpetual
succession and separate legal entity
(c) either (a) or (b)
(d) none of the above
28. Examples of corporate sole are to be found in perpetual offices such as-
(a) The President (b) Governors
(c) Ministers (d) All of these
29. A 'Corporation aggregate' consists of a group of persons constituted as corporation enjoying
perpetual succession and separate legal entity and includes-
(a) Companies incorporated under the Companies Act, 2013
(b) Companies incorporated under the Special Act of Parliament
(c) Companies incorporated outside India
(d) All of the above
30. A company may become a partner in a partnership firm-
(a) if it is specifically pennitted by the Memorandum of Association of the concerned company
(b) if it is specifically permitted by the Articles of Association of the concerned company
(c) if it is permitted by the Central Government
(d) if it is pennitted by the Court.
31. A partnership firm cannot be appointed as a director of the company-
(a) because a partnership firm has no legal entity of its own, apart from its partners
(b) because a partnership finn is the collective name of partners and legal entity belongs to the partners
(c) either (a) or (b)
(d) both (a) and (b)
 ('. ,1 ultiplr Choler Quesllons (MCQs)
I. A statutory company is one which Is incorporated-
(a) b) an Act of Parliament (b) by a~ Act of state legi.slaturc
(c) l 'ndcr the Companies Act, 2013 (d) by either (a) or (b)
2. A company limited by shares may be
(a) A private company (b) A public company
(c) Either (a) or (b) (d) None of the above
3. Which of the following is the characteristic of a company limited by shares?
(a) The liability of its members is limited to the amount remaining unpaid on the shares held rv•.
(b) The nominal or face value of share must be stated in the Memorandum of Associaf '. e-
• IGn
(c) Jf the shares are fully paid, the liability of the members holding such shares is nil
(dj All of the above
4. A company limited by guarantee--
(a) may have share capaital (b) may not have share capital
(c) either (l3) or (b) (d) none of the above
5. Which of the following is not the feature of a company limited by guarantee?
(a) The amount of guarantee must be stated in the Memorandum of Association of the con:~-::
(b) The liability of the members to pay the guaranteed amount arises only when the companyg:C!
into liquidation
(c) The liability of the members to pay the guaranteed amount arises during the life time cf::
company
(d) The Articles of Association of a company llmited by guarantee must state the number of mem~
which the company is to be registered
6. The Articles of Association of a private company-
(a) restricts the right to transfer its shares
(bJ limits the number of its members (except on person company) to 200
(c) prohibits any invitation to the public to subscribe any securities of the company
(d) all of the above
7. The minimum number of members required to form a private company is-
(a) 2 (b)3
(c) 7 (d)IO ,
8- Which of the following words must be added at the end of the name of a private compan)•
(a) 'Limited' only (b) ' Private Limited'
(c) Either (aJ or (b) (d) None of these
9. A private company must have--
(a) al least 2 directors
(b) at least 3 directors
(c) at least 7 directors (d) either (a) or (b) which
10. For the purpose of determining the maximum limit of 200 members of a private compa11Y
of th e following persons shall not be counted in number of members-
(a) Joint holders of a share shall be treated as a single member
(b) Persons who are in the employment of the company after ,~1
(c) Ex-employees who are members while in employment and continued to be rnembers
employment ceased
(~) Both (b) and (c)

h
- -

NATURE ANO TYPES OF COMPANIES + 57

11. A private company is not required to appoint any-

(a) Woman director (b) Independent director
(c) Either (a) or (b) (d) Both (a) and (b)
12. According to section 2(71), 'fublic Company' means n c9mpany which-
a
(a) is not private company
(b) has a minimum paid-up share capital as may be prescribed
(c) either (a) or (b)
(d) both (a) and (b)
13. A private compa:iy which is subsidiary of a public company shall be deemed to he a
(a) Private company (b) Public company
(c) Either (a) or (b) (d) None of the above
14. The minimum number of members required to form a puf>lic company is-
(a) 2 (b) 5
(c) 6 (d) 7
15. Which of the following word must be added at the end of the name of public company?
(a) 'Private Limited' (b) 'Public Limited'
(c) 'Limited' (d) None of these
16. Which of the following is not the features of a Public Company
(a) It can invite offers from general public to subscribe for its securities
(b) It can invite or accept deposits from persons other than its members
• (c) Its shares are non-transferable
(d) A private company which is subsidiary of a public company shall be deemed to be a public
company
17. A· public company may be--
(a) a company limited by shares (b) a company limited by guarantee
(c) an unlimited company (d) all of the above
1s: A public company may be-
(a) Government company (b) Non-Government Company
(c) Either (a) or (b) (d) None of the above
19. A public company must have at least-
(a) 2 directors (b) 3 directors
(c) 5 directors (d) 7 directors
20. The minimum number of members required for the formation of a public company is 7, but
the maximum number of members is-
(a) 50 (b) 100
(c) 200 (d) No prescribed maximum limit for members
21. Which of the following is not an advantage/privilege enjoyed by a private company over a public '
company-
(a) Business can be commenced immediately on incorporation
(b) No need to have more than 2 directors
(c) The number of members is limited to 200
(d) There is no restriction of remuneration payable to directors
58 + COMPANY LAW
'I

22. Which of the following statements is correct in respect of public limited c

(a) Business can be commenced immediately on incorporation °1llPany in 1 .
lld1"-.
(b) No need to have more than two directors
(c) There is no restriction on remuneration payable to directors
(d) The number of members is unlimited
23. Which of the following is not a characteristic of a statutory corporation . .
•n India
(a) It is owned by the state -
(b) Its employees are civil servants and are governed by government regulations i
conditions of service n resPect of
(c) It is created by a special law of the Parliament or State legislature
(d) It is a body corporate and therefore it can sue and be sued
24. Reserve Bank of India is a-
(a) Statutory company (b) Private company
(c) Chatered company ( d) Section 8 company
25. Registered companies are the companies which are incorporated
(a) by a Special Act of Parliament (b) Under the Companies Act, 2013
(c) by a Special Act of a legislative assembly (d) none of the. above
26. Which of the following is the feature of an unlimited company
(a) The liability of members of such companies r.; unlimited as to that of partners of a partnership
firm
(b) It may or may not have share capital
(c) It must have its own Memorandum and Articles of Association
( d) All of the above -
27. An unlimited company may be-
(a) A Private .C ompany (b) A Public Company
(c) Either (a) or (b) (d) None of the above
28. In a Government Company, the government shareholding must not be less tban-
(a) 25% of the paid-up share capital (b) 50% of the paid-up share capital
(c) 51 % of the paid-up share capital ( d) t 00% of the paid-up share capital
29. A subsidiary of a Government Company is treated as a-
(a) Private company (b) Government company
(c) Associate company (d) None of the above es and
30. A company doing the principal business of acquiring, holding and dealing in sbar
securities is called-
(a) Finance company (b) Investment company
(c) Banking company
•
(d) None of the above
,
.
a colllP
,or
31. Accordmg to section 2(52) of the companies Act, 2013, a 'listed compiany mes 05

(a) Which has any of its securities listed on any stock exchange
(b) Which has any of its securities not listed on any stock exchange
(c) Which has any of its securities listed on any recognised stock exchange
(d) none of the above
 NATURP. ANn TYPF5 OF COMPANIES ♦ 59

32. A public company may be-

(a) Government company (b) Non-Government company
(c) Either (a) or (b) (d) None of the above
33. A_ company is deemed to be a subsidiary of another company-
(a) When the latter controls the composition of the Board of directors of the former;
(b) When the former controls the composition of the Board of directors of the latter;
(c) When the ~onner holds more than one-half of the total share capital of the latter
(d) None of the above
34. The paid-up share capital of XYZ (Pvt.) Company Ltd. is Rs. 20 lakhs consisting of 2,00,000
equity shares of Rs. 10 each fully paid-up. ABC (Pvt.) Ltd and its subsidiary DEF (Pvt.) Ltd.
are holding 60,000 and 50,000 shares respectively in XYZ (Pvt.) Co. Ltd. Here-
(a) XYZ (Pvt.) Co. Ltd. is a subsidiary of ABC (Pvt.) Ltd.
(b) XYZ (Pvt.) Co. Ltd. is a subsidiary of DEF (Pvt.) Ltd.
(c) XYZ (Pvt.) Co. Ltd. is a holding company of ABC (Pvt.) Ltd.
(d) None of the above
35. Company XYZ (Pvt.) Co. Ltd. and its subsidiary PQR (Pvt.) Co. Ltd. bold respectively one-
. third of the total share capital of another company ABC (Pvt.) Co. Ltd. Here-
(a) ABC (Pvt.) Co. Ltd. is a subsidiary of XYZ (Pvt.) Co. Ltd.
(b) ABC (Pvt.) Co. Ltd. is subsidiary of PQR (Pvt.) Co. Ltd.
(c) ABC (Pvt.) Co. Ltd. is not a subsidiary of XYZ (Pvt.) Co. Ltd.
(d) None of the above
36. A company is said to be holding company of another if that com·p any-
(a) Controls the composition of the Boad of directors
(b) Exercise or controls more than one-half of the total share capital either at its own or together
with one or more of its subsidiary companies
(c) Both (a) and (b)
(d) Either (a) or (b)
37. An Associate Company, in relation to another company, means a company-
(a) in which that other company has a significant influence
(b) but which is not a subsidiary company of the company having such influence and includes a joint
venture company
(c) both (a) and (b)
(d) either (a) and (b)
38. A company is regarded as an associate company of the other, if the other company bas a
'significant influence' over such company. Hence, 'significant influence' means-
(a) Control of at least 20% of total share capital of a company
(b) Control of business decisions under an agreement
(c) both (a) and (b)
(d) either (a) or (b)
39. An Associate company includes-
(a) Partnership Firm (b) A Joint Venture Company
(c) A Sole Proprietorship business (d) None of these
60 + COMPANY LAW

40. Which of the following statements is not true?

(a) No company shall, either by itself or through its nominees hold any shares • . ·
in its holct·
(b) No holding company shall allot or transfer its shares to any of its subs id" ing cornpan
. •ary cornp )
(c) A holding company shall allot or transfer its shares to any of its subsidia any
(d) A subsidiary company shall hold shares in its holding company as a trust: co~Pany
41. \Vhich of the following cases a subsidiary company can hold shares of its h Id"
Sf O
(a) Where the subsidiary company holds such shares as the legal representative of •ng coin
Pany_
member of the holdin~_company I
· he dcccastd
(b) Where the subsidiary holds such shares as a trustee
(c) Where the subsidiary company is a shareholder even before it became a subsidia
the holding company ry companyof
(d) Either (a) or (i) or (c)
42. Foreign company means any company or body corporate incorporated outside lµdia Wbich-
(a) has a place of business in India whether by itself or through an agent, physically or through
electronic mode
(b) Conducts any business activity in India in any other manner
(c) both (a) and (b)
(d) either (a) or (b)
43. A foreign company is required to deliver necessary documents to the Registrar for registration
within-
(a) 30 days of the establishment of its place of business in India
(b) 60 days of the establishment of its place of business in India
(c) 90 days of the ·establishment of its place of business in India
(d) None of the above
44. If a foreign company contravenes the provisions of this cftapter, the foreign company shall ht
punishable with fine which shall-
(a) not be less than Rs. 1,00,000 (b) not be less than Rs. 3,00,000
(c) be Rs. 1,00,000 to Rs. 3,00,000 (d) none of these
45. Under the Companies Act, 2013, a private company-
(a) must have at least 7 members
(b) cannot have more than 50 members
(c) must prohibit any invitation
(d) must issue a prospectus to the public to subscribe for its shares
46. Which of the following is the characteristic of one person company ?
(a) The minimum number of persons required to form an OPC is 1
(b) The one person company will be formed as a Private Ltd. Company
(c) The words 'Private Limited' must be added at the end of the name of OPC
(d) All of the above.
47. One person company may be-
uarantee
(a) a company limited by shares (b) 8 company limited by g
(c) an unlimited company (d) either (a) or (b) or (c)
 NATURE AND T YPES OF C OMPANIES ♦ 61

48. Which of the following statements is not true?

(a) One person company is not required to hold Annual General Meeting
(b) One person company is required to hold Extra-ordinary General Meeting
(c) The one person company shall have a minimum one director and maximum of 15 directors
(d} The one person company shall have at least one director who has stayed in India for a total period
of 182 days in the previous calendar year
49. Which of the following statements is true?
(a) A natural person, who is an Indian citizen and resident in India, shall be eligible to form and
incorporate a OPC
(b) One person company cannot carry out Non-banking Financia·I activities or cannot be formed with
charitable objectives under section 8
(c) Maximum paid-up share capital of an OPC is Rs. 50 Jakhs and Maximum average annual turnover
is Rs. 20 crores •
(d) All of the above
so. Which of the following cases one person company shall cease to be entitled to continue as one
p~rson cempany?
(a) Where the paid-up share capital of a OPC exceeds Rs. 50,00,000
(b) Where the average annual turnover of a OPC during the relevant period exceeds Rs. 2 crores
(c) Both (a) and (b)
(d) Either (a) or (b) .
•
51. Generally, one person company cannot be allowed to convert voluntarily into any other kind
of company- _ •
(a) Unless 2 years have expired from the date of incorporation of OPC
(b) Unless 3 years have expired from the date of incorporation of OPC
(c) Unless 5 years have expired from the date of incorporation of OPC
( d) None of the above
52. Within 30 days of the establishment of its place of business in ldnia, every foreign company
shall deliver to the Registrar for registration- ·
{a) a certified copy of the charter, statutes or memorandum and articles;
(b) the full address of the registered or principal office of the company;
(c) a list of the directors and secretary of the company;
(d) all of the above
53. If one person company has more than 1 director on its Board, it will he required to hold-
(a) at least one meeting of the Board in each half of a calendar year
(b) the gap between the two meetings is not less than 90 days
(c) both (a) and (b)
( d) none of the above
54. Small company means a company, other than a public company-
(a) paid-up share capital of which does not exceed Rs. 50 lakh or such higher amount as may be
prescribed but not exceeding Rs. 5 crore
(b) turnover as per last Profit & Loss Account does not exceed Rs. 2 crore or such higher amount
as may be prescribed but not exceeding Rs. 20 crore
(c) either (a) or (b)
(d) both (a) and (b)
62 + CoM.rANY LAw

55. Small company does not lnclude--

(a) a ho lding company or a subsidiary company
(b) a company reg istered under section 8
(c) a company or body corporate governed by any Special Act,
(d) either (a) or (b) or (c)
56. " 'hich of the following statements is true?
(a) A small company is not required to present cash flow statement as a,.,....
_ fi,.- .
r-• OJ - ~
(b) In case of small company I Board Meeting to be held in each half of the cal- ., ~.:-
gap between 2 meetings should not be more than 90 days ~ .~ ~
(c) Small company does not include a public company
(d) All of the above
57. Dormant company is formed and registered under this Act for the purpose or.=-
(a) future project'tr holding an asset or intellectual property
(b) has no significant accounting transactions
(c) both (a) and (b)
(d) either (a) or (b)
58. A person or an association of persons may be registered as a charitable compuy ifitis ~
(a) With the obj~s of promotion · of commerce, arts, science, sports, educalioi i~a-±._ ~
welfare, charity, environment protection C:tc.
(b) With the intention to apply its profit or other income in promoting its obj ~LS
(c) With the restriction to prohibit payment of any dividend to its members
( d) All of the above.
59. The name of the companies registered under section 8 shall inc.lude--
(a) Foundation, Forum (b) Association, Federation
(c) Chambers, Confederation, Council (d) All of these
60. A person or an association willing to form a charitable compan~· shall app~· to mt C.llZ'1-
Government with the prescribed fees for a licence in-
(a) Form No . JNC-12 (b) Form N o. Il\C 13
(c) Form No. lNC-14 (d) Form No. INC 15
61. A public company can be converted into a Private company- _ •.-
. · · ioriv~·!
(a) by passing a special resolution to alter the Articles to include the resrncuons • -
O =~
( b) by passing an ordinary resolution . m~1:1-~.;:is
(cJ by pass ing a special resolution to alter the Articl es and obtaining the approYal 01 •
( d ) none of the above ~ -,::
n.•n,· into 1
62. Which or tbe following is tbe legal effect of conversion of public coJDy-..
~
_ _ -.,.i,')11
company . ,g.1 ,.,f tl}! J...
(a) The company becomes a private company from the date of obtaining . . the appr0\ l :#
t,ers ;~ :;1-~
(b) It will have to reduce the number of its members to 200. if the number of me:rn .
200 c,i~-
.py;,-a1e l., ·•
( c) The name of the company must be changed, so as to end w1·th the wordS
(d) All of the above
 NA I Ul<I· ANII TYl'k', P l· <., 'nrvtl' 1\ N ll·'I ♦ 63

(,J. O,n,, l'l'riwn ,•om111111y ""'' IH' ,•on,1t'l'ktl Info II puhlk or prlvafo c-omp1.ny-
(t1) it' the limit of pnid-up :-ih111l1 onpilnl is i1101c1111<1d ll(• yo111I H.11 'W lnk h
(11) it' its 11\1<-'lll~l' 111111u11l lun11wl11 du1i11~ tho 1olov1111I pc 11od uxccod,'1 l<t1 2 crurc
(l') l'ilhor (n) 1H' (h)
• (d) h<,th (n) nnd (h)
t.4. Onl' pl'rson <·om1umy Caln !lcf lt!it'lf converted into II Private or public company-
(n) hy inorc11sing the minimum numhor of momhors lo 2 in c11sc of p1 ivulc company and 7 in c0 41c
of puhlic 1.h)mpnny
(11) hy incrcnsing tho minimum number of diroctors to 2 in case private company and 3 in case of
public oomptmy
(c) hy mninlnining the minimum pnid-up capital ns per requirements of the Act for s uch dass of
company
(d) nll of the nbove
..
65. A Private com1,any can be converted 'into a publ~c company-
(a) by passing a special resolution deleting from its At1iclcs the restrictions which arc essential for
a private company
(h) by passing an ordinary resolution
(c) by passing u speciul resolution to alter the Articles and obtaining the approval of the Tribunal
(d) by passing an ordinary resolution to niter the Articles and obtaining the approval of the Central
Government
66. Private company can be conferted into one person company except-
'
(a) a company registered under section 8 of the Act,
(b) a company having U1e paid-up share capital of Rs. 50 lakh or less
(c) a company having the average annual turnover of Rs. 2 crore or less during the relevant period
(d) none of the above
67. A private company (except charitable company) can be converted into one person company-
(a) by passing a special resolution in o general meeting
(b) by obtaining 'No objection' in writing from the members and creditors
(c) by filing a · copy of the special resolution with the Registrar of Companies m Form No.-
MGT-14 within 30 oays from the date of passing such resolution
(d) all of the above
68. A Private company shall file an application in Form No. INC. 6 for its conversion into one person
company by attaching-
(a) No objection of_members and creditors
(b) The li st of members and creditors
(c) The latest audited Balance Sheet and Stalrnent of Profit and Loss
(d) All of the above

A. 1. (a), 2. (b), J . (a), 4 . (b), 5. (b), 6. (c), 7 . (a), 8. (c), 9. (b), 10. (a), 11. (b), 12. (c), 13. (a),
14. (b), 15. (d), 16. (b), 17. (d), 18. (c), 19. (c), 20. (d), 21. (d), 22. (d), 23. (a), 24. (b), 25. (c),
26. (d), 27. (d). ·
 R I 1c). ~ (nl \ ( d ). I ( d ). ~ ( .lJ. t, (d ) I (tl J 14 (rl ) 'I o,, Ir, ( rJ J, I J (,
14 (I). JC. i dl. Jt, (((). 17 ( cl ). IR (d ), L'J (ll) Jf) (rl) JI (,I) , 2) (tJ J I, ·) Ii I•
' (;,) i4
:t-1c1 2., 1, l '$1 Id). 11) Id) , lO (n), l l (d J
I J
I I , •

C . I I d " I, I 1 I ti). I l l l ~ <d. r, <d>. 7 (nJ H fbJ, 'J r,,1 Jr, r,i, 11
I_. t J I '- ll I. It, I, l I 7 (d). I ~ ( <.), l 'J (h ), ?<1 ( d ), l 1 (c,J, 22 (tJ; ;.·, r:!'
I i '•i

:to. Id) ~. \ 'I I l ) ."> (h). H) (h). l 1 (<..) , !? ( <.,J n (aJ, H r~/ 1; .,_'),
JA '·1 ~·
'l ~ 1d • \)
I

h l. J O
,

I \c l. 11 (d ). 4 2 (<.), '1 l. (A) , 44 ( c.) , 1'i (c,;, 4t;, (,j,:

47. ,; ; · ; ; '1 .~
(d; " i (rJ , • '
tdl. "' (c). ~4 (<-). ~~ - (cl) , 56 . (dJ , 57 (<.,J, 5~. 0
,, ··,
' 0 1d '- I 1,,1 Ii.'.' fJi I
• ,J • ) ,
•
6: d ti • a . t> I ( d). <, <i (a). 66 (aJ , 67 (d ), 6k (d ) .

{) "-h<'n \n,,Hr-c, pt Qursfio n~ :

\C .... ~ "'"~mran, 11 5) fC... U. B.(j,m l~ ~
~ \k-t!\.''1 t'\, ,, features of a company. [ I. 7] fC.l:. R~ ~
~ \\1ia• , , ~ Statu10 ~ Compan y ? [1.11] fC.U. B.Com 2005, 2W :-.
.: ~"L..a: d0 mean by compan y limited by share? [I. I I]
)OU fC.U. B.Com 241'. lr:
.:. \\ ►.a: 1s .,,eant b) pt:rpctual successi on of a compan y? [ I .7] fC.U. B.Com 211(~ ~ -
t- :::>er"lC a · public limited company'. [ I.II ] IC.t.:. B.u»11 1·:
- '\ ~.z .s pm ate compan y ? [ 1.11J
' \\ :,.a• 1s a Subsidia ry Compan y ? [ 1. 11 J fC.L'. B.C<>m l!.:
~ -:►- ~"le Go,ernm ent Ca°mpany. [l. 11] fC.r. B.Com:r:
[C.U. B.Com 2,1)8"'. :JI'
~h=-t do ~ou mean by holding compan y ? [1.11)
U ru1 one person compan y ? [1.13)
tS
fC.L B.Com :r
\\ ?W do ~ou mean by legaJ entity of a company ? [1.7]
!C.L B.Com:1:.
\\ .ttzJ is meant by Li fting of Corpora te veil ? [1.8]
\\ ~ t5 lnJ.miLed liability compan y ? [1.10)
I~ comp~ a citizen ? f 1.9J
\\_re1 1! cummon seal o f a compan y ? [ I. 7)
J _3.1 rs h--.,ted ltab11iry ? f I.7]
If (._-i ; - c.-r,;;ir,.r,J be a panner o f a firm ? [1.1 0]
J~ C:.. ;;, ~~J..tr:. nip firm become a company ? [1 . 10)
. ,"<r
- .I ••1=---- ~ :~,_, d ifferences between Private and Public Company. [ I. I:?] d' ·ertaLO nUJl•·
"'r~ • j .., • J.J me4Jl b; prvhibit ion of asS-Ociat ion of partners h ip excee ing c
10
""me ~ flf.>lc> oo formatio n of compan ies with c h:irita bl'i objects etc. (1 · 1
UC r ~t/C H ~j, vrpv<ate [ I. 5J
(

tA r,: 1s ~ comp;sn1 c..alled an 'A nifi c ial person' ? [ 1.6 1

6
~ fo,4_1 4/'c: u,c 01.h ~h,th .s <.;ompdll} ca11 du li~e J n:Hural person ? [ I. ]
6
'J. !I&f aft' tl,c a ch ~ hi ch a curn pany can not do 11~~ a nat urnJ person ·.' [1. ]
:1 l.>rfUX' ( urp<;rcdH>n ~vie { I 5J
:!8 \J. h.al do by Corpora,e Veil ? [ l. 7 J
>ou understand
\\: hal do ) OU mean by smaJl compan y ? 1.1 I J r
}(J What 1s dorman t company ? { I, I JJ • ..
31 What ts as~iat e compan y ? ( I 1t J
 NATI JRE AND TYPES OF C OMP ANIES
+ 65
£, Medium Que stion s :
1. Define a com pany and State the essential
features of a company. [ I .5 & I. 7]
(C.U. B.C om 2009 , 2011 , 2013 )
2. Point out the differences between a Priva
te Company and a Public Com pany. [ 1.12]
(C.U. B.Com 1995, 2001 , 2007 , 20121
3. Explain the privileges enjo yed by private
limited company over a publ ic limited com pany
.
[1.13] (C.U. B.C om 2012 )
4. "A company is a pers on distinct from its
mem bers "-Ex plain . [1.7] (C.U. B.Com 2013 )
5. Is company a citiz en? Com pany has a
separate legal enti ty-D iscu ss. [1.9] (C.U
6. What proc edur es are to be followed in conv . B.C om 2009 )
erting a priva te com pany into a publ ic com pany
[1.15] (C.U. B.C om 2012) ?
7. What proc edur es are to be followed in conv
erting a publ ic com pany into a priv ate com pany
(1.16] (C.U. B.C om 2011) ?
8. What are the cons eque nces of establishing
an association or partn ersh ip of pers ons exce edin
number ? [1.18] g certa in
9. What do you mea n by Gov ernm ent Com pany
? [1.10]
IO. Distinguish betw een priva te com pany and
public company. [1.12] (C.U. B.C om 2009 ]
11. Write a detailed note on Nati onal com pany
Law Tribunal. [1.20]
F. Long Que stion s :
I. Define company. Dist ingu ish betw een priva
te company and publ ic company. [1.5 & 1.12
]
2. Define company. Disc uss the features of [C.U . B.C om 2009 )
a company. [1.5 & 1.7] (C.U . B.C
3. What is Priv ate Com pany ? Wha t are the om 2013 )
advantages of a private com pan y? [1.11 &
4. Define private company. Wha t are the oblig 1.13]
ations of a private com pany ? Whe n does a priv
become a publ ic com pany ? [1.11 & 1.15] ate com pany
5. What do you mea n by 'Cor pora te Veil
'? Und er wha t circu msta nces liftin g of the veil
[1.8] is poss ible?
6. Explain the conc ept of sepa rate entity of (C.U. B.C om 2011)
a com pany from the busi ness with suita ble exam
7. What is Gov ernm ent com pany ? Wha t are ple. [1.7]
the provisions of the com pani es Act with rega
companies to (a) appo intm ent of audi tor (b) rd to thes e
filing of annual retur n, and (c) Pow er of
Government to mod ify requirements of the Act. Cen tral
[1.11]
8. What is a Foreign com pany ? Wha t are the prov
isions of com pani es with rega rd to form ation of
company ? [1.11] a fore ign

• Law(II) . s
 F O J<\,f/\'IJO N ANI) IN C.ORPO R/\ noN Of A ( ();',,fJ>A..... Y ♦ 79

) Ex~rdse Arld Hints (

A. Multiple Choice Questions (MCQs)
1. The incorporation of a company generally requires stage!! which are :
(a) Promotion of a company (b) Registration of a company
(c) Flotaion of a company (d) AJI of the above
2. The persons who think the idea of forming a company and take necessary steps in its forma tion
are known as -
(a) Directors of company (b) Shareholders of company
(c) Promoters or company promoters (d) None of these
3. Promoter is a person who is--
(a) Elected as director (b) Appointed as chairman
(c) Appointed as managing director (d) Engaged in promoting a company
-'· The minimum number of persons required to form a public company is--
(a) 2 (b) 7
(c) 9 (d) 10
5. The minimum number of persons required t() form a private company is--
(a) 2 (b) 6
(c) 7 (d) 10
6. The minimum number of persons required to form a one person company is--
(a) 1 (b) 2
(c) 3 (d) 7
7. The company formed under section 3(1), whether public or private, may be--
(a) a company limited by shares (b) a company limited by guarantee
(c) an unlimited company (d) either (a) or (b) or (c)
The documents required to be ft.led with the Registrar at the time of incorporatio n of a public
company incJude--
(a) the Memorandum and Articles of Association of the company duly signed by all subscribers
(b) the address for correspondenc e till its registered office is established
(c) a statement of the nominal capital of the company
(d) both (a) and (b)
A declaration by an advocate, a chartered accountant and other professionals shall be filed at
the time of incorporation in-
(a) Form No. INC 7 (b) Form No . INC 8
(c) Form No. INC 9 (d) Fonn No. INC 11
An application for incorpor.ttio n of a pubUc company shall be ft.led, with the Registrar within
whose juris diction the registered office of the company is proposed to be situated, in-
(a) Form No. INC 7 (b) Form No. INC 8
(c) Form No. INC 9 (d) Form No . INC 11
80 + COMPA NY LAw

11. An application for incorporation of one person compa ny shall be ~

. . filed with the R
Compa mes m-- e~~
t of
(a) Form No. INC 2 (b) Form No. INC 7
(c) Form No. INC 8 (d) Fo1m No. INC 9
12. The particulars of interests of each person mentioned in the Article
s as the first di
company along with his consent to act as director of the compa ny shall
be filed ~ of th,
(a) Form No. INC 7 (b) Form No. INC 8
(c) Form No. INC 11 (d) Form No DIR 12
13. The Registrar, on the basis of documents and information filed under
section 7(1), shall
all the documents and m · fiormati·on and issue
· a-- tegisler
(a) Certificate of comme ncemen t of business (b) Certificate of incorporation of business
(c) Corpor ate identity numbe r (d) None of these
14. On being satisfied the Registrar shall issue the certificate of incorp
oration of the company in-
(a) Form No. INC 7 (b) Form No. INC 8
(c) Form No. INC 10 (d) Form No. INC 11
15. On and from the date mentioned in the certificate of incorporation
issued under section 7 (2),
the Regist rar shall allot to the comp any-
(a) a PAN (b) a TAN
(c) a Corpor ate Identity Numbe r (d) None of these
16. If any person furnishes any false or incorrect docum ents with
the Registrar in relation to the
registration of a company, he shall be liable for--
(a) paymen t of fine of Rs. 50,000 (b) action under section 447
(c) both (a) and (b) (d) either (a) or (b)
17. Where a company has been got incorporated by furnishing any
false or incorrect information,
the Tribunal may-
(a) direct that liability of the membe rs shall be unlimit ed
(b) direct removal of the name of the compan y from the registe r of compan
ies
(c) pass an order for the windin g up of the compan y
(d) either (a) or (b) or (c)
18. The documents required to be filed with the Regist rar at the
time of incorporation of OPC-
(a) Memor andum and Articles of Associ ation of OPC
(b) Affidavit from the subscriber and the first Directo r to the Memor andum 9
in Fonn No. INC
(c) Consen t of nomine e in the Form No. INC 9
(d) All of the above
•
19. A n mtegra d .
te process for incorp oration of compa ny and appoin tment of 3 d"irectors of the
proposed company shall be filed with the Regist rar in
(a) Form No INC 2 (b) Form No INC 3
(c) Form No. INC 7 (d) None of these
20• Th e s· the
l"fi d · .
imp 1 1c proforma for mcorporation of compa ny electronically shall be made to
Registr ar in
(a) Form No. INC 32 (b) Form No. INC 32 (SPICE)
(c) Form No. INC 34
(d) Form No INC 35
 FOHMA I ION ANI) INCO Rl'OKA'l ION OF
A er 1Ml1ANY ♦ 81

21. Which of the following comp1'ny IN 1'llow

cd to follow the shnpllcJ 11roforma for Inco
comp11ny clcctronic11lly? rporating
(a) Company having more thnn 7 subscribers
(b) Company hnving not more thun 7 subscribe
rs
(c) Company having DTN for not more thnn 3
proposed Directors
(d) Both (b) and (c)
22. The certificate of incorporation cont ain!
r-
(a) A Corporate Identity Number (CTN)
(b) The date of issue of CIN
(c) The signature of the Registrnr of Companie
s with his seal
(d) All of the above
23. The Certificate of lncorpor.-tion is the
conclusive evidence tha t-
(a) all the legal requirements of registration have
been complied with
(b) the company is properly registered
(c) the company came into existence on the date
of certificate of incorporation
(d) all of lhe above
24. Which of the following is the legal effec
ts of the Certificate of Incorporation?
(a) The company comes into existence and it beco
mes a legal person independent from its members
(b) The Memorandum and Articles of Associatio
n become binding upon the company and all its
members
(c) The company acquires a perpetual successio
n
(d) All of the above
25. The term 'promoter' has been defined
in-
(a) Section 2(52)
(b) Section 2(69)
(c) Section 2(68)
(d) Section 2(70)
26. The term promoter means a per son -
(a) Who has been named as such in a prospectus
(b) Who is identified by the company in the
annual return referred to in section 92
(c) Who has control over the affairs of the comp
any, direct or indirectly whether as a shareholders,
director or otherwise
(d) either (a) or (b) or (c)
27. Which of the following statements is
true?
(a) A company may have more than one promoter
(b) A person who acts in a professional capa
city is not a promoter
(c) A promoter is a person in accordance with
whose advice, directions or instructions the Boar
of Directors of the company is expected to act d
(d) All of the above
Which of the following persons may act as
a promoter?
(a) A partnership Firm
(b) An association of persons
(c) A company or body corporate
(d) All of these
 82 + COMPANY LAw

29. The legal position of a promoter is that--

(a) he is not the agent because there is no principal in existence
(b) he is not the trustee because there is no trust in existence
(c) he stands in a fiduciary relationship towards the company which he brings · t .
in ° existe
(d) all of the above llte
30. Which of the foJlowing is the function of promoter-
(a) To investigate the idea and know whether the formation of the company is possibl
• . . e and profi L,
(b) To settle the details of the Memor:mdum and Articles of Association of the co llau:i
. . mpqy
(c) To arrange for the preparation of the prospectus and its issue
(d) All of the above
31. The fiduciary position of a promoter may be--
(a) not to make a ny profit at the expense of the company
(b) to m ake full disclosure to the company o f all relevant facts relating to the fonnation of a c
ompan\
(c) no t to make an unfair use o f position ·
(d) all of the above
32. A promoter of a company is personally liable--
(a) Unde r section 26 i,e, matters to be stated a nd informa tion to be given in the prospectus;
(b) Under section 35 i,e, civil liability for mis-statements in propectus
(c) Under section 34 i,e, criminal liability for mis-statem ents in prospectus
(d) All of the above
33. Which of the following is the usual ways of paying re muneration to a promoter for his smlces-
(a) Promoter may sell his own property to the company for cash a t a profit provided he makes full
disclosure to this efTect
(b) Promoter may be given an option to buy certain number o f shares in the company at par
(c) Promoter m ay be paid a lump-sum remuneration
( d) Any one of the above
34. All contracts which are purported to be made on behalf of a company before ifs incorPoration
are known as--
(a) Preliminary contracts (b) Commercial contracts
(c) Provisional contracts (d) None of the above
35. Which of the foJlowing statements is true? herl
. . . ntract even11
(a) A company, w h en 1t comes mto exjstence, is not bound by a pre-incorporatwn co
it takes the benefit of the contract entered into on its behalf •
. . rporauon
(b) A company cannot, after incorporation, enforce the contract made before its mco ,e1 lfl
anYnot>
(c) The promoters remain personally liable on a contract made on behalf of a comP
exjstence
(d) All of the above n0r,no•·
·ts ;nc0r,.-
1
36. A contract is entered into by the promoten on behalf of a company before
The company,
(a) can ratify the contract
(b) cannot ratify the contract thl! c,,r.V1';
• . ·1. un~--r
1
,,
(c) cannot rallfy the contract but is entjtled to obtain the benefits accnnng to -~ cJelf1r<.t
. w-tuch I
(d) may ratify that part of the contract whic h J'i beneficia1 and reject the part

L
---- -
_ _ _ _ _ _ _ _ _ _ _ _ _ _..:,f,.:O~RM::.:.:.:,ATI!.!O~N
~ AN~
D_!IN~
CO~R~P~O~RA~TI~O~N~OF~· ~A~C~O~M~PA~N~Y~ +~83

37. The liability of promot ers in connect ion with pre-incorporation contrac t shall come
(a) if the compan y makes a fresh contract in tenns of the pre-m· corporat·ton
to an end
contract
(b) if the
. compan y does not make a fresh contract within a limited ti' 'th
th
rescind e con ac
tr t me c1 er o f thc par1·1es may

(c) both (a) and (b)

(d) either (a) or (b)
38, The quantum of regiS tration fees payable by compan ies to be incorporated
in India depend s
on--
(a) The issued capital of the compan y
(b) The Nomina l capital of the compan y
(c) The paid-up capital of the compan y
(d) The called up capital of the compan y
39, Which of the' followin g stateme nts is false?
(a) A promote r has legal right to claim promotional expenses for his services
(b) A promote r shall have no legal rights to promotional expenses for his services
, unless there is
a valid contract
(c) When a promote r makes proper disclosure, he may expect to be rewarded for his
services .
(d) None of the above

A. 1. (d), 2. (c), 3. (d), 4. (b), 5. (a), 6. (a), 7. (d), 8. (d), 9. (b), 10. (a), 11. (a),
12. (d), 13. (b),
14. (d), 15. (c), 16. (b), 17. (d), 18. (d), 19. (b), 20. (b), 21. (d), 22. (d), 23. (d), 24.
(d), 25. (b) ,
26. (d), 27. (d), 28. (d), 29. (c), 30. (d), 31. (d), 32. (d), 33. (d), 34. (a), 35. (d), 36.
(b). 37. (c),
38. (b), 39. (a).

B. Short Questi ons :

1. What is meant by Promot ion of a Company ?
2. What is meant by Certificate of Incorporation ? (2.3] [C.U.B.Corn. 2007]
3. What do you underst and by comme ncemen t of business ? (2.5] [C.U. B.Corn. 2008,
2010]
4. Define Promot er. (2.6.1] [C.U. B.Corn. 2003]
5. State two functio ns of a promot er. (2.6.2]
6. What is Pre-inc orporat ion contrac t ? (2.7] [C.U. B.Corn. 2008, 2010]
C. Medium Questi ons :
1. Discuss the usual steps to be taken in the formation of a company. (2.2]
[C.U. B.Com. 2013, 2009)
2. What are the effects of registration of a company ? (2.4]
3. Discuss the steps involve d in the incorporation of a company. (2.4] (C.U. B.Com. 2005)
4. Discuss the legal positio n of a promot er to the company. (2.6.3] [C.U. B.Com.
2011]
5. Discuss the functio ns of a promot er.
(2.6.2]
6- Discuss the liabilities of a
promoter. (2.6.3]
 - ... 'ffl

84 + COMPANY LA.w

get in the formation of a ~

7. How muc h rem uner atio n a prom oter can
Pany ? 12.&.61
ship with the company they pr~~
8. "Pro mot ers stand in the fiduciary relation -Coni ...
[2.6.3] •11cn1

9. Disc uss the law relating to pre-incorpor

ation contract. [2.7]

C. Long Questions :
1. Discuss breifly the steps to be taken for
the formation of a public limited com
the com pani es Act, 2013 . [2.2]
fC.U. B.Com. 2007, 2::under I
2611
regi strat ion and inco rpor atio n of a company . What are h ' 1
2. Disc uss the proc edur es for
t e effecb
of registration of a com pany ? [2.2 & 2.4]
3. Def ine the tenn 'pro mot ers'. State the func
[2.6.1, 2.6.2, 2.6. 4 & 2.6.5]
tions, duties and obligations of the promoters
· I
re a com pany can commence its business ?[2.5
4 . Wha t are the conditions to be fulfilled befo
5. Wri te note s on the following :
(a) Certificate of Incorporation [2.3]
]
'
(b) Pre- inco rpor atio n contracts [2. 7]
(c) Cor pora te Identity Number [2.7]
oter of a com pany. [2.6.4 & 2.6.5]
6. Disc uss the duties and Jiab]i]ities of a prom [C.U. B.Com. 2012]

7. Wha t is Pre-incorporation contract ?

or
y ? Giv e excampJe. [2. 7]
Can Pre-incorporation contract bind a com pan [C.U. B.Com. 20141