1. What is known as a charter of a Company?

[A] Memorandum of Association

[B] Bye laws
[C] Articles of Association
[D] Prospectus
Answer: Option [A]
2. Minimum paid up capital for a public company
[A] 500000
[B] 400000
[C] 300000
[D] 200000
Answer: Option [A]
3. The name of a company can be changed by__________.
[A] an ordinary resolution
[B] a special resolution
[C] the approval of the union government
[D] a special resolution and with the approval of the central government
Answer: Option [D]

4. The __________defines a companys relations with the outside world.

[A] prospectus
[B] memorandum of association
[C] articles of association .
[D] statement in lieu of prospectus .
Answer: Option [B]

5. The most important document of a company is its__________.

[A] prospectus
[B] annual report.
[C] memorandum of association
[D] articles of association
Answer: Option [C]

6. Mark out the type of alteration that is permitted in the articles of association____.
[A] that may not be in the companys interest .
[B] that is contrary to the provisions of the companies act.
[C] that increases a members liability without his written consent .
[D] that is consistent with the memorandum of association .
Answer: Option [D]

7. Mark out the document that need not be prepared and registered with the registrar of
companies in public limited companies.
[A] statutory declaration
[B] memorandum of association .
[C] articles of association .
[D] directors undertakings to take up and pay for qualification shares
Answer: Option [C]

8. The share capital of a company may be reduced by __________.

[A] an ordinary resolution
[B] a special resolution
[C] a resolution of the board of directors
[D] obtaining permission from the company law board
Answer: Option [B]

9. The ___________ on equity shares is not cumulative.

[A] dividend
[B] profit
[C] loss
[D] reserve
Answer: Option [A]

10. The ___________ constitute the top administrative organ of the company. .
[A] general manager .
[B] shareholders.
[C] board of directors.
[D] advisory panel.
Answer: Option [C]

11. A directors election takes place in a general meeting through a separated Resolution
passed by a _______ majority
[A] single
[B] two-thirds
[C] three-fourths.
[D] five-sixths .
Answer: Option [A]

12. The total managerial remuneration to the directors and the manager in respect of any
financial year must not exceed _________ percent of the net profit.
[A] one
[B] three
[C] eleven
[D] ten
Answer: Option [C]
13. Where a company has three directors, the maximum remuneration payable to all of
them is ________% of the annual net profit
[A] 5.
[B] 10.
[C] 20.
[D] 25.
Answer: Option [B]

14. A person cannot act as managing director of more than _______company /companies at
a time
[A] one
[B] two
[C] four
[D] five
Answer: Option [B]
15. The partnership entity may be regarded as ____________.
[A] a legal entity .
[B] an accountable entity .
[C] both a legal and accountable entity .
[D] neither a legal nor an accountable entity
Answer: Option [D]

16. The amount of minimum subscription may be learnt from the ______________.
[A] prospectus
[B] memorandum of association
[C] articles of association .
[D] records of general meetings
Answer: Option [A]

17. When can a private company commence business ?

[A] at any time
[B] after applying for registration.
[C] after obtaining the certificate of incorporation.
[D] after obtaining the certificate of commencement of business .
Answer: Option [C]
18. An exception to the doctrine of constructive notice is____________.
[A] the doctrine of ultra vires .
[B] the doctrine of indoor management .
[C] lifting the corporate veil
[D] the doctrine of ultra vires in Articles of Association.
Answer: Option [B]

19. A prospectus is to be issued within _______days of registration.

[A] 30
[B] 60
[C] 90
[D] 180
Answer: Option [C]

20. All monies received with the application of shares are to be deposited_______.
[A] with the controller of capital issues .
[B] in the companys bank account
[C] in a special account opened in a scheduled bank for the purpose
[D] with the registrar of companies
Answer: Option [C]

21. The minimum subscription is to be received within ______days of the offer.

[A] 30
[B] 60
[C] 120
[D] 150
Answer: Option [C]
22. The charter of a company refers to its ________________.
[A] prospectus
[B] memorandum of association
[C] articles of association
[D] statement in lieu of a prospectus
Answer: Option [B]

23. An association of 30 persons not registered under the companies Act but carrying on a
business is a/an ___________.
[A] illegal association
[B] partnership
[C] private company
[D] public company.
Answer: Option [A]

24. A company is a juristic person with a perpetual succession _____________

[A] as such it dies.
[B] its life depends on the life of its members.
[C] it is created by a process of law and can be put to an end only by a process of law
[D] none
Answer: Option [C]
25. On a share of Rs. 100 of a company, a shareholder has already paid Rs. 30.His Liability is
now limited to ___________
[A] Rs. 100.
[B] Rs. 30
[C] Rs. 70.
[D] Rs.10
Answer: Option [C]

26. The Reserve Bank of India is an example of a _____________.

[A] registered company.
[B] statutory company.
[C] chartered company.
[D] unlimited company.
Answer: Option [B]
27. The liability of a shareholder in a company limited by shares is ____________.
[A] unlimited
[B] limited by guarantee.
[C] limited to the unpaid value of shares subscribed by him.
[D] none of the above
Answer: Option [C]

28. An act is said to be ultra vires a company when it is beyond the powers ___________.
[A] of the company
[B] of the directors .
[C] of the directors but not the company
[D] conferred on the company by the Articles.
Answer: Option [A]

29. Which of the following companies need not have their own articles of Association?
[A] unlimited companies.
[B] companies limited by guarantee
[C] private companies limited by shares.
[D] public companies limited by shares.
Answer: Option [D]

30. The Articles of a company conflict with the Memorandum _______________.

[A] the Articles shall prevail.
[B] the Memorandum shall prevail
[C] the directors will resolve the conflict.
[D] the court will resolve the conflict.
Answer: Option [A]

31. A shareholder purchased in the open market shares of a company whose prospectus
contained some misstatements. He ____________.
[A] can rescind the contract only but cannot claim damages
[B] can claim damages only but cannot rescind the contract
[C] has no remedy against the company.
[D] has remedy against the directors responsible for the issue of the prospectus
Answer: Option [C]

32. Underwriting means ___________.

[A] selling shares at a discount .
[B] purchasing property at less than market price.
[C] agreeing to purchase shortfall of shares in a company in case of under subscription
[D] offering new shares to outsiders
Answer: Option [C]

33. Share capital of a company means ______________.

[A] equity share capital .
[B] preference share capital
[C] equity and preference share capital .
[D] equity and preference share capital and debentures
Answer: Option [C]

34. The dividend on preference capital is paid _____________

[A] whenever there are profits
[B] only if there are profits.
[C] even if there are no profits.
[D] only when the directors recommend it
Answer: Option [D]

35. Shares can be issued ____________.

[A] at par.
[B] at discount.
[C] at premium.
[D] all of the above.
Answer: Option [D]

36. The debenture holders of a company are companys__________.

[A] owners
[B] creditors
[C] customers
[D] all of these.
Answer: Option [B]
37. A share certificate is required to be signed by_____________
[A] company secretary.
[B] two directors.
[C] two directors and company secretary
[D] all directors and company secretary
Answer: Option [C]

38. A secretary should have sound knowledge of_______________.

[A] company law.
[B] tax laws.
[C] labour laws.
[D] all of these.
Answer: Option [A]
39. Transmission of shares takes place in the following case_____________.
[A] sale of shares.
[B] theft of shares.
[C] operation of any law.
[D] all of these.
Answer: Option [C]

40. The dividend on preference capital is paid___________.

[A] whenever there are profits
[B] only if there are profits
[C] even if there are no profits.
[D] only when the directors recommend it
Answer: Option [D]

41. A private company ________issue deferred shares with disproportionatevoting rights

[A] can ony
[B] can
[C] cannot
[D] can with the prior approval of the government
Answer: Option [A]

42. When is a company said to have been registered?

[A] when it files the memorandum of association with the registrar if companies
[B] when it gets the certificate of incorporation
[C] when it gets the certificate of commencement of business
[D] when it actually starts its business
Answer: Option [A]

43. how many types of preference shares

[A] 8
[B] 7
[C] 6
[D] 5
Answer: Option [A]

44. The debenture holders of a company are companys____________.

[A] owners
[B] creditors
[C] customers
[D] all of these
Answer: Option [B]

45. A share certificate is required to be signed by__________.

[A] company secretary
[B] two directors
[C] two directors and company secretary
[D] all directors and company secretary.
Answer: Option [C]

46. Transmission of shares takes place in the following case

[A] sale of shares.
[B] theft of shares
[C] operation of any law.
[D] all of these
Answer: Option [C]

47. To enable a company to pay dividends, a special authority is ___________.

[A] not needed either in the memorandum or in the articles
[B] needed either in the memorandum or in the articles
[C] needed only in the memorandum
[D] needed only in the articles
Answer: Option [A]

48. According to the companies act, which one of the following companies can commence
allotment of shares even before the minimum subscription is subscribed or paid?
[A] Charted company
[B] Private company
[C] Government company
[D] Public limited company
Answer: Option [B]
49. Share premium received by issuing shares can be used for ___________.
[A] payment of dividend
[B] issue of bonus share
[C] remuneration to management
[D] any business purpose
Answer: Option [B]

50. Under the companies act, which of the following powers can be exercised by the board
of directors?
[A] Power to sell any of the companies undertaking
[B] Power to make call.
[C] Power to borrow money in excess of the paid up capital.
[D] Power to reappoint on auditor
Answer: Option [B]
51. The liability of shareholders of a public company is limited to the _________.
[A] paid up value of shares
[B] nominal value of shares
[C] extent of their private assets
[D] amounts called up.
Answer: Option [A]

52. Under the Indian Companies Act, 1956, a person can be a Director in ___________.
[A] 7 companies.
[B] 10 companies
[C] 20 companies
[D] 25 companies.
Answer: Option [C]

53. Investment in which of the following is most risky?

[A] equity shares
[B] preference shares
[C] debenture
[D] Land
Answer: Option [A]

54. Which of the following is not an ownership security?

[A] equity shares.
[B] debentures.
[C] preference shares.
[D] None of the above
Answer: Option [B]

55. In which of the following, interest and dividend is payable even if the company does not
earn profit?
[A] equity capital
[B] preference capital.
[C] debentures
[D] bonds
Answer: Option [C]

56. Debentures cannot be _____________

[A] irredemable debentures.
[B] participating debentures
[C] registered debentures
[D] earear debbentures
Answer: Option [C]

57. The existence of a joint stock company is interrupted by ______________.

[A] the death of its members
[B] the death of its directors.
[C] the death or insolvency of its manigins; director
[D] none of these
Answer: Option [D]

58. When an existing company offers its shares for sale to the existing shareholders, it is
known as_____________.
[A] private placing
[B] bonus issue
[C] rights issue
[D] offer for sale.
Answer: Option [C]

59. A ___________ is a combination of two companies to form a new company.

[A] merger
[B] public
[C] private
[D] private
Answer: Option [A]
60. Promoter is a person who__________.
[A] takes part in the incorporation of a company.
[B] is a director.
[C] is a relative of the managing director.
[D] works to siva publicity to the co.
Answer: Option [A]

-:Short Notes:-
5 marks each
1. Dividends:- Dividends are an important source of income for shareholders of a
company. In simple terms, a dividend is a distribution of a company’s profits to its
shareholders. Section 2(35) of the Companies Act, 2013, defines the term “dividend”
as any distribution of profits by a company to its shareholders, whether in cash or in
kind. It includes bonus shares, but does not include the distribution of assets on
liquidation of a company. Section 123 of the Companies Act, 2013, lays down the
provisions for the declaration and payment of dividends. According to this section, a
company may declare and pay dividends only out of the profits of the company for
that year or any previous year(s) after providing for depreciation or out of the profits
of the company for any previous year(s) after providing for depreciation and after
setting aside an amount for reserves as may be prescribed. Further, the company
may declare interim dividends during any financial year or at any time before the
finalization of the accounts of that year. However, such interim dividends can be paid
only out of the surplus in the profit and loss account and the reserves of the
company.
2. Transmission/ Transfer of Shares:
The word ‘transmission’ means transfer of title by operation of law. It may be by
succession Transmission of shares is a process by operation of law where under the
Shares are registered in a Company in the name of deceased person or an insolvent
person are registered in the name of his legal heirs by the Company on proof of
death or insolvency as the case may be. Transmission of shares takes place when
registered member dies or is adjudicated insolvent or lunatic by competent court.
Section 56 of the Companies Act, 2013 the power of the company to register, on
receipt of an intimation of transmission of any right to securities by operation of law
from any person to whom such right has been transmitted.

Modes of Transmission:
 1. The Survivors in case of joint shareholding can get the share transmitted on
production of the death certificate of deceased shareholder.
2. If the member of the Company dies and leaves after him a will or letter of
administration then survivor shall get the copy of will certified under the seal of the
Court. The certified copy of will is called a probate and it shall be forwarded to the
Company.
3. If Member of the Company dies without leaving a Will, then succession certificate
issued by the Court shall be issued to the Company.
4. Transmission in case of small shareholding:- Transfer may be considered and
affected by the Company without obtaining succession certificate. The Board of
Directors shall ensure that sufficient evidence has been produced by the legal heirs.

3. Pre- Incorporation Contracts:-

“A pre-corporation contract is one which is entered into when the Company is in the
process of being incorporated but is not yet completed it. At common law such
contracts were held to be void, as the Company is not yet in existence."

The person who enters into a pre-incorporation agreement is usually called the
Promoter. The Indian Companies Act 2013 defines the Promoter under Section 2(69).
The Job of promoter is not only limited towards, performing certain duties, but surely
it extends toward the incorporation of a company. It depends on the nature of the
company which is to be established, to arrange their respective persons.

Pre-incorporation contracts perform a valuable function. By permitting valid and

binding legal commitments with third parties, nascent companies are able to secure
significant and sometimes essential services necessary to become a fully capitalized
and stable corporation.

Legal Status:
"The legal status of a pre-incorporation contract is not easy to assess. Going by the
definition of the contract, there have to be at least two parties/persons who enter
into contract with each other. "So, the general principle is that if one of the parties to
the contract is not in existence at the time of entering into the contract then no
contract will there.
Hence, the company can't enter into a contract before it comes into existence, and it
comes into existence only after its registration. Thus it is said that the pre-
incorporation contract is entered into by the promoters on behalf of the company.
The promoters, while entering into the contract, act as agents of the company.
However when the principal, that is the company is itself not in existence, how can it
appoint an agent to act for it." So, the promoters, themselves" and not the company,
become personally liable for all contracts entered into by them even though they
claim to be acting for the prospective company.
 But under section 230 of the Indian Contract Act , "an agent cannot personally
enforce contracts entered into by him on behalf of his principal, nor is he personally
bound by them if he specifies clearly, at the time of making the contract, that he is
only acting as an agent and he is not personally liable under the contract. So if this
principle is applied, the contract becomes in fructuous as neither of the parties is
liable under the contract."

4. Quorum:
The Companies Act, 2013 (hereinafter referred to as the Act) requires that a
company established under the Act has to hold General meetings as well as Board
meetings periodically. To ensure that the companies follow this regulation and that
such meetings are held properly, it requires a quorum to be met for it to be deemed
as a valid meeting.

A ‘Quorum’ in simple words means the minimum number of members that have to
be present in a meeting. Under the Act, the quorum for a General Meeting, a Board
Meeting and an Extraordinary General Meeting is enumerated within its provisions.

Requirements of Quorum for a General Meeting:

Section 103 of the Act states the quorum required for a General Meeting. Under this
Section, unless the Articles of Association of the company provide for a larger
quorum, the minimum quorum must be:
• For public companies
(a) 5 members to be present if as on the date of the meeting being held, the
number of members in the company does not exceed one thousand.
(b) 15 members to be present if as on the date of the meeting there are more
that one thousand members but less than five thousand members.
(c) 30 members to be present if as on the date of the meeting there are more
than five thousand members.
• For Private Companies
In the case of a private company regardless of the number of members,
two members must be present for the quorum to be met for a meeting.
Options Upon Non- Fulfilment of Quorum Requirement:
Sub-clause (2) and (3) of Section 103 of the Act provides for when the quorum has not been
met. If the quorum is not present within half an hour of the time set for the meeting to
begin, then the following options will be applicable:

• The meeting will be adjourned, and it shall be held on the same day and at
the same time next week, or any other date and time as the Board may
determine. If the meeting is adjourned then the date, time and place of the
meeting will be notified personally or via advertisement. The advertisement
 must be published in both English as well as the vernacular language in a
newspaper which is in circulation at a place where the registered office of the
company is situated.
• The meeting, if called by requisitions under Section 100, shall stand cancelled.
• Under sub-clause (3), if the quorum is not present at the adjourned meeting,
then the members present shall be the quorum.
5. Liquidator:
Section 2(23) of the Companies Act,2013 defines the term ‘Company Liquidator’. It
defines as follows-
‘Company Liquidator’ means a person appointed by the Tribunal as the Company
Liquidator in accordance with the provisions of section 275 for the winding up of a
company under this Act.

A liquidator is a person generally appointed by the court, unsecured creditors or by

the shareholders of the company. He is the person who liquidates assets (in most
cases). The liquidator is mainly appointed when the company has been insolvent and
bankrupt. After his appointment, he takes control of all the assets, properties of the
organization and persons.

He has the legal power to act in different capacities on behalf of the company. For
liquidation, the liquidator can sell the assets of the company in the open cash market
any other things having equal value.

The main and important role of the liquidator is to investigate all affairs of the
company, the liquidator has to find out if any assets need to be recovered if those
have been misplaced or sold at a lower price than the market value. The liquidator
has the liberty to reverse these types of transactions.

Role:
The liquidator is appointed for handling the liquidation process. Their main role and
responsibility are to manage all the activities, accounts, assets, etc. of the company
and to liquidate all these as per dues that need to be paid to the creditors. A
liquidator can also pay from the funds of the company if it is available.

The appointment of the Company Liquidator is enshrined under Section 275 of the
act which provides a detailed conditions upon which the liquidator can be appointed.
• The Tribunal chooses a liquidator to help close a company.
• This liquidator is chosen from professionals who are registered under the
Insolvency and Bankruptcy Code, 2016.
• The Tribunal can limit the liquidator’s powers, but generally, they have the
same powers as any liquidator.
• The Tribunal decides the terms, conditions, and payment for the liquidator.
 • The liquidator must declare any conflicts of interest within a week of being
appointed.
• When the Tribunal orders a company to be wound up, it can appoint a
temporary liquidator to manage the process.

6. Memorandum of Association:
The memorandum of association acts as the foundation of every company. It explains
all the rules and bubbles powers of the owner in your systematic formal
representation. It has a broad scope. As it is very important for every organisation,
we will try to understand more about moa. Let us discuss the meaning of the
memorandum of association and its aims, features, and many more.

Memorandum of Association of a Company

Memorandum of association of the company deals with all aspects of that particular
organisation such as the operations delegation of duties and policies, principles, etc.
The memorandum of association of any company is formed or designed by
considering the objective of a particular firm. In the year 2013, section 399 of the
companies act, designed to form an MOA, which is the public document and needs
to get aware of this moa to all employees of an organisation.

Meaning:
The memorandum of association definition explains that all the powers and the
rights should be mentioned in this public document and no one should depart from
the contract as well as not to Violet the rules and regulations specified in the moa. If
anyone violates, they can be termed as ultra vires of the company and immediately
can void them. This is the simple and straight away definition of the memorandum of
association of any company. It is completely under legal survival. All the papers are
strictly verified and are tested by the moa in company law.