CATestSeries.

org (Since 2015)

CA Final | CA Inter | CA IPCC | CA Foundation Online Test Series

Question Paper

CS Executive- Company Law & Practice Duration: 40

Details: Test-2 (Ch- 2) Marks: 40

Instructions:

 All the questions are compulsory

 Properly mention test number and page number on your answer sheet, Try to upload sheets
in arranged manner.

 In case of multiple choice questions, mention option number only Working notes are
compulsory wherever required in support of your solution

 Do not copy any solution from any material. Attempt as much as you know to fairly judge
your performance.

Legal: Material provided by catestseries.org is subject to copyright. No part of this

publication may be reproduced, distributed, or transmitted in any form or by any means, including
photocopying, recording, or other electronic or mechanical methods, without the prior written
permission of the publisher. For permission requests, write to the publisher, addressed “Attention:
Permissions Coordinator,” at exam@catestseries.org. If any person caught of copyright
infringement, strong legal action will be taken. For more details check legal terms on the website:
catestseries.org

CATESTSERIES.ORG
Q-1. Which of the following activities can a registered company NOT engage in?

a) Owning property

b) Signing contracts

c) Marrying or divorcing

d) Hiring employees

Q-2. According to the concept of corporate personality, shareholders of a company:

a) Own the company's property collectively

b) Act as agents of the company

c) Can be held liable for the acts of the company

d) Are distinct from the company

Q-3. In the case of Lee v. Lee's Air Farming Ltd., the court held that:

a) Lee's widow was not entitled to compensation

b) Lee was not a separate legal person from the company

c) Lee could not hold the position of managing director and chief pilot simultaneously

d) Lee's widow was entitled to compensation

Q-4. Which of the following best describes perpetual succession in relation to an

incorporated company?

a) The company's existence is unaffected by changes in membership.

b) The company is dissolved when all members leave or die.

c) The company's existence is dependent on the shareholders' approval.

d) The company can only continue if it is wound up as per law.

CATESTSERIES.ORG
Q-5. What happens to an incorporated company if all its members are killed or leave?

a) The company ceases to exist.

b) The company continues to exist.

c) The company needs to be re-incorporated.

d) The company's assets are distributed among the members' legal representatives.

Q-6. Which of the following statements is true regarding the transferability of shares in
public and private companies?

a) Shares of both public and private companies are freely transferable.

b) Shares of public companies are freely transferable, while shares of private companies
have restrictions.

c) Shares of private companies are freely transferable, while shares of public companies
have restrictions.

d) Shares of both public and private companies have restrictions on transferability.

Q-7. According to the judicial decision in Gasque v. Inland Revenue Commissioners, what
attributes can be given to a body corporate (company) similar to those of a natural person?

a) Citizenship, domicile, and nationality

b) Domicile, residence, and nationality

c) Nationality, residence, and citizenship

d) Domicile, nationality, and citizenship

Q-8. When can the members of a company be held personally liable for the payment of the
company's debts?

a) When the company is incorporated as an Unlimited Company

CATESTSERIES.ORG
b) When the company carries on business with less than seven members in the case of a
public company or less than two members in the case of a private company for more than
six months, and the members are aware of this fact

c) When the company's prospectus is issued with fraudulent intent

d) When the company fails to repay deposits accepted with fraudulent intent

Q-9. Under which section of the law can the Tribunal declare individuals personally liable,
without limitation of liability, for the debts of a company if it is found that the company's
business was carried on with fraudulent intent?

a) Section 3A

b) Section 339

c) Section 35(3)

d) Section 75(1)

Q-10. In which scenario can the Central Government file an application before the Tribunal
for disgorgement of assets and holding individuals personally liable without any limitation of
liability?

a) When a company fails to repay the deposit or part thereof, accepted with fraudulent
intent

b) When a company's report indicates the occurrence of fraud, and any director, key
managerial personnel, or other person has taken undue advantage or benefit from it

c) When a company issues a prospectus with fraudulent intent

d) When a company carries on business with fewer members than required for an extended
period

CATESTSERIES.ORG
Q-11. What is one disadvantage of a registered company mentioned in the given
information?

a) Lack of privacy

b) Limited control over company workings

c) High expense of registration

d) Possibility of fraud

Q-12: Which business model allows for the most effective control over the workings of the
company?

a) Registered company

b) Sole proprietorship

c) Partnership

d) Non-registered company

Q-13. Which of the following is NOT a characteristic of an associate company?

a) The company has a significant influence over the associate company.

b) The company is a subsidiary of the associate company.

c) The company has control of at least 20% of the total voting power of the associate
company.

d) The company has control of or participation in business decisions under an agreement

with the associate company.

Q-14. Which of the following is NOT a requirement for a company to be considered a

domestic company in India?

(a) The company must be registered under the Companies Act, 2013.

CATESTSERIES.ORG
(b) The company must have its registered office in India.

(c) The company must have made the prescribed arrangements for the declaration and
payment of dividends within India.

(d) The company must be an Indian company.

Q-15. A private limited company is exempted from the following requirement:

(a) Issuing a prospectus

(b) Providing a statement in lieu of a prospectus

(c) Dematerializing its securities

(d) Serving notice to its members

Q-16. A private limited company can close its register of members or debenture holders
without giving notice to the public if:

(a) It has served notice on all of its members at least seven days prior to the closure.

(b) It has published the notice in at least two newspapers.

(c) It has published the notice on its website.

(d) All of the above.

Q-17. Which of the following is a privilege that a private company has over a public
company?

(a) The ability to issue shares without a prospectus

(b) The ability to close its register of members without notice to the public

(c) The ability to avoid forming an audit committee

(d) All of the above

CATESTSERIES.ORG
Q-18. Which of the following is a requirement that only applies to private companies with a
turnover of two hundred crore rupees or more during the preceding financial year?

(a) Appointing an internal auditor

(b) Forming a CSR committee with two directors

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Q-19. Which of the following is a characteristic of a public limited company?

(a) It has a minimum of 7 shareholders.

(b) It has a maximum of 15 directors.

(c) It can issue shares to the public.

(d) All of the above.

Q-20. Which of the following is not a characteristic of a public limited company?

(a) It is a separate legal entity from its shareholders.

(b) Its shares are not transferable.

(c) It is required to publish its financial statements annually.

(d) It can raise additional capital by issuing debentures and bonds.

Q-21. Which of the following is not a characteristic of a government company?

(a) It can issue shares to the public.

(b) It can raise additional capital by issuing debentures and bonds.

(c) It is required to publish its financial statements annually.

(d) It is subject to the same regulations as a private limited company.

CATESTSERIES.ORG
Q-22. Which of the following is the correct replacement for the word "Board" in section
149(6)(a) of the Act, with respect to a Government Company?

a) Department of Central Government

b) State Government

c) Ministry of Finance

d) None of the above

Q-23. Which of the following entities are exempted from the provisions of the first and
second proviso to sub-section (1) of section 188 of the Companies Act, 2013?

a) Government companies

b) Central Government

c) State Governments

d) All of the above

Q-24. In case of a government company, other than a listed company, which of the
following entities is required to approve contracts or arrangements other than those
referred to in clause (a) of the notification before entering into such contract or
arrangement?

a) Ministry or Department of the Central Government which is administratively in charge of

the company

b) State Government

c) Both (A) and (B)

d) None of the above

CATESTSERIES.ORG
Q-25. Which of the following provisions of Section 196 of the Companies Act, 2013 shall not
apply to Government Companies?

a) The requirement of appointing/re-appointing a Managing Director (MD), Whole-time

Director (WTD), or Manager for a term not exceeding 5 years at a time.

b) The requirement of seeking approval of the Board and Members at a meeting for the
appointment of Managerial Personnel.

c) The requirement of filing a return of the appointment of Managerial Personnel within 60

days with the Registrar of Companies (ROC) in Form MR-1.

d) All of the above.

Q-26. In case of a Government Company, who is authorized to appoint the Managing

Director (MD), Whole-time Director (WTD), or Manager?

a) The Board of Directors.

b) The Central Government.

c) The Ministry or Department of the Central Government which is administratively in

charge of the company.

d) None of the above.

Q-27. Who has the right to conduct a supplementary audit of a company's accounts?

a) The company's statutory auditor

b) The company's management

c) The Comptroller and Auditor General of India (CAG)

d) None of the above

CATESTSERIES.ORG
Q-28. What is the purpose of a supplementary audit?

a) To ensure that the company's accounts are accurate

b) To identify any areas of concern in the company's financial reporting

c) To provide additional information to the company's shareholders

d) All of the above

Q-29. Who is responsible for preparing the annual report of a government company?

a) The company's management

b) The company's statutory auditor

c) The Central Government or the State Government, as the case may be

d) None of the above

Q-30. What information must be included in the annual report of a government company?

a) The company's financial statements

b) The company's management discussion and analysis (MD&A) report

c) Both (a) and (b)

d) None of the above

Q-31. Who among the following individuals is exempt from the provisions of Section 203,
including the penal provision mentioned in sub-section (5), in a Government Company?

CATESTSERIES.ORG
a) Chief Financial Officer (CFO)

b) Chief Executive Officer (CEO)

c) Whole-Time Director

d) Company Secretary (CS)

Q-32. Which of the following statements is true regarding the exemptions to Government
Companies under Section 188 of the Companies Act, 2013?

a) Before the amendment, contracts or arrangements with any other Government Company
were exempted, but now the exemption is extended to contracts or arrangements with the
Central Government or any State Government or any combination thereof.

b) Before the amendment, contracts or arrangements with the Central Government or any
State Government or any combination thereof were exempted, but now the exemption is
extended to contracts or arrangements with any other Government Company.

c) The amendment does not provide any exemptions to Government Companies under
Section 188 of the Companies Act, 2013.

d) The exemptions under Section 188 of the Companies Act, 2013, remain unchanged after
the amendment.

Q-33. Which of the following Government Companies would be exempt from the provisions
of Section 170 and 171 of the Companies Act?

a) Government Companies with partial ownership by the Central Government

b) Government Companies with partial ownership by State Governments

c) Government Companies with complete ownership by the Central Government

CATESTSERIES.ORG
d) Government Companies with complete ownership by State Governments

Q-34. Which committee's role and terms of reference are affected by the notification
relating to sub-sections (2), (3), and (4) of Section 178 of the Companies Act?

a) Audit Committee

b) Nomination and Remuneration Committee

c) Stakeholders Relationship Committee

d) All of the above

Q-35. Which of the following disclosures is not required in the abridged form of the Board's
report for a small company?

a) Explanations or comments by the Board on every qualification, reservation, or adverse

remark made by the auditor in his report.

b) The web address where the annual return has been placed.

c) Details of significant and material orders passed by regulators, courts, or tribunals

impacting the company's going concern status.

d) Disclosure of the company's internal financial controls with reference to financial

statements.

Q-36. Which section of the Companies Act, 2013 prescribes the abridged form of the
Board's report for a small company?

a) Section 92(3)

b) Section 134(3A)

CATESTSERIES.ORG
c) Section 143(12)

d) Section 188(1)

Q-37. What is the maximum penalty amount that can be imposed on a small company for
non-compliance with provisions of the Act?

a) Two lakh rupees

b) Four lakh rupees

c) One lakh rupees

d) Five lakh rupees

Q-38. For a small company, is it necessary to obtain certification of e-forms from a

professional such as a Chartered Accountant (CA), Company Secretary (CS), or Cost and
Management Accountant (CMA)?

a) Yes, it is mandatory for a small company to obtain certification of e-forms from a

professional.

b) No, certification of e-forms is not required for a small company.

c) Certification of e-forms is optional for a small company.

d) The Act does not provide any specific requirement regarding the certification of e-forms
for a small company.

Q-39. What is the minimum quorum required for a general meeting of a public company if
the number of members as on the date of the meeting exceeds five thousand?

a) Five members

b) Fifteen members

c) Thirty members

CATESTSERIES.ORG
d) Two members

Q-40. What is the minimum quorum required for a general meeting of a private company?

a) Five members

b) Fifteen members

c) Thirty members

d) Two members

(40 X 1 = 40 = Marks)

CATESTSERIES.ORG