1. What is the meaning of the word 'company' in common parlance?

A) An artificial person with separate legal entity

B) An organization with economic and non-economic objectives
C) An association of multiple persons
D) To carry on a business for gain

2. How is a company defined in Section 2(20) of the Companies Act,

2013?
A) An artificial person with perpetual succession
B) An organization with separate legal entity and common seal
C) A company incorporated under this Act or under any previous
company law
D) An association of many persons engaged in trade or business

3. How did Lord Justice Lindley define a company?

A) An organization with perpetual succession and common seal
B) An artificial person created by law with separate entity
C) An association formed for economic and non-economic purposes
D) An association of many persons who contribute money or monies
worth to a common stock and employed in some trade or business
4. According to Prof. Haney, how is a company defined?
A) An association of persons for economic purposes
B) An organization formed for various purposes, both economic and
non-economic
C) A legal entity with separate legal personality
D) An artificial person created by law, having separate entity, with a
perpetual succession and common seal

5. When does a company come into existence under the Companies

Act?
A) On registration under the Act
B) On establishment of a separate legal entity
C) On fulfillment of economic objectives
D) On incorporation of the company

6. What does it mean for a company to have a separate legal entity?

A) It possesses property in its own name
B) It has a personality distinct from its members
C) It is regulated, modified or dissolved by law
D) It is an artificial person with perpetual succession
7. In the case of Salomon & Co. Ltd., who owned the business?
A) The unsecured creditors
B) Salomon himself
C) Salomon's wife and children
D) The company

8. According to the decision in Salomon & Co. Ltd. case, who was an
agent of whom?
A) The unsecured creditors were agents of Salomon
B) Salomon's wife and children were the agents of the company
C) Salomon was the agent of the company
D) The company was the agent of Salomon

9. In the case of 'L', could 'L' hold both the position of the governing
director and an employee of the company?
A) Only if he surrenders his shares in the company
B) Yes
C) Only if he resigns as the governing director
D) No
10. In the given case of 'L', what was 'L' entitled to as an employee of
the company?
A) Compensation claim
B) Balance of the business's assets
C) Nominal value of his shares
D) Profit and loss share

11. What is the liability of the members of a company limited by shares

based on?
A) Unpaid premium on their shares
B) Outstanding debts of the company
C) Nominal value of their shares
D) Guarantee amount

12. In the case of unlimited liability companies, when does a member's

liability end?
A) When the shareholder sells their shares
B) When the guarantee amount is met
C) When each paisa has been paid off
D) When the company is dissolved
13. What determines the liability of each member in a company limited
by guarantee?
A) The profits made by the company
B) The guarantee amount committed by the member
C) The total assets of the company
D) The nominal value of the member's shares

14. When is a member of a company strictly liable for the payment of

the whole debt?
A) When a member enters into a contract to serve the company
B) When a member fails to pay the guarantee amount
C) When the number of members falls below the required minimum and
the company continues to carry on business for more than six months
D) When the company's assets are not sufficient to discharge the
debentures

15. What does it mean for a company to have a separate legal entity?
A) It has a residential status
B) It is capable of owning, enjoying and disposing of property in its own
name
C) It has individual capacity to sue and be sued
D) It can enter into deeds through a power of attorney
16. What was the Supreme Court's verdict on treating dividend income
as agricultural income in the Guzdar case?
A) It should be treated as agricultural income up to 60%
B) It should be taxed as income from manufacture and sale
C) It could not be regarded as agricultural income
D) It should be treated as divested of agricultural character

17. In the Macaura case, why was the claim for insurable interest
rejected?
A) Macaura did not have majority shareholding in the company
B) The company did not have insurable assets
C) The insurance policy was invalid
D) No shareholder has any right to any item of property owned by the
company

18. What are shares of a company considered as?

A) Movable property
B) Personal property
C) Immovable property
D) Intellectual property
19. What happens to a company if its human members are dead?
A) The company loses its legal status
B) The company becomes defunct
C) The company is dissolved
D) The company continues to exist

20. How does a company work since it is an artificial person without a

body or limbs?
A) Through the agency of directors, officers, and employees
B) Through the contributions of the shareholders
C) Through the separate legal entity of the company
D) Through the common seal of the company

21. Who can execute deeds on behalf of a company according to

Section 22 of the Companies Act?
A) Any person holding shares in the company
B) The government authorities
C) A person empowered by the company through a power of attorney
D) The directors and officers of the company
22. When can a company exercise its right to sue for a loss or
defamatory material?
A) When the members pass a resolution to sue
B) When any member of the company is personally affected
C) When the loss affects its property or personality, or when defamatory
material affects its business
D) When the loss exceeds a certain threshold

23. What is the status of a company as a citizen according to the Indian

Citizenship Act?
A) It is treated as a citizen in the country of its incorporation
B) It does not have the citizenship status but can have a residential
status
C) It is eligible for dual citizenship
D) It has the same citizenship status as its members

24. What is considered a document described as a prospectus?

A) Contract between the company and its director
B) Registered document of a company
C) Internal communication within the company
D) Invitation offering shares or debentures to the public for subscription
or purchase
25. What are the requirements for a document to be considered as a
prospectus?
A) Invitation to the public by or on behalf of the company to subscribe or
purchase shares, debentures, or other instruments
B) Invitation to the public for employment opportunities
C) Invitation to all shareholders for a general meeting
D) Invitation to selected individuals to invest in the company

26. To be considered a prospectus, does the document need to be

issued to the public?
A) No
B) Yes
C) Only if it is addressed to potential investors
D) It depends on the content of the document

27. What does the term 'public' include in the context of issuing a
prospectus?
A) Any section of the public
B) Investment professionals only
C) The public residing in the same geographic area
D) Existing shareholders only
28. When is a document deemed to be issued to the public as a
prospectus?
A) When the document is widely distributed to potential investors
B) When the invitation to subscribe for shares is open to anyone who
brings money and applies on the prescribed form
C) When the document passes the information to the public
D) When the document is addressed to specific individuals
Answer Sheet
1. D
2. C
3. D
4. D
5. A
6. B
7. D
8. C
9. B
10. A
11. C
12. C
13. B
14. C
15. B
16. C
17. D
18. A
19. D
20. A
21. C
22. C
23. B
24. D
25. A
26. B
27. A
28. B