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Company Law, 2013 MCQs Set-2
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1. A company registered under Section 8:
a. Is included within small company
b. Is excluded from small company
c. Is deemed to be public company
d. Is an unlimited company
2. A company or body corporate governed by any special Act:
a. Is included in small company
b. Is excluded from small company
c. Must be One Person Company
d. Must be public company only
3. A company limited by shares is defined under:
a. Section 2(68)
b. Section 2(22)
c. Section 2(62)
d. Section 2(85)
4. In a company limited by shares, the liability of members is:
a. Unlimited
b. Fixed by directors
c. Limited by the memorandum
d. Decided by creditors
5. The liability of members in a company limited by shares extends to:
a. Total debts of the company
b. Amount unpaid on the shares respectively held by them
c. Personal assets of members
d. Amount determined by Tribunal
6. In a company limited by shares, member liability arises in respect of:
a. Fully paid shares only
b. Unpaid amount on shares held
c. Personal guarantees
d. Company profits
7. Which of the following correctly describes a company limited by shares?
a. Member liability is unlimited
b. Member liability is limited to unpaid amount on shares
c. Member liability depends upon annual turnover
d. Member liability is determined after winding up only
8. A company limited by guarantee is defined under:
a. Section 2(21)
b. Section 2(22)
c. Section 2(62)
d. Section 2(85)
9. In a company limited by guarantee, the liability of members is limited by:
a. Articles of association
b. Memorandum
c. Board resolution
d. Share certificate
10. Members of a company limited by guarantee undertake to contribute to:
a. Personal liabilities of directors
b. Company profits
c. Assets of the company in the event of winding up
d. Share capital during incorporation
11. Liability in a company limited by guarantee arises:
a. At the time of incorporation
b. During annual general meeting
c. On transfer of shares
d. In the event of winding up
12. In a company limited by guarantee, the amount payable by members is:
a. Unlimited
b. Equal to company turnover
c. The amount undertaken in the memorandum
d. Fixed by Registrar
13. An unlimited company is defined under:
a. Section 2(21)
b. Section 2(22)
c. Section 2(92)
d. Section 2(85)
14. An unlimited company means a company:
a. Having liability limited by shares
b. Having liability limited by guarantee
c. Having no share capital
d. Not having any limit on the liability of its members
15. In an unlimited company, the liability of members is:
a. Limited by memorandum
b. Limited by shares
c. Limited by guarantee
d. Unlimited
16. Which of the following correctly describes an unlimited company?
a. Member liability is restricted to unpaid share amount
b. Member liability has no limit
c. Member liability arises only on winding up
d. Member liability is fixed by Registrar
17. The essential feature of an unlimited company is:
a. No limit on liability of members
b. Prohibition on transfer of shares
c. Minimum paid-up capital
d. Restriction on public invitation
18. Holding company is defined under:
a. Section 2(42)
b. Section 2(45)
c. Section 2(46)
d. Section 2(87)
19. A holding company means a company of which such companies are:
a. Associate companies
b. Foreign companies
c. Dormant companies
d. Subsidiary companies
20. For the purpose of Section 2(46), the expression “company” includes:
a. Partnership firm only
b. Any body corporate
c. Co-operative society only
d. Trust only
21. Subsidiary company is defined under:
a. Section 2(6)
b. Section 2(42)
c. Section 2(45)
d. Section 2(87)
22. A subsidiary company is one in which the holding company:
a. Controls the composition of the Board of Directors
b. Appoints auditors only
c. Prepares annual accounts only
d. Conducts winding up only
23. A company is subsidiary where the holding company exercises or controls more than:
a. One-fourth of voting power
b. One-third of voting power
c. One-half of total voting power
d. Three-fourth of voting power
24. The expression “layer” in relation to a holding company means:
a. Its memorandum
b. Its articles
c. Its debentures
d. Its subsidiary or subsidiaries
25. Composition of Board of Directors is deemed to be controlled where another company can:
a. Appoint or remove all or majority of directors
b. Appoint auditors only
c. Call extraordinary meetings only
d. Transfer shares compulsorily
26. Associate company is defined under:
a. Section 2(6)
b. Section 2(42)
c. Section 2(45)
d. Section 2(46)
27. Associate company means a company in which another company has:
a. Unlimited liability
b. Significant influence
c. No voting rights
d. Full ownership only
28. An associate company is not:
a. A foreign company
b. A government company
c. A subsidiary company
d. A dormant company
29. Associate company includes:
a. Statutory company
b. Joint venture company
c. Unlimited company
d. Section 8 company
30. Significant influence means control of at least:
a. 10% of total voting power
b. 15% of total voting power
c. 20% of total voting power
d. 25% of total voting power
31. Foreign company is defined under:
a. Section 2(42)
b. Section 2(45)
c. Section 2(46)
d. Section 2(87)
32. A foreign company means a company or body corporate incorporated:
a. In India
b. Under special Act
c. Outside India
d. By Central Government only
33. A foreign company must have:
a. No place of business in India
b. A place of business in India
c. Only registered office outside India
d. No business activity
34. A foreign company may have place of business in India:
a. Only physically
b. Only through agent
c. Only through electronic mode
d. Physically or through electronic mode
35. Government company is defined under:
a. Section 2(42)
b. Section 2(45)
c. Section 2(46)
d. Section 2(6)
36. A Government company is one in which not less than how much paid-up share capital is held by Government?
a. 26%
b. 49%
c. 51%
d. 75%
37. Government company includes:
a. Foreign company only
b. A subsidiary company of such Government company
c. Partnership firm
d. One Person Company only
38. Formation of a company is primarily dealt with under:
a. Section 2
b. Section 3
c. Section 7(5)
d. Section 149
39. A public company may be formed by:
a. One person
b. Two persons
c. Seven or more persons
d. Fifty persons
40. A private company may be formed by:
a. Two or more persons
b. One person only
c. Seven persons only
d. Hundred persons
41. A One Person Company may be formed by:
a. Two persons
b. One person
c. Seven persons
d. Five persons
42. For incorporation of a company, subscribers must subscribe their names to:
a. Articles of Association
b. Prospectus
c. Memorandum of Association
d. Share certificate
43. Documents for incorporation are filed with:
a. Tribunal
b. Central Government
c. Stock Exchange
d. Registrar
44. Which of the following documents is filed with Registrar for incorporation?
a. Memorandum of Association
b. Articles of Association
c. Consent of directors
d. All of the above
45. Certificate of incorporation is issued by the Registrar under:
a. Section 7(2)
b. Section 7(3)
c. Section 7(4)
d. Section 7(5)
46. Corporate Identity Number (CIN) is issued under:
a. Section 3(1)
b. Section 7(2)
c. Section 7(3)
d. Section 7(4)
47. CIN stands for:
a. Corporate Incorporation Name
b. Central Identity Number
c. Company Identification Note
d. Corporate Identity Number
48. Under Section 7(4), the company shall maintain and preserve:
a. Share warrants only
b. Copies of documents and information originally filed
c. Balance sheet only
d. Minutes of meetings only
49. From the date mentioned in the certificate of incorporation, the subscribers become:
a. Creditors
b. Auditors
c. Members of the company
d. Liquidators
50. On incorporation, a company gets:
a. Perpetual succession
b. Power to acquire and dispose property
c. Capacity to exercise functions under the Act
d. All of the above
51. Suppression of material information during incorporation attracts action under:
a. Section 149
b. Section 447
c. Section 68
d. Section 34
52. Under Section 7(6), liability for furnishing false information may extend to:
a. Director and promoter
b. First director only
c. Creditors only
d. Auditors only
53. Under Section 7(7), the Tribunal may order:
a. Winding up of company
b. Removal of name of company
c. Changes in memorandum and management
d. All of the above
54. Articles of Association is:
a. The first document of the company
b. The second document registered along with the memorandum
c. Auditor’s report
d. Certificate of incorporation
55. Articles of Association is defined under:
a. Section 4
b. Section 7
c. Section 5
d. Section 10
56. Articles of Association contain:
a. Rules, regulations and bylaws for internal management
b. Objects of company only
c. Certificate of incorporation
d. Statement of profits
57. Articles of Association are similar to:
a. Partnership deed of partnership
b. Certificate of incorporation
c. Share warrant
d. Prospectus
58. Memorandum of Association is the:
a. Internal regulation
b. Charter of the company
c. Rule book for directors only
d. Share capital register
59. Memorandum of Association defines:
a. Internal management only
b. Fundamental conditions and objects of company
c. Remuneration of auditors
d. Mode of meetings only
60. Articles of Association primarily deal with:
a. External affairs of company
b. Scope of company
c. Internal affairs and management
d. Winding up only
61. Memorandum of Association defines:
a. Internal regulations
b. Scope of the company
c. Method of audit
d. Board procedure only
62. Acts beyond Memorandum of Association are:
a. Valid
b. Ratifiable
c. Voidable
d. Absolutely void
63. Acts beyond Articles of Association:
a. Are absolutely void
b. Can be ratified
c. Cannot be altered
d. Require winding up
64. Which document cannot be easily altered?
a. Articles of Association
b. Board resolution
c. Memorandum of Association
d. Share certificate
65. Which document can be easily altered?
a. Memorandum of Association
b. Articles of Association
c. Certificate of incorporation
d. Prospectus
66. The binding force of Memorandum and Articles of Association is provided under:
a. Section 3
b. Section 4
c. Section 5
d. Section 10
67. Under Section 10, Memorandum and Articles bind:
a. Only directors
b. Only creditors
c. Company and members
d. Auditors and Registrar
68. Each member is bound to the company to conform to:
a. Prospectus only
b. Share certificate only
c. Memorandum and Articles of Association
d. Board resolution only
69. The doctrine of indoor management is an exception to:
a. Doctrine of ultra vires
b. Doctrine of constructive notice
c. Doctrine of separate legal entity
d. Doctrine of perpetual succession
70. The doctrine of indoor management is based on:
a. Public conscience and justice
b. Strict statutory interpretation
c. Principle of absolute liability
d. Doctrine of estoppel only
71. The genesis of the doctrine of indoor management lies in:
a. Salomon v Salomon & Co. Ltd.
b. Ashbury Railway Carriage Co. v Riche
c. Royal British Bank v Turquand
d. Foss v Harbottle
72. The doctrine of indoor management is also known as:
a. Rule in Foss v Harbottle
b. Turquand Rule
c. Rule of constructive notice
d. Rule of ultra vires
73. The decision in Royal British Bank v Turquand was given by:
a. Lord Denning
b. Justice Holmes
c. Sir Jarvis
d. Lord Cairns
74. The doctrine of indoor management is regarded as:
a. A negative doctrine
b. A penal doctrine
c. A procedural doctrine
d. A positive doctrine
75. Under the doctrine of indoor management, outsiders are entitled to assume that:
a. Internal procedures have been properly complied with
b. MOA does not exist
c. Company has unlimited powers
d. All acts of directors are ultra vires
76. The doctrine of indoor management protects:
a. Directors acting fraudulently
b. Outsiders dealing with the company in good faith
c. Only shareholders
d. Only auditors
77. Under the doctrine of indoor management, outsiders are not expected to know:
a. Contents of MOA and AOA
b. Name of the company
c. Whether internal formalities have been properly complied with
d. Registered office of the company
78. Alteration of articles under Section 14 is subject to:
a. Provisions of the Act and conditions contained in memorandum
b. Approval of creditors only
c. Permission of Tribunal in every case
d. Approval of shareholders only
79. A company may alter its articles by:
a. Board resolution
b. Ordinary resolution
c. Special resolution
d. Unanimous consent only
80. Section 14 permits alteration having the effect of conversion of:
a. Private company into public company
b. Public company into private company
c. Both A and B
d. Holding company into subsidiary company
81. A private company shall cease to be a private company when:
a. It changes directors
b. It alters articles removing required restrictions and limitations
c. It changes registered office
d. It issues debentures
82. Conversion of a public company into a private company shall not be valid unless approved by:
a. Tribunal
b. Stock Exchange
c. SEBI
d. Central Government
83. Approval for conversion of public company into private company is granted on:
a. Oral request
b. Application made in prescribed form and manner
c. Board recommendation only
d. Shareholders’ agreement only
84. Applications pending before Tribunal before commencement of Companies (Amendment) Act, 2019 shall be:
a. Automatically dismissed
b. Transferred to Supreme Court
c. Disposed of by Tribunal under previous applicable provisions
d. Decided by Registrar
85. A copy of the order approving alteration under Section 14 shall be filed with:
a. NCLAT
b. Central Government
c. Stock Exchange
d. Registrar
86. The altered articles together with order of approval shall be filed within:
a. Seven days
b. Fifteen days
c. Thirty days
d. Sixty days
87. Any alteration registered under Section 14(2) shall be valid:
a. As if originally contained in the articles
b. Only for future shareholders
c. Only after annual general meeting
d. After approval of creditors
88. A promoter is a person who:
a. Conducts audit of company
b. Forms and brings a company into existence
c. Only subscribes shares
d. Only acts as employee
89. The position of a promoter is:
a. Servant of company
b. Creditor of company
c. Fiduciary in nature
d. Judicial authority
90. A fiduciary position implies:
a. Relationship based on trust and confidence
b. Relationship of debtor and creditor
c. Relationship of employer and employee
d. Relationship created by statute only
91. A promoter must make:
a. Secret profits
b. Full disclosure of material facts
c. Private agreements only
d. Hidden transactions
92. A promoter cannot:
a. Enter into contracts
b. Receive remuneration
c. Make undisclosed secret profits
d. Form a company
93. Which of the following is a duty of promoter?
a. Duty to disclose interest and profits
b. Duty to conduct audit
c. Duty to wind up company
d. Duty to declare dividend
94. The liability of a promoter may arise for:
a. Misstatement in prospectus
b. Secret profits
c. Breach of fiduciary duty
d. All of the above
95. A promoter stands in fiduciary relation towards:
a. Company proposed to be formed
b. Registrar only
c. Creditors only
d. Tribunal only
96. Which of the following is a right of promoter?
a. Right to secret profits
b. Right to remuneration if agreed
c. Right to avoid disclosure
d. Right to unlimited control
97. A company may recover from promoter:
a. Lawful remuneration
b. Secret profits improperly made
c. Registered office expenses only
d. Share capital
98. Share is defined under:
a. Section 2(24)
b. Section 2(84)
c. Section 2(34)
d. Section 2(14)
99. According to Section 2(14), a share means:
a. Debenture of a company
b. Share in the share capital of a company
c. Asset of a company
d. Profit of a company
100. The definition of share under the Companies Act, 2013 includes:
a. Stock
b. Debenture
c. Deposit
d. Bond
101. Stock is included within the definition of share except where:
a. Company is public
b. Share capital is reduced
c. Distinction between stock and shares is expressed or implied
d. Company is private
102. Section 43 of the Companies Act deals with:
a. Transfer of shares
b. Kinds of share capital
c. Alteration of memorandum
d. Winding up
103. A company limited by shares may issue primarily:
a. One class of shares
b. Three classes of shares
c. Two classes of shares
d. Four classes of shares
104. The two classes of shares permitted under Section 43 are:
a. Bonus shares and debentures
b. Preference shares and debentures
c. Equity share capital and preference share capital
d. Equity shares and government securities
105. According to the explanation to Section 43, equity share capital means:
a. Preference share capital
b. All share capital which is not preference share capital
c. Debenture capital
d. Borrowed capital
106. Equity shares are also known as:
a. Preference shares
b. Redeemable shares
c. Ordinary shares
d. Bonus shares
107. Preference share capital is defined with reference to:
a. Any partnership firm
b. Company limited by shares
c. Unlimited company only
d. Foreign company only
108. Preference share capital means that part of issued share capital carrying:
a. No rights
b. Preference rights
c. Unlimited liability
d. Only voting rights
109. Preference shares carry preferential right with respect to:
a. Payment of dividend
b. Repayment of capital on winding up
c. Both A and B
d. Transfer of shares
110. Preference shareholders get preference regarding:
a. Appointment of directors
b. Payment of dividend
c. Alteration of memorandum
d. Constructive notice
111. Preference shares carry preferential right regarding repayment:
a. Of loans only
b. In case of winding up
c. Of debentures only
d. Of reserves only
112. Equity share capital includes:
a. Preference share capital
b. Only redeemable shares
c. All share capital not being preference share capital
d. Debenture stock
113. Which of the following is correct regarding preference shares?
a. They are ordinary shares
b. They carry preferential rights
c. They have unlimited liability
d. They are not part of share capital
114. Preference rights under preference shares relate to:
a. Dividend and repayment of capital
b. Transfer of shares only
c. Internal management
d. Constructive notice
115. Debenture is defined under:
a. Section 2(14)
b. Section 2(22)
c. Section 2(30)
d. Section 2(68)
116. According to Section 2(30), debenture includes:
a. Debenture stock
b. Bonds
c. Other instruments evidencing debt
d. All of the above
117. A debenture is an instrument:
a. Evidencing ownership
b. Evidencing debt
c. Evidencing partnership
d. Evidencing agency
118. Debenture may constitute:
a. A charge on assets of the company
b. No charge on assets of the company
c. Either A or B
d. Transfer of ownership
119. Which of the following is included within the definition of debenture?
a. Bonds
b. Preference shares
c. Equity shares
d. Share warrants
120. Debenture stock is:
a. Excluded from debenture
b. Included within debenture
c. A type of equity share
d. A preference share
121. Director is defined under:
a. Section 2(14)
b. Section 2(30)
c. Section 2(34)
d. Section 2(68)
122. According to Section 2(34), a director means:
a. Manager of company
b. Shareholder of company
c. Person appointed to the Board of a company
d. Auditor of company
123. Every company shall have:
a. Board of auditors
b. Board of directors
c. Board of creditors
d. Board of shareholders
124. The Board of Directors shall consist of:
a. Partnership firms
b. Body corporates
c. Individuals as directors
d. Government officers only
125. Minimum number of directors in a public company is:
a. One
b. Two
c. Three
d. Five
126. Minimum number of directors in a private company is:
a. One
b. Two
c. Three
d. Four
127. Minimum number of directors in a One Person Company is:
a. One
b. Two
c. Three
d. Five
128. Maximum number of directors in a company is:
a. Ten
b. Twelve
c. Fifteen
d. Twenty