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Company Law, 2013 MCQs Set-3
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1. A company may appoint more than fifteen directors by:
a. Board resolution
b. Ordinary resolution
c. Court order
d. Special resolution
2. Certain prescribed classes of companies shall have at least:
a. One nominee director
b. One independent director
c. One woman director
d. Two managing directors
3. Provision relating to company having Board of Directors is contained under:
a. Section 129
b. Section 149
c. Section 2(34)
d. Section 166
4. Every company shall have at least one director who stays in India for not less than:
a. Ninety days
b. One hundred days
c. One hundred and eighty-two days
d. Two hundred days
5. The period of stay in India by at least one director is calculated during:
a. Calendar year
b. Assessment year
c. Accounting year
d. Financial year
6. In case of a newly incorporated company, requirement relating to resident director shall apply:
a. Immediately on incorporation
b. After five years
c. Proportionately at the end of financial year
d. Only after commencement of business
7. Every listed company shall have at least ______ of total number of directors as independent directors.
a. One-fourth
b. One-third
c. One-half
d. Two-thirds
8. The Central Government may prescribe minimum number of independent directors in:
a. All partnership firms
b. Private companies only
c. Classes or classes of public companies
d. Foreign companies only
9. Companies existing before commencement of the Act shall comply with provisions relating to independent directors within:
a. Six months
b. One year
c. Two years
d. Three years
10. Compliance relating to independent directors shall be made from:
a. Date of incorporation only
b. Date of notification of rules, as applicable
c. Date of first AGM only
d. Date of audit report only
11. Annual General Meeting is governed under:
a. Section 94
b. Section 95
c. Section 96
d. Section 97
12. Every company other than One Person Company shall hold:
a. Board meeting only
b. Extraordinary general meeting only
c. Annual General Meeting
d. Creditors’ meeting only
13. Every annual general meeting shall be specified as such in:
a. Articles of association
b. Notice calling the meeting
c. Balance sheet
d. Board resolution
14. The maximum gap between two Annual General Meetings shall not exceed:
a. Nine months
b. Twelve months
c. Fifteen months
d. Eighteen months
15. The first Annual General Meeting shall be held within:
a. Six months from incorporation
b. Nine months from closing of first financial year
c. Fifteen months from incorporation
d. Three months from incorporation
16. Any subsequent Annual General Meeting shall be held within:
a. Three months from closing of financial year
b. Six months from closing of financial year
c. Nine months from closing of financial year
d. Twelve months from closing of financial year
17. The Registrar may extend the time for holding Annual General Meeting by a period not exceeding:
a. One month
b. Two months
c. Three months
d. Six months
18. Registrar cannot extend the time for holding:
a. Board meeting
b. First Annual General Meeting
c. Extraordinary general meeting
d. Directors’ meeting
19. Annual General Meeting shall be conducted during:
a. Any convenient hours
b. Business hours
c. Night hours
d. Public holidays only
20. Business hours for Annual General Meeting means:
a. 8 a.m. to 5 p.m.
b. 9 a.m. to 6 p.m.
c. 10 a.m. to 7 p.m.
d. 9 a.m. to 9 p.m.
21. Annual General Meeting shall not be held on:
a. Sunday only
b. Bank holiday only
c. National holiday
d. Second Saturday only
22. The rule of majority in company law was established in:
a. Rule in Salomon case
b. Rule in Turquand case
c. Rule in Foss v Harbottle
d. Rule in Ashbury Railway case
23. The rule in Foss v Harbottle is based on:
a. Minority rule
b. Majority rule principle
c. Strict liability
d. Absolute liability
24. According to the rule in Foss v Harbottle, courts generally do not interfere in:
a. Internal management of company
b. Criminal proceedings
c. Personal disputes of directors
d. Government policy
25. Under the rule in Foss v Harbottle, the proper plaintiff for wrong done to the company is:
a. Any shareholder
b. Director individually
c. Company itself
d. Auditor
26. The rule in Foss v Harbottle recognizes:
a. Unlimited liability
b. Doctrine of indoor management
c. Separate legal personality of company
d. Preference share capital
27. One advantage of the rule in Foss v Harbottle is that it:
a. Abolishes majority rule
b. Preserves rights of majority shareholders
c. Removes legal personality
d. Restricts company meetings
28. Which of the following is an exception to Foss v Harbottle?
a. Ultra vires acts
b. Fraud on minority
c. Abuse of majority power
d. All of the above
29. A shareholder may bring an action in court in case of:
a. Ultra vires acts
b. Valid internal management only
c. Lawful dividend declaration
d. Annual general meeting
30. Fraud on minority means:
a. Fair treatment of minority
b. Discrimination and unfairness towards minority shareholders
c. Transfer of shares
d. Internal audit
31. Exceptions to Foss v Harbottle are based on:
a. Strict statutory interpretation
b. Administrative control
c. Natural justice and fair play
d. Judicial restraint only
32. Unreasonable use of majority power causing unfairness to minority is:
a. Perpetual succession
b. Fraud on minority
c. Constructive notice
d. Transferability of shares
33. The rule in Foss v Harbottle primarily restricts:
a. Power of Registrar
b. Power of auditors
c. Right of individual shareholders to sue
d. Power of directors
34. Relief in cases of oppression and mismanagement is provided under:
a. Section 149
b. Section 241
c. Section 96
d. Section 43
35. Under Section 241, a member may apply to the Tribunal where the affairs of the company are being conducted in a manner:
a. Beneficial to minority only
b. Prejudicial to public interest
c. Contrary to directors’ wishes
d. Against Registrar only
36. Under Section 241, application may be made where there is material change in:
a. Management or control of the company
b. Name of auditors only
c. Place of registered office only
d. Share certificate format
37. A member can apply under Section 241 only if he has the right to apply under:
a. Section 10
b. Section 96
c. Section 244
d. Section 43
38. Prospectus is defined under:
a. Section 2(14)
b. Section 2(30)
c. Section 2(70)
d. Section 32
39. Prospectus means any document:
a. Described or issued as a prospectus
b. Issued only by private company
c. Relating only to debentures
d. Prepared by auditors only
40. Prospectus includes:
a. Red herring prospectus
b. Shelf prospectus
c. Notice or advertisement inviting offers from public
d. All of the above
41. Red herring prospectus is referred under:
a. Section 31
b. Section 32
c. Section 96
d. Section 241
42. Shelf prospectus is referred under:
a. Section 31
b. Section 32
c. Section 43
d. Section 149
43. A prospectus may include:
a. Circular
b. Advertisement
c. Other document inviting public offers
d. All of the above
44. Prospectus invites offers from the public for:
a. Subscription or purchase of securities
b. Appointment of directors
c. Transfer of property
d. Conduct of meetings
45. Prospectus relates to securities of:
a. Partnership firm
b. Body corporate
c. Co-operative society only
d. Tribunal
46. Prospectus is defined under:
a. Section 2(14)
b. Section 2(30)
c. Section 2(70)
d. Section 32
47. Prospectus means any document:
a. Described or issued as a prospectus
b. Issued only by private company
c. Relating only to debentures
d. Prepared by auditors only
48. Prospectus includes:
a. Red herring prospectus
b. Shelf prospectus
c. Notice or advertisement inviting offers from public
d. All of the above
49. Red herring prospectus is referred under:
a. Section 31
b. Section 32
c. Section 96
d. Section 241
50. Shelf prospectus is referred under:
a. Section 31
b. Section 32
c. Section 43
d. Section 149
51. A prospectus may include:
a. Circular
b. Advertisement
c. Other document inviting public offers
d. All of the above
52. Prospectus invites offers from the public for:
a. Subscription or purchase of securities
b. Appointment of directors
c. Transfer of property
d. Conduct of meetings
53. Prospectus relates to securities of:
a. Partnership firm
b. Body corporate
c. Co-operative society only
d. Tribunal
54. Section 26 of the Companies Act deals with:
a. Alteration of memorandum
b. Issue of prospectus and matters to be stated therein
c. Transfer of shares
d. Board meetings
55. Every prospectus issued by or on behalf of a public company shall be:
a. Oral
b. Undated
c. Dated and signed
d. Approved by Tribunal only
56. The information and financial reports in a prospectus shall be specified by:
a. Tribunal
b. Stock Exchange
c. SEBI in consultation with Central Government
d. Company auditor only
57. A prospectus shall not be valid if issued more than:
a. Thirty days after filing
b. Sixty days after filing
c. Ninety days after filing
d. One hundred and eighty days after filing
58. The period of ninety days is calculated from the date on which copy of prospectus is delivered to:
a. Stock Exchange
b. Tribunal
c. Central Government
d. Registrar
59. Before publication of prospectus, a copy thereof shall be delivered to:
a. Auditor
b. Registrar
c. SEBI only
d. Creditors
60. The copy of prospectus delivered to Registrar shall be signed by:
a. Any shareholder
b. Company secretary only
c. Every person named as director or proposed director
d. Creditors only
61. A prospectus issued in contravention of Section 26 makes the company liable to:
a. Imprisonment only
b. Fine
c. Winding up automatically
d. Removal of directors only
62. Minimum fine for contravention of Section 26 is:
a. ₹10,000
b. ₹25,000
c. ₹50,000
d. ₹1,00,000
63. Maximum fine for contravention of Section 26 may extend to:
a. ₹1 lakh
b. ₹2 lakh
c. ₹3 lakh
d. ₹5 lakh
64. Every person knowingly party to issue of prospectus in contravention of Section 26 shall be:
a. Rewarded
b. Punishable with fine
c. Disqualified permanently
d. Imprisoned for life
65. Which of the following is a type of prospectus under the Companies Act?
a. Shelf prospectus
b. Red herring prospectus
c. Abridged prospectus
d. All of the above
66. Shelf prospectus is referred under:
a. Section 31
b. Section 32
c. Section 26
d. Section 35
67. Red herring prospectus is referred under:
a. Section 26
b. Section 31
c. Section 32
d. Section 34
68. Abridged prospectus means:
a. Full prospectus issued to public
b. Summary containing salient features of prospectus
c. Prospectus issued after winding up
d. Prospectus issued by private company only
69. Deemed prospectus arises where:
a. Company directly issues prospectus
b. Document is deemed to be prospectus by law
c. Prospectus is oral
d. Company has no share capital
70. Shelf prospectus enables:
a. Multiple issues of securities without issuing fresh prospectus each time
b. Winding up of company
c. Transfer of shares
d. Removal of directors
71. Red herring prospectus generally does not contain:
a. Name of company
b. Objects of company
c. Complete particulars of price or quantum of securities
d. Signatures of directors
72. Abridged prospectus is issued to:
a. Summarize the important features of prospectus
b. Replace memorandum of association
c. Conduct annual meeting
d. Appoint directors
73. Which of the following is correctly matched?
a. Section 31 — Shelf prospectus
b. Section 32 — Red herring prospectus
c. Deemed prospectus — Prospectus by implication of law
d. All of the above
74. A deemed prospectus is treated as:
a. Invalid document
b. Private agreement
c. Prospectus under law
d. Internal regulation only
75. Shelf prospectus is governed under:
a. Section 26
b. Section 31
c. Section 32
d. Section 35
76. Shelf prospectus may be filed by:
a. All companies compulsorily
b. Classes of companies as provided by SEBI regulations
c. Private companies only
d. Foreign companies only
77. Shelf prospectus is filed with:
a. Tribunal
b. Stock Exchange
c. Registrar
d. Central Government
78. Shelf prospectus is filed at the stage of:
a. Winding up
b. First offer of securities
c. Transfer of shares
d. Board meeting
79. The validity period of a shelf prospectus shall not exceed:
a. Six months
b. One year
c. Two years
d. Five years
80. The validity period of shelf prospectus commences from:
a. Date of incorporation
b. Date of filing with Registrar
c. Date of opening of first offer of securities
d. Date of annual general meeting
81. During validity period of shelf prospectus:
a. Fresh prospectus is required for every issue
b. No further prospectus is required for subsequent offers
c. Company cannot issue securities
d. Only one issue can be made
82. A company filing shelf prospectus shall file:
a. Articles of association
b. Information memorandum
c. Share warrant
d. Board report
83. Information memorandum shall contain material facts relating to:
a. New charges created
b. Changes in financial position
c. Other prescribed changes
d. All of the above
84. Information memorandum shall be filed with:
a. Tribunal
b. Registrar
c. Stock Exchange
d. NCLAT
85. If applicants desire to withdraw application after intimation of changes, subscription money shall be refunded within:
a. Seven days
b. Ten days
c. Fifteen days
d. Thirty days
86. Shelf prospectus together with information memorandum shall be deemed to be:
a. Memorandum of association
b. Articles of association
c. Prospectus
d. Share certificate
87. Shelf prospectus means a prospectus under which securities may be issued:
a. In one issue only
b. Without issue of further prospectus over a certain period
c. Only through private placement
d. After winding up
88. Red herring prospectus is governed under:
a. Section 31
b. Section 32
c. Section 33
d. Section 34
89. A company proposing to make an offer of securities may issue:
a. Deemed prospectus
b. Abridged prospectus
c. Red herring prospectus
d. Secret prospectus
90. Red herring prospectus may be issued:
a. After winding up
b. Prior to the issue of prospectus
c. After annual general meeting
d. After allotment of shares
91. A red herring prospectus shall be filed with the Registrar at least:
a. One day before opening of subscription
b. Two days before opening of subscription
c. Three days before opening of subscription
d. Seven days before opening of subscription
92. A red herring prospectus carries:
a. No legal obligation
b. Same obligations as applicable to a prospectus
c. Only contractual obligations
d. Only moral obligations
93. Any variation between red herring prospectus and final prospectus shall be:
a. Ignored
b. Hidden
c. Highlighted as variations
d. Approved by Tribunal
94. After closure of offer under Section 32, the prospectus shall state:
a. Total capital raised
b. Closing price of securities
c. Other omitted details
d. All of the above
95. The final prospectus after closure of offer shall be filed with:
a. Registrar and SEBI
b. Tribunal only
c. Central Government only
d. Stock Exchange only
96. Red herring prospectus does not include complete particulars of:
a. Directors
b. Registered office
c. Quantum or price of securities
d. Name of company
97. Which of the following correctly describes a red herring prospectus?
a. It contains complete particulars of securities
b. It is issued after winding up
c. It may omit particulars relating to price or quantum of securities
d. It is applicable only to private companies
98. Abridged prospectus is defined under:
a. Section 2(1)
b. Section 2(14)
c. Section 2(30)
d. Section 2(70)
99. An abridged prospectus means:
a. Full prospectus issued to public
b. Memorandum containing salient features of a prospectus
c. Document relating to winding up
d. Internal memorandum of company
100. The salient features of abridged prospectus are specified by:
a. Tribunal
b. Central Government
c. SEBI
d. Registrar
101. SEBI specifies salient features of abridged prospectus by:
a. Regulations
b. Oral directions
c. Board resolution
d. Court order
102. Which of the following correctly describes an abridged prospectus?
a. It contains complete details of all securities
b. It is a memorandum of salient features of prospectus
c. It is issued only after allotment
d. It replaces memorandum of association
103. Section 33 of the Companies Act deals with:
a. Red herring prospectus
b. Issue of application forms for securities
c. Shelf prospectus
d. Misstatement in prospectus
104. No form of application for purchase of securities shall be issued unless it is accompanied by:
a. Memorandum of association
b. Articles of association
c. Abridged prospectus
d. Share certificate
105. The requirement of abridged prospectus does not apply where application form is issued in connection with:
a. Transfer of shares
b. Bona fide invitation to enter underwriting agreement
c. Annual general meeting
d. Winding up proceedings
106. Section 33 does not apply in relation to securities:
a. Offered to public
b. Not offered to the public
c. Listed on stock exchange
d. Converted into debentures
107. A copy of the prospectus shall be furnished on request made before:
a. Incorporation of company
b. Closing of subscription list and offer
c. First board meeting
d. Annual general meeting
108. If company defaults in complying with Section 33, it shall be liable to:
a. Imprisonment only
b. Penalty
c. Winding up
d. Removal of directors
109. Penalty for each default under Section 33 may extend to:
a. ₹10,000
b. ₹25,000
c. ₹50,000
d. ₹1,00,000
110. Section 25 deals with:
a. Shelf prospectus
b. Red herring prospectus
c. Deemed prospectus
d. Abridged prospectus
111. A document containing offer of securities for sale to the public shall be deemed to be:
a. Memorandum
b. Articles
c. Prospectus
d. Share warrant
112. A document is deemed prospectus where company allots securities with a view to:
a. Winding up
b. Public sale of securities
c. Transfer of directors
d. Reduction of capital
113. Under Section 25, all rules relating to contents of prospectus shall apply to:
a. Deemed prospectus
b. Board resolution
c. Share certificate
d. Annual report
114. Liability relating to misstatements and omissions in prospectus also applies to:
a. Articles of association
b. Deemed prospectus
c. Debenture trust deed
d. Board meetings
115. Under Section 25, persons accepting the offer are treated as:
a. Creditors
b. Directors
c. Subscribers for securities
d. Auditors
116. A deemed prospectus is treated as if securities were offered to public for:
a. Transfer
b. Subscription
c. Audit
d. Redemption
117. Corporate Social Responsibility is governed under:
a. Section 135
b. Section 149
c. Section 96
d. Section 25
118. The Companies Act, 1956 made CSR expenditure:
a. Mandatory
b. Optional
c. Penal
d. Void
119. Under the Companies Act, 2013, CSR expenditure became mandatory for:
a. All companies
b. Loss making companies only
c. Certain class of profitable companies
d. Foreign companies only
120. A company having net worth of not less than ______ shall constitute CSR Committee.
a. ₹100 crore
b. ₹250 crore
c. ₹500 crore
d. ₹1000 crore
121. CSR Committee is required where turnover of company is not less than:
a. ₹100 crore
b. ₹500 crore
c. ₹750 crore
d. ₹1000 crore
122. CSR Committee is required where net profit of company is not less than:
a. ₹1 crore
b. ₹2 crore
c. ₹5 crore
d. ₹10 crore
123. CSR Committee shall consist of:
a. One director only
b. Two or more directors
c. Three or more directors
d. Five directors compulsorily
124. Out of the directors in CSR Committee, at least one director shall be:
a. Woman director
b. Nominee director
c. Managing director
d. Independent director
125. Where a company is not required to appoint independent director under Section 149(4), CSR Committee shall consist of:
a. One director
b. Two or more directors
c. Three independent directors
d. Five directors
126. Every company under Section 135 shall spend at least ______ of average net profits on CSR activities.
a. 1%
b. 2%
c. 5%
d. 10%
127. CSR expenditure is calculated on the basis of average net profits of:
a. Preceding one financial year
b. Preceding two financial years
c. Three immediately preceding financial years
d. Five immediately preceding financial years
128. In case of default under Section 135(5) or (6), company shall be liable to penalty of:
a. Twice the amount required to be transferred or ₹1 crore, whichever is less
b. ₹10 crore compulsory
c. ₹5 crore compulsory
d. Only warning