Q.1 Which document is considered the constitution of a company?
Share Certificate
Memorandum of Association
Board Resolution
Articles of Association
Explanation - The Memorandum of Association defines the company's constitution, objectives, and scope of operations.
Correct answer is: Memorandum of Association
Q.2 Which type of company has a limited liability but cannot issue shares to the public?
Private Company
Public Company
Government Company
One Person Company
Explanation - A private company restricts share transfer, cannot invite the public to subscribe to shares, and has limited liability.
Correct answer is: Private Company
Q.3 The 'Articles of Association' primarily govern:
The company's external relations
The internal management of the company
The capital structure
The appointment of auditors
Explanation - Articles of Association set rules for internal management and powers of directors within a company.
Correct answer is: The internal management of the company
Q.4 Which body is responsible for regulating companies in India?
RBI
SEBI
Company Law Board
Registrar of Companies (ROC)
Explanation - The ROC, under the Ministry of Corporate Affairs, registers and regulates companies according to the Companies Act.
Correct answer is: Registrar of Companies (ROC)
Q.5 What is the minimum number of members required to form a private company?
1
2
7
10
Explanation - A private company must have at least 2 members and a maximum of 200 members.
Correct answer is: 2
Q.6 Which of the following is true about a One Person Company (OPC)?
It requires at least two directors
It can have a nominee to take over in case of death
It can raise funds from the public
It must have a minimum paid-up capital of 10 lakh
Explanation - An OPC allows one person to form a company with a nominee who will assume ownership if the sole member dies.
Correct answer is: It can have a nominee to take over in case of death
Q.7 Which type of shares carry no voting rights?
Equity Shares
Preference Shares
Ordinary Shares
Deferred Shares
Explanation - Preference shares usually carry fixed dividends and limited or no voting rights in the company.
Correct answer is: Preference Shares
Q.8 The maximum number of directors in a private company is usually:
15
10
20
Unlimited
Explanation - As per the Companies Act, a private company may have a maximum of 15 directors unless it decides otherwise.
Correct answer is: 15
Q.9 The term 'prospectus' in company law refers to:
A company's internal policy document
A public document inviting subscriptions to shares or debentures
A shareholder agreement
A report to the ROC
Explanation - A prospectus provides information about the company to potential investors for subscription to shares or debentures.
Correct answer is: A public document inviting subscriptions to shares or debentures
Q.10 Which of the following is NOT a type of company?
Company limited by shares
Company limited by guarantee
Unlimited company
Company limited by creditors
Explanation - There is no legal category known as 'company limited by creditors' under company law.
Correct answer is: Company limited by creditors
Q.11 Which of the following documents must be filed with the ROC to incorporate a company?
Balance Sheet
Memorandum and Articles of Association
Annual Return
Shareholder Agreement
Explanation - Memorandum and Articles of Association are essential documents for company incorporation.
Correct answer is: Memorandum and Articles of Association
Q.12 A company can be considered a separate legal entity because of:
Articles of Association
Doctrine of Separate Legal Entity
Prospectus
Board Resolutions
Explanation - A company has its own legal identity, separate from its members, due to the doctrine established in Salomon v. Salomon.
Correct answer is: Doctrine of Separate Legal Entity
Q.13 Which type of company is prohibited from inviting the public to subscribe to shares?
Public Company
Private Company
Government Company
Unlimited Company
Explanation - Private companies cannot invite public subscription to their shares; only public companies can.
Correct answer is: Private Company
Q.14 Who is responsible for preparing the annual financial statements of a company?
Directors
Shareholders
Auditors
ROC
Explanation - Directors are responsible for preparing financial statements, which are then audited by independent auditors.
Correct answer is: Directors
Q.15 Which of the following is a statutory meeting required under company law?
First Annual General Meeting
Extraordinary General Meeting
Board Meeting
Nominee Meeting
Explanation - A statutory meeting is held after incorporation of the company to inform members about formation and share capital.
Correct answer is: First Annual General Meeting
Q.16 Which body has the power to strike off a company from the register?
Board of Directors
SEBI
Registrar of Companies
Company Law Tribunal
Explanation - The ROC can remove a company from the register for non-compliance or inactivity.
Correct answer is: Registrar of Companies
Q.17 Which type of company is formed for promoting commerce, art, science, religion or charity without the intention of profit distribution?
Private Company
Public Company
Non-Profit Company
Government Company
Explanation - Non-profit companies are established for charitable or social objectives and do not distribute profits.
Correct answer is: Non-Profit Company
Q.18 The liability of shareholders in a company limited by shares is:
Unlimited
Limited to the unpaid amount on their shares
Limited to total assets of the company
Limited to the number of directors
Explanation - Shareholders are liable only for the amount unpaid on their shares; personal assets are protected.
Correct answer is: Limited to the unpaid amount on their shares
Q.19 The concept of 'lifting the corporate veil' allows:
Shareholders to vote multiple times
Directors to act outside Articles
Courts to look beyond the company's separate legal identity
Company to issue shares freely
Explanation - Courts can disregard the company's separate entity to prevent fraud, evasion, or wrongdoing.
Correct answer is: Courts to look beyond the company's separate legal identity
Q.20 Which of the following can be a member of a One Person Company?
A company
A single individual
A group of five individuals
A partnership firm
Explanation - OPC is designed for a single person as its member, with a nominee appointed to take over on death.
Correct answer is: A single individual
Q.21 Which of the following companies must have at least 3 directors?
Private Company
Public Company
One Person Company
Non-Profit Company
Explanation - A public company is required to have a minimum of 3 directors as per the Companies Act.
Correct answer is: Public Company
Q.22 Debenture holders of a company are considered:
Part owners
Creditors
Directors
Managers
Explanation - Debenture holders lend money to the company and are considered creditors, not shareholders.
Correct answer is: Creditors
Q.23 Which of the following powers is vested in the Board of Directors?
Appointing auditors
Managing day-to-day business
Approving annual returns
Issuing statutory notices
Explanation - The Board of Directors manages daily operations and implements policies of the company.
Correct answer is: Managing day-to-day business
Q.24 Which of the following is required for a company to legally commence business?
Certificate of Incorporation
Certificate of Commencement of Business
Memorandum of Association
Articles of Association
Explanation - After incorporation, a company needs the Certificate of Commencement of Business to start operations legally.
Correct answer is: Certificate of Commencement of Business
Q.25 Which of the following statements about a public company is correct?
It cannot issue shares to the public
It must have at least 7 members
It can operate without directors
It is always owned by the government
Explanation - A public company must have a minimum of 7 members and can invite the public to subscribe to shares.
Correct answer is: It must have at least 7 members