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Companies act, 2013 - class-XI

Description: companies act, 2013
Number of Questions: 110
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Tags: company business studies companies act, 2013 - introduction and characteristics business organisation and correspondence
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Which of the following sections permits the registration, under a licence granted by the Central Government, of associations not for profit with limited liability without being required to use the word "Limited" or the words "Private limited" after their names?

  1. Section 8

  2. Section 25

  3. Section 18

  4. Section 20


Correct Option: A

As per Section 464 of the Companies Act, $2013$, no association or partnership consisting of more than prescribed persons shall be formed for the purpose of carrying on any business, unless it is registered as a company or is formed under any other law for the time being in force. The number of persons which may be prescribed under this section shall not exceed __. Rule 10 of Companies (Miscellaneous) Rules, 2014 prescribes ___ persons in this regard.

  1. $100 ; 50$

  2. $50 ; 100$

  3. $60 ; 20$

  4. $20 ; 10$


Correct Option: A

Which of the following person is NOT eligible to incorporate One Person Company (OPC) as per Companies Act, 2013?
(1) Indian citizen and resident in India
(2) Person who has already incorporated one OPC in India
(3) Artificial person
(4) Indian citizen and non-resident in India
Select the correct the answer from the options given below-

  1. (1), (3) & (4)

  2. (2), (3) & (4)

  3. (1), (2) & (4)

  4. (2) & (4)


Correct Option: B

An auditor may function as -
(I) An employee
(II) An independent professional
The correct answer is -

  1. (I) only

  2. (II) only

  3. Either (I) or (II)

  4. Neither (I) nor (II)


Correct Option: A

Which of the following rights are available to auditors of the company as per the provisions of the Companies Act, 2013?
(I) Right to sign the audit report
(II) Right to speak at general meeting
(III) Right to attend general meeting
(IV) Right to advice company on their financial policies
(V) Right to visit branch office
Select the correct answer from the options given below -

  1. (I), (II), (III) & (V) only

  2. (I), (II) & (V) only

  3. (I), (III) & (V) only

  4. (I), (II), (IV) & (V) only


Correct Option: A

The minute of the proceedings of every general meeting should be recorded in the books kept for that purpose within _________________.

  1. 30 days of every such meeting

  2. 3 months of any such meeting

  3. The intervening period between that meeting and the next meeting

  4. Such time as approved by the chairman of the company


Correct Option: A
Explanation:

 The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

As per Rule 10 of the Companies (Appointment & Remuneration of Managerial Personnel ) Rules, 2014, which of the following are duties of Company Secretary?
(1) To provide guidance to the directors with regards to their duties, responsibilities and powers.
(2) To formulate the business strategies.
(3) To represent before various Regulators, and other authorities in connection with
discharge of various duties.
(4) To call annual general meeting and extraordinary general meeting on his own.
Select the correct answer from options given below-

  1. (1) & (3)

  2. (2) & (4)

  3. (1), (2) & (3)

  4. (1), (3) & (4)


Correct Option: A

Section 143(1) of the Companies Act, 2013 requires an auditor to inquire -

  1. Whether loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are prejudicial to the interest of the company or its members

  2. Where the transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company

  3. Where the company is not an investment or a banking company, whether so much of the company consists of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company

  4. All of the above


Correct Option: A

The section 211 of Companies Act, 2013 describes rules and regulations regarding __________________.

  1. Serious Fraud Investigation Office (SFIO)

  2. Several Fraud Investigation Company (SFIC)

  3. Public Financial Institutions (PFIs)

  4. Key Managerial Personnel (KMP)


Correct Option: A
Explanation:

The Serious Fraud Investigation Office (SFIO)  is a fraud investigating agency in India under the jurisdiction of government of India. It  is a coordinating agency with Income Tax and CBI. 


SFIO is a multi disciplinary organization involve experts from finance sector, accounting sector, capital market, forensic audit, taxation, company law. These experts are taken from their individual department to form SFIO. It is headed by a Director appointed by government of India.

Section 211 of the Companies Act 2013 describes rules and regulations for SFIO. 

In which of the following independent case Mr. Ram can be appointed as auditor of the XYZ Ltd. as per Companies Act, 2013?
(I) Relative of Mr. Ram hold securities of Rs. 50,000 in XYZ Ltd.
(II) Mr. Y, the partner of Mr. Ram has debt payable to PQR Ltd. (Subsidiary of XYZ Ltd.) of Rs. 3,00,000.
(III) Mr. Z partner of Mr. Ram is working as General Manager in XYZ Ltd.
(IV) Mr. B has taken load of Rs. 2 lakh from XYZ Ltd. and relative of Mr. Ram has given guarantee for this transaction.
The correct answer is -

  1. (I) & (II) only

  2. (III) & (IV) only

  3. (I), (II) & (III) only

  4. (I), (II), (III) & (IV)


Correct Option: A

Which of the following section of the Companies Act, 2013 contains provisions regarding the appointment of the auditor?

  1. Section 224

  2. Section 238

  3. Section 138

  4. Section 139


Correct Option: A

Which of the following shall be eligible for appointment as an auditor of an company as per section 141(3) of the Companies Act, 2013?

  1. An officer or employee of the company

  2. A person who, or his relative or partner is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of Rs. 5 lakhs

  3. A person whose relative hold security or interest in the company of face value not exceeding Rs.one lakh

  4. None of the above


Correct Option: C

As per Section 139(6) of the Companies Act, 2013 provides that the first auditor or auditors are to be appointed by the Board of directors within ____________ of the date of the registration of the company.

  1. 30 days

  2. 45 days

  3. 60 days

  4. 90 days


Correct Option: A
Explanation:

The appointment of Auditors in a Company is Governed under Section 139 of the Companies Act. 

Section 139(6) of the Act,2013 says that, the first auditor of a company must be appointed by the BOD within 30 Days from the date of registration of the Company. In case of failure of the Board to appoint such auditor, the board shall inform the members of the company, who shall within ninety days at an Extra Ordinary General Meeting appoint the auditor

Which of the following is function of Company Secretary?

  1. To provide to the directors of the company, collectively and individually, such guidance as they may require with regards to their duties, responsibilities and powers

  2. To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings

  3. To assist the Board in the conduct of the affairs of the company

  4. To ensure that the company complies with the applicable secretarial standards


Correct Option: D

Which of the following section of the Companies Act, 2013 contains provisions as regards to qualifications of auditors?

  1. Section 131

  2. Section 124

  3. Section 224

  4. section 141


Correct Option: D

As regards ratification of promoters contracts, the view taken in _______ was that the company could not ratify contract made by a promoter before its incorporation.

  1. Ashbury RAilway Carriage and Iron Co. Ltd. vs. Riche

  2. Shyamlal Roy vs. Madhusudan Roy

  3. Kelner vs. Baxter

  4. Smith vs. Anderson


Correct Option: C

In case of OPC and small company, the annual return shall be signed by the_________.

  1. Company Secretary

  2. Director of the company

  3. Company Secretary and director of the company.

  4. Company Secretary, or where there is no Company Secretary, by the director of the company.


Correct Option: D
Explanation:

OPC is one person company which has only one person as member and there is no prescribed capital. According to Section 92, every company has to prepare an annual return in the prescribed form containing the particulars as they appear in the financial statements. The annual return is to be signed by a director and company secretary, in case of normal company.

In case of OPC and small company, the annual return shall be signed by the company secretary or where there is no company secretary, by the director of the company.

Which of the following Section of the Companies Act, 2013 specify the functions of Company Secretary?

  1. Section 203

  2. Section 205

  3. Section 208

  4. Section 210


Correct Option: B
Explanation:

Section 205 of the Companies Act 2013 specifies the functions to be performed by the Company Secretary. These functions are:

  • To report to the Board about compliance with the provision of the Act, the rules and the laws under the Act.
  • To ensure that the company complies with the Secretarial Standards.
  • To discharge such other duties as may be prescribed.

Which of the following statement is CORRECT in relation to Non-Profit making companies registered under Section 8 of the Companies Act, 2013?
(I) Non-profit making companies registered can pay 10% of their surplus as dividend on approval of central government.
(II) A firm may be a member of the non-profit making companies.
(III) Non-profit making companies registered cannot convert itself into company of any other kind.
(IV) Non-profit making companies has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
Select the correct answer from the options given below -

  1. (II) and (IV) of the aove

  2. (I, (II) and (IV) of the above

  3. (I), (II) and (III) of the above

  4. (I), (II), (III) and (IV) of the above


Correct Option: A

The first step towards incorporation of a company is -

  1. To print MOA and AOA

  2. To have certificate of incorporation

  3. To adopt a suitable name

  4. To appoint director


Correct Option: C
Explanation:

The first and foremost task in the direction of formation of company is the selection of a name to be given to the proposed company. Having decided to launch a company, the promoter has to select a name for it and submit an application to the registrar of companies of the state in which the registered office of the company is to be situated, for its approval. The proposed name may be approved if it is not considered undesirable. It may happen that another company exists with the same name or a very similar name or the preferred name is misleading, say, to suggest that the company is in a particular business when it is not accepted but some alternate name may be approved. Therefore, three names, in order of their priority are given in the application to the Registrar of Companies before formation of company.

The expression "Secretarial Standards" means -

  1. Secretarial standards issued by the ICSI

  2. Secretarial standards approved by the Central Government.

  3. Both (A) and (B)

  4. Secretarial standards issued by the ICSI whether approved by the Central Government or not.


Correct Option: C
Explanation:

Secretarial Standards are the standards issued by the Institute of Company Secretaries of India constituted under the section 3 of the Company Secretaries Act 1980. Secretarial Standards provide clear view of the laws when the laws are not clear. These are approved by the Central Government. Secretarial Standards provide clarity to the laws which does not imply that these are alternatives to the original law. 

A whole time KMP which includes Company Secretary shall not hold office in______________.

  1. More than one company except in its subsidiary company at the same time.

  2. More than two companies and its subsidiary company at the same time.

  3. More than one company except in its associate company at the same time.

  4. More than one company except in related company at the same time.


Correct Option: A
Explanation:

Key Managerial Personnel (KMP) are the employees of a company who hold key positions in the company and greater responsibility of overall functioning of the company including the responsibility to protect the interest of the stakeholders. 

According to Section 203(3), a whole time KMP shall not hold office in more than one company except in its subsidiary company at the same time. 

On incorporation, a company acquires legal entity with perpetual succession and a __________.

  1. Seal which is optional

  2. Common seal which is compulsory

  3. Rubber stamp which is compulsory

  4. common seal which is optional


Correct Option: D

Which of the following is advantage incorporation of company?
(A) Capacity to sue
(B) Greater social responsibility
(C) Corporate personality
(D) Detailed winding-up procedure
Select the correct answer from the options given below:

  1. B and D only

  2. A, B and C

  3. C and B only

  4. C and A only


Correct Option: C

As per section 2(51) of the Companies Act, 2013, "Key Managerial Personnel", in relation to a company, means -
(i) Chief Executive Officer or the managing director or the manager
(ii) Company Secretary
(iii) General Manager
(iv) Whole Time Director
(v) Chief Legal Officer
(vi) Chief Financial Officer
Select the correct the answer from the options given below:-

  1. (i), (ii), (iv) and (vi)

  2. (i), (iii), (iv), (v) and (vi)

  3. (i), (ii), (v) and (vi)

  4. (i), (iv), (v) and (vi)


Correct Option: A
Explanation:
  • Key managerial personnel are the employees of a company who hold key positions in the company and greater responsibility of overall functioning of the company including the duty to protect the interest of all stakeholders.
  • Under Section 2 (51) of the Companies Act, 2013 inclusively defines key managerial personnel as:
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed.

Which of the following as section permits the registration, under a licence granted by the Central Government, of associations not for profit with limited liability without being required to use the word "Limited" or the words "Private Limited" after their names?

  1. Section 8

  2. Section 25

  3. Section 18

  4. Section 20


Correct Option: A

Statement X: As a corporate person, the company is not entitled to own and hold property in its own name.
Statement Y: Member can claim ownership of any time of the company's assets.
Select the correct the answer from the options given below:

  1. Statement X is correct and Statement Y is correct explanation of Statement X

  2. Statement X is correct but Statement Y is not correct explanation of Statement X

  3. Statement X and Statement Y both are correct

  4. Statement X and Statement Y both are incorrect


Correct Option: D

The auditor of Government Company is appointed or reappointed by the -

  1. Controller and Auditor General of India

  2. Comptroller and Auditor General of India

  3. Comptroller and General Auditor General of India

  4. Central and Auditor General of India


Correct Option: B

Section 2(45) of the Companies Act, 2013 defines a "Government company" as any company in which not less than ____ of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government or partly by one or more State Governments.

  1. 31%

  2. 41%

  3. 51%

  4. 61%


Correct Option: C

"Body Corporate" or "Corporation" includes a company incorporated outside India but does not include __________

  1. Companies registered under earlier company law before Companies Act, 2013 came into force

  2. A co-operative society registered under any law relating to co-operative societies; and

  3. Any other body corporate which the Central Government may notify

  4. (B) or (C)


Correct Option: D

License under Section 8 of Companies Act, 2013 may be granted by Central Government if _______
(i) It is limited to form a company for promoting commerce, art, science, religion charity or any other useful object
(ii) The company allows the payment of dividend to its members
(iii) Apply its profits or other income in promotion of its objects
Select the correct answer from the options given below -

  1. (i), (ii), (iii) of the above

  2. (ii) of the above

  3. (ii) and (iii) of the above

  4. (i) and (iii) of the above


Correct Option: D

_____ is an artificial person created by law, having separate entity, with perpetual succession and a common seal.

  1. Partnership firm

  2. HUF

  3. Company

  4. All of the above


Correct Option: C

PRINCIPLE: An incorporated company under the Companies Act has a separate entity and corporate liability.
FACTS: Certain persons transferred a tea estate to an incorporated company and claimed exemptions from 'ad valorem' duty on the ground that they themselves were shareholders in the company.

  1. The shareholders are liable to pay as the company is a separate legal person

  2. The shareholders are not liable to pay as it is a transfer from them in one name to themselves under another name

  3. The shareholders are liable because everybody has a duty to pay on a transfer or conveyance

  4. The shareholders will not pay, the company would pay on their behalf


Correct Option: A

Statement A: A company dies with the death of its shareholders.
Statement B: In the case of a private company, every member owing fully paid up shares can freely transfer shares held by him.
Select the correct the answer from the options given below:

  1. Statement A is correct but Statement B is incorrect

  2. Statement B is correct but Statement A is incorrect

  3. Statement A is correct and Statement B is correct explanation of Statement A

  4. Statement A and Statement B both are incorrect


Correct Option: D

Preference shares are those which carry the preferential rights as to____.

  1. The payment of dividend at a fixed rate

  2. The return of capital on winding up of the company

  3. Both (A) & (B)

  4. Either (A) or (B)


Correct Option: C

In the case of a company limited by guarantee, the members are liable only to the extent of the amount guaranteed by them. 

  1. true

  2. false

  3. partly true

  4. partly false


Correct Option: A

"A company, in broad sense, may mean an association of individuals formed for some purpose" was observed in?

  1. Anderson v. Smith

  2. Smith v. Anderson

  3. Anderson v. Shaw

  4. None of the above


Correct Option: A

Which of the following case clearly established the principle that company is a legal person distinct from its members?

  1. Salman Vs Salman & Co. Ltd.

  2. Salomon Vs Salomon & Co. Ltd.

  3. Salsman Vs Salsman & Co. Ltd.

  4. Smith Vs Anderson


Correct Option: B

Characteristic of a company ..........
(I) Transferability of profits
(II) Property of company is joint property of shareholders
(III) Compulsory Common Seal
Select the correct answer from the options given below:

  1. (I) and (II)

  2. (II) and (III)

  3. (III) and (I)

  4. None of the above


Correct Option: D

Section 2(45) of the Companies Act, 2013 defines a "Government company" as any company in which not less than ___________ of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government or partly by one or more State Governments.

  1. 31%

  2. 41%

  3. 51%

  4. 61%


Correct Option: C

Licence under Section 8 of the Companies Act, 2013, may be granted by Central Government if ____________.
(i) It is intended to form a company for promoting commerce, art, science, religion, charity or any other useful object
(ii) The company allows the payment of dividend to its members
(iii) Apply its profits or other income in promotion of its objects
Select the correct the answer from the options given below-

  1. (i), (ii) & (iii) of the above

  2. (ii) of the above

  3. (ii) & (iii) of the above

  4. (i) & (iii) of the above


Correct Option: D

An association not for profit registered under the Companies Act, 2013 popularly known as__.

  1. Section 8 company

  2. Section 25 company

  3. Section 18 company

  4. Section 20 company


Correct Option: A

A partnership firm cannot become member of the company registered under Section 8 of the Companies Act, 2013.

  1. True

  2. False

  3. Partly true

  4. Partly false


Correct Option: B

Profit making companies are required to spend  _____% their average net profit for activities related to corporate social responsibility.

  1. 2

  2. 1.5

  3. 1

  4. 2.5


Correct Option: A

A company was incorporated on 1st January, 2014. Its financial year will be _________.

  1. 31st March, 2014

  2. 31st March,2015

  3. 31st March,2016

  4. 31st March,2017


Correct Option: B
Explanation:
Option B is Right.
Usually, the financial year of a company consists of 12 months. However, in some cases, it may not be so. In the case of a newly incorporated company, financial statements have to be prepared from the date of incorporation of the company till the year-end date of the financial year which may not be of 12 months.

Register of members is to be prepared as per ____________.

  1. section 66 of Companies Act, 2013

  2. section 30 of Companies Act, 2013

  3. section 88 of Companies Act, 2013

  4. none of the above


Correct Option: C

In how much time companies are required to switch over to the new format of Register of members?

  1. 8 months

  2. 3 months

  3. 6 months

  4. 4 months


Correct Option: C

A company can be created in several ways. Which ONE of the following is NOT a valid method of creating a company?

  1. The division of the High Court can create a company.

  2. A company can be created by registering certain documents with Registrar

  3. A company can be created by an act of parliament

  4. None of the above


Correct Option: A

Study the following information and answer the question that follows:
Principle: A 'fixture' is something attached to land or a building in such a way that it is regarded as an irremovable part of the property you are considering buying. Some typical 'fixture' in a home included the hot water service, range top, wall oven, fixed floor coverings, light fittings and a bulitrin (under bench) dishwasher. Garden plants, including bushes and trees are also 'fixtures'.
Rule A. When land is sold, all 'fixtures' on the land are also deemed to have been sold.
Rule B. If a movable thing is attached to the land or any building on the land, than it becomes a 'fixture'.
Factual Situation Khaleeda wants to sell a plot of land she owns in Beghmara (Meghalaya) and the sale value decided for the plot includes the fully-furnished palatial six-bedroom house that she has built on it five years ago. She sells it to Gurpreet for $Rs. 60$ lakh. After completing the sale, she removes the expensive Iranian carpet which used to cover entire wooden floor of one of the bedrooms. The room had very little light and Khaleeda used this light-coloured radiant carpet to negate some of the darkness in the room. Gurpreet, after moving in, realises this and files a case to recover the carpet from Khaleeda.
Assume that in the above fact scenario, Khaleeda no longer wants the carpet. She removes the elaborately carved door to the house after the sale has been concluded and claims that Gurpreet has no claim to the door. The door is question was part of Khaleeda's ancestral home in Nagercoil (Tamil Nadu) for more than $150$ years before she had it fitted as the entrance to her Beghmara house.
Rule C. If a moveable thing is placed on land with the intention that it should become an integral part of the land or any structure on the land, it becomes a fixture. Applying Rules A and C, to the fact situations in questions $44$ and $45$, as a judge you would decide in favour of

  1. Khaleeda in both situations

  2. Gurpreet only in $44$

  3. Khaleeda only in $45$

  4. Gurpreet in both situations


Correct Option: D
Explanation:

(d) is correct. Looking into the case, the facts state that Khaleeda did not disclose her intention of removing the carpet or the carved door while entering into the contract thus in both cases the judgement until going in favour of Gurpreet.

The Companies Act, 2013 extends to-.

  1. Whole of India

  2. Whole of India excluding State of Jammu & Kashmir

  3. Whole of India excluding State of Bihar

  4. Whole of India excluding State of Jammu


Correct Option: A

_________ have homogeneous members.

  1. Partnership Firm

  2. Company

  3. Cooperatives

  4. Hindu Undivided Family


Correct Option: D

Which one of the following is known as owners of a company?

  1. Debenture holders

  2. Board of Directors

  3. Shareholders

  4. Partners


Correct Option: C

If any _______ is present while forming the agency then the relationship of agency becomes contractual.

  1. consideration

  2. law

  3. emotion

  4. affection


Correct Option: A

According to the Companies Act, 2013 the term 'Bonds' are treated as long term borrowings, but these shall be stated in ____________.

  1. ascending order of maturity or conversion

  2. descending order of maturity or conversion

  3. either ascending or descending order of maturity

  4. on the basis of LIFO method


Correct Option: B

The seal of a company acts as its signature.

  1. True

  2. False


Correct Option: A
Explanation:

Common Seal is the official signature of the company and each company shall have only one seal, on its incorporation.

 Common Seal is the signature of the company to any document on which it is affixed and binds the company for all obligations undertaken in the document

Memorandum of association contains which of the following?

  1. Place of registered office of the company

  2. Objective of the company

  3. Amount of registered share capital

  4. All of the given options.


Correct Option: D

Secretary has a power to give casting vote.

  1. True

  2. False


Correct Option: B
Explanation:

Secretary does not have a power to cast a vote. He/she is not included in the voting power in the board meeting. 

According to the provisions of Companies Act, 2013 atleast what percent of the average net profits of the company shall be spend in pursuance of CSR activities?

  1. 10 percent

  2. 8 percent

  3. 3 percent

  4. 2 percent


Correct Option: D

According to the Section 203 of the Companies Act, 2013 which of the following persons has been covered under term 'Whole-time KMP'?

  1. Company Secretary

  2. Chartered Accountant

  3. Civil Engineer

  4. Promoter


Correct Option: A

Which of the following is considered as a 'tangible asset'?

  1. Vehicles

  2. Computer Software

  3. Mining Rights

  4. Goodwill


Correct Option: A

Consider the following statements :
1.Neither the Companies Act, 1956 not the Companies Act, 2013 defines the term 'Person' i.e. the one member of OPC
2. The one member of OPC can be either a natural person or a Juridical person.
3. An OPC cannot be converted into any other class of company.
Which of the above statement/s is/are not true?

  1. 1 and 2

  2. 2 and 3

  3. Only 2

  4. Only 3


Correct Option: D
Explanation:

The conversion of a private limited into an OPC (One Person Company) is allowed as per the Companies Act, 2013, which provides a mechanism to convert one class of company into another.That the annual turnover of the company must be less than Rs. 2 crores during the past three consecutive financial years.

Which of the following is a correct statement?

  1. Goods and Service Tax (GST) is a consolidation of many indirect taxes already levied in India

  2. In India, Excise duty and Service tax are levied by the Central Government

  3. VAT is levied by the State Governments

  4. All of the above


Correct Option: D

Which of the following statements is correct?

  1. The 'Corporate Governance' is about ethical conduct only.

  2. The 'Corporate Governance' is beyond the realm of law.

  3. The 'Corporate Governance' stems from the culture and mind set of management and cannot be regulated by legislation alone.

  4. All of the above


Correct Option: C

Consider the following statements :
1. Under the new Company Act, 2013, a director is treated as related party.
2.  Under the new Company Act, 2013, an 'Official Liquidator' should be appointed under subsection (1) of Section 359.
3. Life Insurance Corporation cannot be treated as a 'Public Financial Institution'.
Which of the above statement/s is/are not correct

  1. Only 3

  2. Only 2

  3. 1 and 3

  4. 1 and 2


Correct Option: A
Explanation:

LIC is one of the financial institutions to be established in India after independence. The full form of LIC is life insurance corporation and it was established in 1956. The main aim behind the establishment was to spread the message of life insurance in the country. Also, it was required to mobilize people's savings.

Which of the following is not an object of the Companies Act, 2013?

  1. To encourage transparency

  2. To encourage profitability

  3. To encourage accountability

  4. None of these


Correct Option: B

According to the Companies Act, 2013, which of the following is/are treated as 'non-current investment'?

  1. Investment in Mutual Funds

  2. Investment in Govt. Securities

  3. Investment in Bonds

  4. All of the above


Correct Option: D

Rule 12 of the Companies (Incorporation) Rules, 2014 states that an application for incorporation shall be filed with ROC in _______ in case of one person company or _______ in case of other companies.

  1. Form INC-2; Form INC-5

  2. Form INC-7; Form INC-5

  3. Form INC-7; Form INC-2

  4. Form INC-2; Form INC-7


Correct Option: D

As per Section 2(69) of the Companies Act, 2013, which of the following person can be treated as "Promoter"?
(I) Who has been named as such in a  prospectus or is identified by the company in the annual return referred to in Section 92. 
(II) Who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise.
(III) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act
(IV) Person who is acting in a professional capacity

  1. (I) and (II) only

  2. (II) and (III) only

  3. (II), (III) and (IV) only

  4. (I), (II), (III) of the above


Correct Option: D

A partnership firm cannot become member of the company registered under Section 8 of the Companies Act, 2013.

  1. True

  2. False

  3. Partly true

  4. Partly false


Correct Option: B

Which of the following section of the Companies Act, 2013 defines "Government Company"?

  1. Section 2(54)

  2. Section 2(35)

  3. Section 2(53)

  4. Section 2(45)


Correct Option: D
Explanation:
Section 2(54) defines "Managing Director"
Section 2(35) defines "Dividend"
Section 2(53) defines "Manager"
Section 2(45) defines "Government company" as a company in which not less than fifty-one per cent. of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

If the Registrar is satisfied that all requirements, have been complied with, he will register the company and issue the ______.

  1. Certificate of commencement of business

  2. Certificate of incorporation

  3. Compliance certificate

  4. Certificate to act as director


Correct Option: B
Explanation:

 A Certificate of Incorporation ( is a legal document that is issued by Ministry of Corporate Affairs once a company is successfully registered with them. The Certificate  Of Incorporation is a proof that the company is now registered with the Registrar of Companies. According to Rule 36(13) of the Companies Incorporation Rules, 2014, the certificate of incorporation shall be issued by the Registrar in Form No. INC-11.

In relation to OPC, "resident in india" means a person who has stayed in India for a period of not less than _______ days during the immediately preceding one calendar year

  1. 152

  2. 160

  3. 182

  4. 200


Correct Option: C
Explanation:

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

Which of the following person is NOT eligible to incorporate One Person Company (OPC) as per Companies Act, 2013?
(1) Indian citizen and resident in India
(2) Person who has already incorporated one OPC in India
(3) Artificial person
(4) Indian citizen and non-resident in India
Select the correct the answer from the options given below

  1. (1), (3) and (4)

  2. (2), (3) and (4)

  3. (1), (2) and (4)

  4. (2) and (4)


Correct Option: B
Explanation:

As per Section 2(62) of the Company’s Act 2013, a company can be formed with just 1 Director and 1 member which is known as One Person Company. It is a form of a company where the compliance requirements are lesser than that of a private company. Only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate and act as a member and nominee of an OPC. For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

Small company as defined in Section 2(85) of the Companies Act, 2013 means which of the following company?

  1. Public Company of which turnover does not exceed Rs. 2 Crores

  2. A Company registered under section 8

  3. Public company of which paid-up share capital does not exceed Rs. 50 Lakhs

  4. Private company of which paid-up share capital does not exceed Rs. 50 Lakhs


Correct Option: D

For ascertaining as to whether the proposed name is available for adoption, the promoters are required to make an application to the Registrar of Companies in From No. INC 1 along with fee as provided in ____

  1. Companies (Registration Office and Fees Rules, 2014)

  2. Companies (Incorporation and Fees) Rules, 2014

  3. Companies (Fees and Penalties) Rules, 2013

  4. Companies (Fees and Penalties) Rules, 2014


Correct Option: A
Explanation:

As per rule 9 of the Companies (Incorporation ) Rules, 2014, an application for the reservation of a name shall be made in Form No. INC.1 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014. 


A public company must have atleast _______ and a private company must have at least _______.

  1. 5 Directors; 3 Directors

  2. 2 Directors; 3 Directors

  3. 3 Directors, 2 Directors

  4. 10 Directors; 4 Directors


Correct Option: C

Appointment of Company Secretary is mandatory in -
(a) Every listed company
(b) Every unlisted private company having paid-up share capital of Rs.10 Crore or more
(c) Every public company having paid-up capital of Rs.5 Crore or more
(d) Every public company having turnover of Rs. 5 Crore or more
Select the correct answer from the option given below :-

  1. (a) & (b)

  2. (a) & (c)

  3. (a) & (d)

  4. (a), (c) & (d)


Correct Option: B
Explanation:

  • As per Section 2 (24) of Companies Act, 2013, Company Secretary or Secretary means a Company Secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a Company Secretary under this Act. As per Company Secretaries Act, 1980 “Company Secretary” means a person who is a member of the Institute of Company Secretaries of India.
  • Following Companies need to appoint whole time company secretary :
1. All Listed Companies 
2. Every Public Company having paid-up share capital of Rs. 10 Cr. or More 
3. Every other Company having paid-up share capital of Rs. 5 Cr. or More. 

As per Rule 9 of Companies (Incorporation ) Rules, 2014, for reservation of name, application shall be made in ________

  1. From No. INC-1A

  2. From No. INC-5

  3. From No. INC-1

  4. From No. INC- 1B


Correct Option: C
Explanation:

As per rule 9 of the Companies (Incorporation ) Rules, 2014, an application for the reservation of a name shall be made in Form No. INC.1 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014. 


As per the Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every other public company having a paid-up share capital of ______or more shall have whole-time key managerial personnel.

  1. Rs. 5 Crore

  2. Rs. 8 Crore

  3. Rs. 2 Crore

  4. Rs. 10 Crore


Correct Option: D

Secretarial Audit is also known as - 

  1. Complementary Audit

  2. Corporate Governance audit

  3. Compliance Audit

  4. Total Audit


Correct Option: C

As per Section 275 of the Companies Act, 2013, Company Secretaries have been recognized to be appointed as ______from a panel to be maintained by the Central Government.

  1. Financial Liquidator or Company Liquidator.

  2. Provisional Liquidator or Company Liquidator.

  3. Provisional Liquidator or Financial Liquidator.

  4. Both (A) and (B)


Correct Option: B
Explanation:

Section 275 of the Companies Act 2013 talks about the appointment of the Company liquidators in case of winding up. As per clause (2) of the section, the provisional liquidator or the Company Liquidator, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters.

A company cannot be registered with the name -
(1) Which is undesirable
(2) Which is identical to name of an existing company
(3) Which is identical to or too nearly resembles the name of an existing company
Select the correct answer from the options given below -

  1. 1

  2. 2

  3. 3

  4. All of the above are correct


Correct Option: D
Explanation:
A legal entity must have a name, which forms the identity of the enterprise. The name clause, the first of the MOA, protects the entity against future registrations of the same or closely identical name. Likewise, the name of the entity shouldn’t be similar or closely identical to any other operating entity.  The Central Government may find a name to be undesirable and misleading, in which case it may prohibit it. A company should end with the word ‘limited’ in case of a public limited enterprise, and ‘private limited’ in the case of a private limited enterprise.

A Company Secretary in practice is eligible to become a _____ of National Company Law Tribunal.

  1. Technical Member

  2. Judicial Member

  3. Ordinary Member

  4. Special Member


Correct Option: A
Explanation:

Section 409 of the Companies Act. 2013 talks about the appointment of the members of the National Company Law Tribunal. As per clause (3) of the section the qualifications of being the technical member of the tribunal includes a person  who—

  • has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service; or
  • is, or has been, in practice as a chartered accountant for at least fifteen years; or
  • is, or has been, in practice as a cost accountant for at least fifteen years; or 
  • is, or has been, in practice as a company secretary for at least fifteen years; or
  • is a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to
  • management, conduct of affairs, revival, rehabilitation and winding up of companies; or
  • is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.

A company may be _______________.

  1. Limited by shares

  2. Liimited by guarantee

  3. (A) or (B)

  4. (A) but not (B)


Correct Option: C

"Company Secretary" or "Secretary" means a company secretary as defined in ____of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a Company Secretary under the Act.  

  1. Section 2 (1) (c)

  2. Section 2 (1) (a)

  3. Section 2 (1) (d)

  4. Section 2 (1) (e)


Correct Option: A

A company consists of _______ members, whereas a Hindu Undivided Family business consists of _______ members since it consists of members of the joint family itself.

  1. Homogeneous, homogeneous

  2. Heterogeneous, homogeneous

  3. Homogeneous, Heterogeneous

  4. None of the above


Correct Option: B

A society registered under the Societies Registration Act come within the term 'Body Corporate'

  1. True

  2. False

  3. Partly True

  4. Partly false


Correct Option: B

A company is legally required to have its accounts audited annually by a _______.

  1. Accountant in Practice

  2. Chartered accountant

  3. Chartered Financial Analyst

  4. Chartered Secretary in Practice


Correct Option: B

In a private company there must not be less than -

  1. Two Persons

  2. Seven Persons

  3. Six Persons

  4. Ten Persons


Correct Option: A

________ has homogeneous members.

  1. Partnership Firm

  2. Company

  3. Cooperatives

  4. Hindu Undivided Family


Correct Option: D

Maximum number of members of a private company are ________.

  1. 100

  2. 200

  3. 500

  4. Unlimited


Correct Option: B

Which of the following is advantage of incorporation of company?
(I) Limited Personality
(II) Limited Liability
(III) Limited Succession
Select the correct answer from the options given below:

  1. (I) but not (II) and (III)

  2. (II) but not (I) and (III)

  3. (III) but not (I) and (II)

  4. (II) but not (III) and (I)


Correct Option: D

As per _____ of the Companies Act, 2013 "company" means a company incorporated under Companies Act, 2013 or under any previous company law.

  1. Section 2(3)

  2. Section 2(20)

  3. Section 2(12)

  4. Section 2)25)


Correct Option: B

Private company which is a subsidiary of a public company is treated as ________.

  1. Public Company

  2. Private Company

  3. Statutory Company

  4. Deemed Company


Correct Option: A

Which of the following is advantage of incorporation of company?

  1. Restriction on transfer of shares

  2. Unlimited liabilty

  3. Capacity not to sue

  4. Separate property


Correct Option: D

Perpetual succession means -

  1. Members may go and members may go but the company goes on forever

  2. Members may come and members may come but the company goes on forever

  3. Members may come and members may go but the company goes on forever

  4. Members may come and members may go but the company cannot go on forever


Correct Option: C

Choose the correct answers from the following alternatives given
Which amounts to fraud:

  1. false representation as to fact

  2. a mere opinion

  3. a statement of expression

  4. a statement of intention


Correct Option: A

Characteristic of a company ________ .

  1. Capacity to sue and be sued

  2. Limited liability

  3. Optional common seal

  4. All of the above


Correct Option: D

Which of the following is characteristic of a company?
(1) Limited Profit
(2) Corporate Personality
(3) Limited Succession
Select the correct answer from the options given below:

  1. (1) only

  2. (2) and (3) only

  3. (3) only

  4. (2) only


Correct Option: D

As per Companies Act, 2013 financial statement is ________.

  1. fund flow statement

  2. cash flow

  3. balance sheet

  4. profit and Loss account


Correct Option: A

Secretarial Audit is compulsory for _____________.

  1. listed company

  2. companies having, paid up capital of Rs.100 crore

  3. public company

  4. both a and b


Correct Option: D

The Companies Act, 2013 extends to -

  1. Whole of India

  2. Whole of India excluding State of Jammu and Kashmir

  3. Whole of India excluding State of Bihar

  4. Whole of India excluding State of Jammu


Correct Option: A

A Company is having 1500 shareholders. As per Companies Act, 2013 it __________.

  1. may maintain records in electronic form

  2. compulsorily maintain records in electronic form

  3. there is no provision for maintaining of records as per Company Act, 2013

  4. none of the above


Correct Option: B

A private company cannot have more than _______

  1. 250 members including past and present employee members

  2. 200 members including past and present employee members

  3. 500 members excluding past and present employee members

  4. 500 members including past and present employee members


Correct Option: B

Section 2(62) of the companies Act, 2013 has provisions related to ___________.

  1. Small Company

  2. One Person Company

  3. Resident director

  4. None of the above


Correct Option: B

Small company is _________.

  1. public company

  2. other than a Public company

  3. holding company

  4. company registered under section 8


Correct Option: B

As per Companies Act, 2013 a dormant company is ___________.

  1. company registered for further product

  2. inactive company

  3. no significant accounting transactions

  4. all of the above


Correct Option: D

Section 3(1) of Companies Act, 2013 defines the term _________.

  1. director

  2. OPC

  3. dormant company

  4. small company


Correct Option: B
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