Commerce Accountancy · Law Legal Studies

Business Organizations and Corporate Governance

1,376 Questions

Business organizations and corporate governance explore company structures, stakeholder responsibilities, and regulatory frameworks under the Companies Act. These commerce topics are essential for Chartered Accountancy, company secretary exams, and banking probationary officer assessments. Practice these questions to master corporate formation, director roles, and business ownership types.

Companies Act 2013 provisionsCorporate stakeholder rolesPrivate limited company rulesDebenture holder rightsCompany incorporation rulesState-owned enterprises

Business Organizations and Corporate Governance Questions

Multiple choice

For which of the following types of companies is the word ‘limited' not required to be used?

  1. A govt. company or a company licensed u/s 8 of Companies Act 2013

  2. A public company limited by guarantee or a private company

  3. A private company limited by shares and a govt. company

  4. A public company and a govt. company
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under section 8, the Central Government may, by licence issued in prescribed manner, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited” .

Multiple choice

Which of the following statements is not correct?

  1. Coop Bank operating in more than one state is registered under Multi-State Coop Societies Act.

  2. Govt. can exempt a bank from provisions of Banking Regulation Act, on its own.

  3. The company matters relating to a banking company are regulated by an authority under the Companies Act.

  4. Banks undertake trading in shares subject to regulation by SEBI.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct Answer: Govt. can exempt a bank from provisions of Banking Regulation Act, on its own.

Multiple choice

Which of the following characteristics of a company is not true?

  1. Liability of the shareholders is to the extent of a nominal value of the shares held by them.

  2. A company is a group of shareholders and is not different from them.

  3. Company is created through a legal process called incorporation which is completed by issue of Certificate of Incorporation by RoC.

  4. A company, being legal person, has all the rights and obligation to sue or to be sued.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A company has a distinct legal entity independent of its mem­bers. It can own property, make contracts and file suits in its own name. Shareholders are not the joint owners of the company's property. A shareholder cannot be held liable for the acts of the company. Similarly, members of the company are not its agents.

Multiple choice

Which of the following statements is correct?

  1. Certificate of incorporation is required by a public company only and not by a private company.

  2. Certificate of commencement of business is conclusive proof of existence of a company.

  3. Certificate of incorporation is conclusive proof of existence of a company.

  4. Certificate of commencement of business is required by a private company only.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Section 35 of the Companies Act, 1956 deals with the conclusiveness of the certificate of incorporation. It provides that “A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, and that the association is a company authorised to be registered and duly registered under this Act.”

Multiple choice

Compared to a public company, a private limited company is at a disadvantage because

(a) it cannot invite public to subscribe to its shares (b) it has to observe restrictions on transfer of its shares because the number of members is limited (c) it has limited growth due to less shareholders (d) it cannot obtain loan from a bank

  1. (a) to (d) are correct

  2. (a), (b) and (c) are correct

  3. (a), (c) and (d) are correct

  4. (b), (c) and (d) are correct
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The following are the disadvantages of private limited company: The shares in a private limited company cannot be sold or transferred to anyone else without the agreement of other shareholders. It has limited growth and restricted number of shareholders. It is not allowed to invite public to subscribe to its shares.

Multiple choice

As per Rules under Prevention of Money Laundering Act 2002, the banks are not required to obtain which the following documents while opening an account of a company?

  1. Certificate of Incorporation

  2. Memorandum of Association and Articles of Association

  3. Board resolution and official valid document in respect of the person operating the account

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As per Rules under Prevention of Money Laundering Act 2002, the banks are required to obtain the following documents:

(i)   Certificate of incorporation and Memorandum and Articles of Association (ii)  Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v)  Copy of the telephone bill

Thus, all the given documents are important. 

Multiple choice

Your branch is approached by a public limited company to open a current account in their name. For the purpose of opening the account, they submit the Memorandum and Articles of Association and other papers along with a resolution passed by the Board of the company in a duly held meeting. It is observed from the Articles of Association that the Board of the company should have five directors for the purpose of business decisions, but the resolution has been passed by 4 directors, as the 5th one is away to UK in connection with a business trip.

  1. Since minimum number of directors is 3 for a public limited company, the account can be opened.

  2. Since majority of the directors were present at the meeting, the account should be opened.

  3. Bank can obtain another resolution and in the mean time open the account to increase its business.

  4. The resolution in its present form is not a proper resolution due to which account cannot be opened.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct Answer: The resolution in its present form is not a proper resolution due to which account cannot be opened.