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

Additional directors are appointed by the _________.

  1. Board of Directors

  2. Promoters

  3. Underwriters

  4. Shareholders
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.

Multiple choice

Which among the following is a necessary condition for declaring it a company as a Govt. company under the provisions of Companies Act 1956?

  1. It should be fully owned by the Central Govt.

  2. It should be fully owned by the Central and State Govt.

  3. At least 50% of the paid up capital should be owned by the Govt.

  4. At least 51% of the paid up capital should be owned by the Govt.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Government companies, under the provisions of Companies Act 1956, are the companies where the Central Govt. or one or more State Govt. or the Central and the State Govt. (jointly) hold, at least 51 per cent of the paid-up capital.

Multiple choice

Casual vacancies in the board of directors are filled in by the _________.

  1. Board of Directors

  2. Promoters

  3. Underwriters

  4. Shareholders
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the case of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board.

Multiple choice

Which of the following documents is called charter of the company?

  1. Certificate of Commencement of Business

  2. Certificate of Incorporation

  3. Articles of Association

  4. Memorandum of Association
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An important step in the formation of a company is to prepare a document called memorandum of association. It is the charter of the company and is a very important document as it contains the basic conditions on which the company is incorporated.

Multiple choice

The ‘fit and proper’ criterion is used by companies

  1. while conducting the shareholders’ meeting

  2. while appointing directors

  3. while appointing the managing director

  4. passing resolutions by the board members
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This criterion is used by the nomination committee before an appointment of a person as director or after a person is appointed as director on continuing basis.

Multiple choice

If a company does not want to include in its name the words ‘limited’, it can do so u/s 25 of Companies Act, 1956 after obtaining license from

  1. SEBI

  2. Company Law Board

  3. Registrar of Company

  4. Regional Director
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All companies having limited liability are required to use the term ‘limited’ or ‘private limited’. But under Section 25, companies are allowed to dispense with the use of term ‘limited’ or ‘private limited’ from their names after obtaining license from the Regional Director. This helps the company to enjoy limited liability without disclosing to the public the nature of liability of its members. 

Multiple choice

Which of the following is correct?

(a) A company can commence its business without obtaining Certificate of Commencement of business, if it is a private company. (b) A company can commence its business without obtaining Certificate of Commencement of business, if it is a company without any share capital. (c) A company can commence its business after obtaining Certificate of Commencement of business u/s 125, if it is a public company.

  1. Only (a) and (c)

  2. Only (a) and (b)

  3. Only (b) and (c)

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Private companies are not required to obtain a Certificate of Commencement. Also, companies without any share capital do not need such formalities. Thus, (a) and (b) are true. For public companies, Certificate of Commencement is required.

Multiple choice

Which of the following are correct?

(a) Certificate of Incorporation is the birth certificate of a company. (b) Certificate of Incorporation is conclusive evidence of creation of a company. (c) On the basis of Certificate of Incorporation, bank can open account without any other introduction. (d) Certificate of Commencement is required both by the public and private companies.

  1. Only (b), (c) and (d)

  2. Only (a), (b) and (c)

  3. Only (a), (c) and (d)

  4. All of the above

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Private companies are not required to obtain a Certificate of Commencement. Hence, statement (d) is incorrect. 

Multiple choice

At least __________ of the total number of directors of a public company are to be persons whose period of office is liable to determination by retirement of directors by rotation.

  1. 2

  2. 3

  3. 7

  4. 2/3
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Unless the Article (Section 152 of Companies Act, 2013) provides retirement of all the directors, atleast 2/3 directors of a public company shall be persons whose period of office is liable to determination by retirement of directors by rotation. 

Multiple choice

The additional directors in a company appointed by the Board of Directors by passing a resolution, can remain in office

  1. as per the term fixed in their appointment by the board

  2. up to the date of next annual general meeting

  3. for one year at the maximum

  4. for 6 months at the maximum
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Additional Directors are appointed by the Board between the two annual general meetings subject to the provisions of the Articles of Association of a company. Additional Directors shall hold office only up to the date of the next annual general meeting of the company.

Multiple choice

For opening an account of a company, under Prevention of Money Laundering Act, 2002, which of the following documents is not mandatory?

  1. Officially valid document in respect of person to operate the account

  2. Certificate of Incorporation and Resolution from Board of Directors

  3. Memorandum of Association and Articles of Association

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

For opening an account of a company, under Prevention of Money Laundering Act, 2002, all the documents listed in the options are required. Thus, option 4 is the correct answer.