Commerce Accountancy ยท 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

Assertion (A): Doctrine of indoor management protects an outsider dealing with a company from irregularities inside a company. Reason (R): Doctrine of ultra vires protects an outsider dealing with a company for corporate capacity not mentioned in the objects clause.

  1. (A) is true, but (R) is false.

  2. (A) is false, but (R) is true.

  3. (A) and (R) are true, but (R) is not an explanation of (A).

  4. (A) and (R) are true, and (R) is an explanation of (A).
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The doctrine helps protect external members from the company and states that the people are entitled to presume that internal proceedings are as per documents submitted with the Registrar of Companies. In corporate law, ultra vires describes acts attempted by a corporation that are beyond the scope of powers granted by the corporation's objects clause.

Multiple choice

Assertion (A): Every public company shall have at least three and every private company at least two Directors. Reason (R): Directors are trustees for the company, and not for individual shareholders.

  1. (A) and (R) are true, but (R) is not an explanation for (A).

  2. (A) and (R) are true, and (R) is an explanation for (A).

  3. (A) is true, but (R) is false.

  4. (R) is true, but (A) is false
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Every company shall have a minimum number of three Directors in case of public company, two Directors in case of private company and one Director in one person company and a maximum of fifteen Directors in its Board of Directors. Directors are trustees for the company, and not for individual shareholders.

Multiple choice

Ministry of Company Affairs is now Called:

  1. Ministry of Corporate Affairs

  2. Ministry of Carpet Affairs

  3. Ministry of Corpus Affairs

  4. Ministry of Business Affairs
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Ministry of Company Affairs was renamed the Ministry of Corporate Affairs in 2007 to better reflect its broader responsibilities regarding the corporate sector.

Multiple choice

'Golden Handshake Scheme' is associated with

  1. inviting foreign companies

  2. private investment in public enterprises

  3. voluntary retirement

  4. establishing joint enterprises
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

'Golden Handshake Scheme' is associated with voluntary retirement. A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement.

Multiple choice

The Corporate Laws is/are ____

  1. Companies Act

  2. SEBI Act

  3. Indian Contract Act

  4. All of the above

  5. A and B are both
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Corporate laws govern the formation and operation of companies. Both the Companies Act and the SEBI Act (which regulates securities markets) are fundamental corporate laws, making option E the correct choice.

Multiple choice

Which of the following is true about statutory corporations?

  1. Statutory corporations are public enterprises that come into existence by a special act of the parliament.

  2. Statutory corporations are subject to the same accounting and audit procedures as are applicable to government departments.

  3. Statutory enterprises are funded directly by the government treasury.

  4. The employees of statutory enterprises are civil servants.

  5. These are a major subdivisions of Government departments and is suject to direct control of the ministry.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the correct answer. Statutory corporations come into existence by a special act of the parliament.

Multiple choice

According to the Indian Companies Act 1956, a government company means, any company in which not less than _______________ of the paid up capital is held by the central government or partly by central government, and partly by one or more state governments.

  1. 100 percent

  2. 91 percent

  3. 75 percent

  4. 51 percent

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

This is the correct answer. The paid up capital by the government is not less than 51 percent.

Multiple choice

Which of the following has the power of the Government and the considerable amount of operating flexibility of private enterprises?

  1. Departmental Undertakings

  2. Statutory Corporations

  3. Government companies

  4. All of the above

  5. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is the correct answer. These are public corporations brought into existence by a Special Act of Parliament. It is a corporate body created by legislature and is a corporate person. Thus, these have the power of the Government and the considerable amount of operating flexibility of private enterprises.

Multiple choice

Which of the following enterprises may benefit the most by an established brand name at the time of incorporation?

  1. Departmental Undertaking

  2. Government Company

  3. Statutory corporations

  4. Joint Venture

  5. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the correct answer. When two parties enter a joint venture one of the parties benefits from the other's goodwill, which has already been established in the market. With an established brand name there is a ready market waiting for the product to be launched. A lot of investment is saved in the process.

Multiple choice

Directions: Choose the correct option for the given question.

A person can hold office at the same time as director in more than

  1. 5 companies

  2. 10 companies

  3. 15 companies

  4. 20 companies
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the Companies Act (specifically in the Indian context, which this question likely references), there is a limit on the number of companies in which a person can hold the position of director. The limit is 10 public companies.