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

Directions: Choose the correct option for the given question.

One of the statutory duties of a company secretary is to

  1. negotiate with third parties

  2. keep proper books and register

  3. gather information about competitors

  4. act as a medium of communication
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A company secretary has statutory duties under the Companies Act, which include maintaining statutory books, registers, and records to ensure compliance with legal requirements.

Multiple choice

Directions: Choose the correct option for the given question.

A company secretary has no right to

  1. exercise control and supervision of activities of the company departments.

  2. sign documents which requires authentication of the company.

  3. demand his outstanding salary as a preferential creditor on winding up of the company.

  4. call the annual general meeting of the company.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A company secretary is an officer of the company, but they do not have the inherent power to call an Annual General Meeting (AGM) on their own authority; that power rests with the Board of Directors.

Multiple choice

Directions: Choose the correct option for the given question.

A change in the registered office of the company from one state to another can be affected by

  1. a resolution of the board of directors

  2. an ordinary resolution

  3. a special resolution

  4. a special resolution and confirmation from the Company Law Board
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Changing the registered office from one state to another is a significant change that requires altering the Memorandum of Association. This requires a special resolution by the shareholders and confirmation by the relevant regulatory authority (formerly the Company Law Board, now the Regional Director/NCLT).

Multiple choice

Directions: Choose the correct option for the given question.

When the 'Articles of Association' does not authorise the change in the capital then in order to alter the capital of a company

  1. table 'A' should be adopted

  2. articles should be altered

  3. permission of the registrar of companies should be obtained

  4. permission of the Company Law Board should be obtained
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If the Articles of Association do not contain the power to alter capital, the company must first amend its Articles of Association to include such authority before it can proceed with the capital alteration.

Multiple choice

Directions: Choose the correct option for the given question.

The 'Articles of Association' establishes relationship between

  1. company and the government

  2. company and the outsiders

  3. company, its members and members' interest

  4. company and the registrar of the companies
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Articles of Association serve as the internal document of a company. It defines the rules and regulations for the internal management of the company and governs the relationship between the company and its members, as well as among the members themselves.

Multiple choice

Merger of two companies which are producing similar products or render the same type of service, falls under

  1. <font size="2">h</font>orizontal merger

  2. <font size="2">v</font>ertical merger

  3. <font size="2">c</font>onglomerate merger

  4. <font size="2">c</font>oncentric merger
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Horizontal merger is a business consolidation that occurs between firms who operate in the same space, often as competitors offering the same goods or services.

Multiple choice

Which of the following is/are correct with respect to The Companies Act, 1956?

(a) Minimum number of members in a private company is 2. (b) Maximum number of members in a public company is 50. (c) Minimum number of directors in a private company is 3. (d) Maximum number of directors in a public company is restricted to 12.

  1. Only (a)

  2. (a) and (d)

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

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

Minimum number of members required to form a private company is 2, whereas a public company requires at least 7 members. Maximum number of members in a private company is restricted to 50, there is no restriction of maximum number of members in a public company. The Companies Act, 1956 prescribed minimum 2 directors for a private and 3 for a public company to constitute a Board. This criterion has been retained by the new Act, but the maximum limit of directors on the Board has now been raised from 12 to 15. Thus, only a is correct.

Multiple choice

The borrowing powers of Board of Directors of a public company are given by _____ through _______.

  1. Registrar of Companies, Certificate of Commencement of Business

  2. Shareholders, Articles of Association

  3. Registrar of Companies, Articles of Association

  4. Shareholders, Memorandum of Association
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Restrictions on borrowing power: A public company can borrow only after the receipt of Commencement Certificate. [Section 149(1)]. But a private company can borrow immediately after the incorporation.

Multiple choice

Which of the following charges is/are not required to be registered by a company with Registrar of Companies?

(a) a charge on uncalled share capital (b) a charge in the form of a pledge (c) a charge on book debts (d) a floating charge

  1. (a) and (b)

  2. Only (c)

  3. Only (b)

  4. (a) and (c)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The following charges are compulsorily registrable: A charge for the purpose of securing any issue of any debentures A floating charge A charge on uncalled share capital A charge on calls made but not paid A charge on any immovable property A charge on ship A charge on book debts of the company A charge on goodwill or on patent or on license under the patent or on trademark or copyright or on the license under the copyright A charge other than a pledge on any movable property of the company

Multiple choice

Which of the following statements is correct about departmental undertakings?

  1. The departmental undertakings facilitate the parliament to exercise an effective control over their operations.

  2. The departmental undertakings are established under a special act of the parliament.

  3. The departmental undertakings are independently financed.

  4. The departmental undertakings are managed by a board of directors who are nominated by the government.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the correct answer.