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 elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities
The chairman must be present within 15 minutes from the scheduled time of the meeting.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The chairman should be present within the 15 minutes from the schedule of the meeting . in case of his absence a director should take the charge of the meeting present in the meeting shall choose one of their member to be chairperson of the meeting

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

Proxy must be a member of the company.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This statements is a  False due to the following reasons:

(i) Proxy is a person appointed by a member of a public company to attend and vote on his behalf in the General Meeting.
(ii) The representative of an absent member is called proxy.
(iii)proxy is an instrument by which the appointment of a person is made i.e. proxy form atleast 48 hours before the meeting.
(iv) According to the provision of the Act a notice convening meeting must state that a member  entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote instead of himself and proxy need not be a member.
(v) A proxy is not authorised to speak at meeting.
So a proxy need not be a member of the company.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities
The qualification share must be purchased by the Directors within ______months from his appointment.

  1. 2

  2. 4

  3. 8

  4. 6
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The article of association of a company may require the Directors of that company to hold some minimum shares at the time of his appointment within such a time limit as prescribed under section 270 of the companies act 1956. This minimum shares is known s 'Qualification Shares'. 

If the Directors doesn't hold that share qualification at the time of his appointment then he must require them within two months of his appointment.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statement are True or False.

Company Secretary need not attend the Board meeting.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At the Board meeting, the Secretary has to obtain the signatures of the directors present in the Director's Attendance Book, ascertain the quorum and read the notice convening the meeting if so desired by the Chairman. Generally, he is requested lo read the minutes of the previous Board meeting. He has to obtain the signature of the Chairman in confirmation of the Minutes when approved. 

Thereafter, he is to assist the Chairman conducting the meeting, give him all necessary information and explanations as and when required, and take notes of the proceedings on the agenda paper including the terms of the resolutions passed.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statement is True or False:

A director can remain absent from three consecutive board meetings without taking leave of absence from the board.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
This statement is False because of the following reasons:
(i) Under such circumstance , the director shall take 'leave of absence' from the board meeting.
(ii) As per section 283(9) of the Companies (Amendment)  Act,1988 states,"If a director remains absent for consecutive three board meeting without taking leave of absence from the board" his directorship gets terminated.
(iii) If a director has already remained absent at two consecutive board meeting without prior leave of absence from the board, he must obtain leave of absence from the board if he want to remain absent at the third board meeting also.
(iv) If he fails to take prior leave of absence for the third board meeting,his directorship gets automatically terminated.
(v) Hence, a director cannot remain absent from three consecutive board meeting without taking leave of absence from the board.
Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statement is True or False:

A director has to obtain qualification share within two months from the date of his appointment.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True , a director has to obtain qualification shares within two months from the date of his appointment . A share of common stock that a candidature of board  of directors is required to own is called qualification shares

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statements is True or False:

The directors are representative of shareholders.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The board of directors should be a representation of both management and shareholder interests, and consist of both internal and external members.The executive board consists of insiders elected by employees and shareholders and is headed by the CEO or managing office

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following Statement is True or False:

The power of granting extension of time for holding the Annual General Meeting is vested in the Registrar of Companies.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This Statement is True because of the following reasons:

(i) As per section 166 of the Companies Act, 1956, the company is required to hold its Annual. General Meeting for the financial year ending on 31st march on or before 30th September.
(ii) If for any reason, the company is unable to conduct the meeting, the, company secretary has to write to the Registrar of Companies requesting for extension in time for holding the Annual General Meeting. 
(iii) The company secretary while corresponding to the Registrar of companies has to assure the Registrar of Companies that all necessary formalities would be completed and the meeting would be conducted in the extended time.
(iv) The company secretary gives an undertaking on behalf of the company, of course, to pay the penalty for the delay. 

Provisions relating to this are now dealt by the Companies Act ,2013.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statements is True or False:
The Registrar is a statutory authority under the Companies Act, 1956.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This statement is True, due to the following reasons :

(i) Through the Ministry of Corporate the Registrar of Companies is appointed by the Central Government to have statutory control over the companies.
(ii) The Registrar of an Companies  is an official, appointed by the Central Government to co-ordinate ordinate d supervise the promotion, registration and matters relating to companies registered under the Companies Act 1956. (iii) As per law, no company can commence business unless it is registered with the Registrar of Companies. 
(iv) He is responsible for the administration of company law in the state. 
(v) The Registrar is a recognised statutory authority under the Companies Act. (vi) He has to see that companies operate within the legal limits and comply to various legal formalities as laid down by the Companies Act. 
(vii) The Registrar has powers to take action against the companies which do no comply with legal provisions.
Hence the Registrar is a statutory authority under the Companies Act, 1956. 

Provisions relating to this are now dealt by the Companies Act ,2013.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statement is True or False:

The Registrar of Companies is appointed by the State Government.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This statement is False, due to the following reason:

(i) The Registrar of companies is an officer appointed by the Central Government for each state.
(ii) He is being appointed to register, supervise and co-ordinate to the matter relating to the companies registered under the Companies Act,1956.
(iii) He has control over the various activities carried by the companies in his state.
(iv) The Registrar is a recognised statutory authority under the Companies Act.
(v) He has to see that companies,operate within the legal limits and comply to various legal formalities.
(vi) Every company has to submit certain documents with Registrar to obtain incorporation certificate and business commencement certificate.

Provisions relating to registrar are now dealt by the Companies Act ,2013.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statement is True or False:

Company secretary has to file copy of special resolution with the Registrar of Companies.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This statement is True due to the following reasons :

(i) Registrar of companies is appointed by the Central Government to have statutory control over the Companies.
(ii) Every company has to submit certain documents with Registrar to obtain incorporation and business commencement certificate.
(iii) The Registrar of Companies has to perform function like, Incorporation of Companies, Registration of Documents, etc.
(v) The Secretary has to make correspondence with the Registrar of Companies for filing various documents. 
(v) The Secretary has to write letters to the Registrar, on various issues, one such is 'Filing Special Resolution'. 
(vi) Under Section 192 of the Companies Act 1956; whenever a special resolution is adopted at a general meeting, a copy of the resolution is to be-filed by the Secretary with the Registrar of Companies. If default is made in Complying with the filling of special resolution, the company and defaulting officer shall be punishable with fine. 
(vii) It should be filed within 30 days of it being adopted.
(viii) He also has to enclose the requisite filing fees.

Provisions relating to this are now dealt by the Companies Act ,2013.

Multiple choice elements of business classification of human activities characteristics of business activities economic and non-economic activities human activities - commercial and non-commercial activities

State the following statements is True or False:
The Registrar of Companies can impose fine or penalty on companies when irregularities are noticed.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Committee is of the view that in tune with legal developments in the country, guided by recent pronouncements of the Apex court it would be appropriate for the law to provide a regime of penalties for companies. These would be monetary in nature since it would not be feasible to imprison an artificial person such as a company. Such penalties should also be relatable to the size of the company in addition to the nature of the offence.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

A company funded through shares ___________.

  1. has unlimited liability

  2. exists only in contemplation of law

  3. has a perpetual succession

  4. comes to an end on the death of all the members
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A company funded through shares has a perpetual succession. Perpetual succession refers to the law of continuing the organization despite the death, insanity, exit of one member, etc.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

Public companies issued shares to public through document called ________________.

  1. Letter of offers & acceptance

  2. Offer for sale & acceptance

  3. Prospectus

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

A Prospectus is a formal legal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public. 


The preliminary prospectus is the first offering document provided by a security issuer and includes most of the details of the business and transaction in question; the ,final prospectus containing finalized background information including such details as the exact number of shares/certificates issued and the precise ,offering price is printed after the deal has been made effective. In the case of mutual funds, a fund prospectus contains details on its objectives, investment strategies, risks, performance, distribution policy, fees and expenses, and fund management. 

A prospectus includes the name of the company issuing the stock or the mutual fund manager, the amount and type of securities being sold and, for stock offerings, the number of available shares. 

The prospectus also details whether an offering is public or private, how much the underwriters are earning per sale and names of the company’s principals. A brief summary of the company’s financial information, whether the SEC approved the prospectus and other pertinent information is included as well.