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

Who approves the name with which the company will be known?

  1. The Board of Directors

  2. The Chief Executive Officer

  3. The Registrar of Companies

  4. The Company Secretary

  5. The Cabinet Secretary
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In India, the Registrars of Companies (ROC), are vested with the primary duty of registering companies floated in the respective states and the union territories and ensuring that such companies comply with statutory requirements under the Act. The name of the company, with which the company will be known has to be approved by the Registrar of Companies. 

Multiple choice

Which of the following statements is incorrect?

a. A Karta in a Hindu Undivided Family does not have limited liability. b. A company is an artificial person, thus it cannot own property. c. A public company cannot start its business activities till the issue of the Certificate of Commencement of Business.

  1. Only a

  2. Only b

  3. Only c

  4. Both a and b

  5. Both a and c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Though a company is an artificial person, it can still enter into contracts and buy and own property. Hence, this is the only incorrect statement.

Multiple choice

Which of the following statements is/are correct: a. Promoter is not the trustee of the company but he stands in a fiduciary relationship. b. Promoter can select any name for the company being promoted without approval from any authority. c. Both a public and a private company can commence business after obtaining Certificate of In corporation.

  1. only a

  2. only b

  3. only c

  4. both b and c

  5. a, b and c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the correct option. Promoter is not the trustee of the company but he stands in a fiduciary relationship. A fidiuciary relationship is a relationship of utmost faith. A promoter should not carry out any activity which is against the interest of the company. For instance, a promoter should not make any undisclosed profits from the company being promoted.

Multiple choice

Which of the following statements is incorrect?

  1. The memorandum of association defines the objects for which the company is formed.

  2. Promoter is not an agent of the company.

  3. In case of the subscription becoming void, the money received from the applicants has to be returned within 50 days.

  4. Experts conducting feasability studies are not considered promoters.

  5. Certificate of incorporation is a conclusive evidence of regularity of incorporation of a company irrespective of any deficiency in its registration.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is the correct option. In case of the subscription becoming void, the money received from the applicants has to be returned within 80 days, not 50. This statement is incorrect and thus, this is the correct option.

Multiple choice

Which of the following structures have a separation of ownership and management?

  1. Sole proprietorship has a separation of ownership and management.

  2. Partnership has a separation of ownership and management.

  3. Company has a separation of ownership and management.

  4. All business organisations have a separation of ownership and management.

  5. No business organisation has a separation of ownership and management.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is the correct answer. Of all the given options, company has a separation of management and ownership.

Multiple choice

Which of the following statements is/are correct?

a. Minimum subscription should be 75% of total number of shares offered. b. Notice of the exact address must be submitted within 30 days of the reciept of incorporation. c. The Memorandum of Association must be signed by at least 7 persons in case of public company and 2 persons in case of private company.

  1. Only a

  2. Only b

  3. Only c

  4. Both a and b

  5. Both b and c
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Both these statements are correct. Notice of the exact address must be submitted within 30 days of the receipt of incorporation. The Memorandum of Association must be signed by at least 7 persons in case of public company and 2 persons in case of private company.

Multiple choice

A statutory declaration is to be submitted with the concerned authorities stating that all the legal requirements of the Companies Act in regard to incorporation have been complied with. This statement can be signed by any of the following, except

  1. Advocate of High Court or Supreme Court

  2. Chartered Accountant or Company Secretary

  3. Registrar of Companies

  4. Person named in the articles as a director

  5. Manager or Secretary of the Company
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Statutory declaration has to be submitted to the Registrar of Companies. Hence, this is incorrect.

Multiple choice

Prior approval from which of the following is compulsory before going ahead with raising funds from public?

  1. Board of directors

  2. Underwriters

  3. Stock exchange

  4. SEBI

  5. Registrar of Companies
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Securities and Exchange Board of India or SEBI is the regulator for the securities market in India to protect the interest of investors. Prior approval from SEBI is compulsory before going ahead with raising funds from public.

Multiple choice

Which of the following statements is true in case of government company?

  1. A company in which not less than 51% of the paid-up capital is held by Central Government or State Government, jointly or separately, is called government company.

  2. The subsidiary of a government company is called as government company whether public company or private company.

  3. The government company being a private company is not required to use the word Pvt. Limited at the end of the name of the company.

  4. The company under the control of only Central Government is called as government company.

  5. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

As per section 617 of Companies Act, 1956, the company in which not less than 51% of the paid-up capital is held by central government or State Government, jointly or separately, is called government company. The subsidiary of a government company is called as government company whether public company or private company, and the government company being a private company is not required to use the word Pvt. Limited at the end of the name of the company. The correct option is (5).

Multiple choice

For which one of the following reasons is an amendment in Companies Bill 2009 proposed?

  1. To provide more powers to Department of Company Affairs.

  2. To provide regulatory powers to Department of Company Affairs.

  3. To make Indian Accounting Standards applicable with effect from 1.4.2011.

  4. To ensure smooth convergence of the Indian Accounting Standards with IFRS.

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

The Companies Bill 2009 proposed amendments primarily to ensure smooth convergence of Indian Accounting Standards with International Financial Reporting Standards (IFRS). This was part of India's commitment to global accounting harmonization. The other options are incorrect - the bill was not about powers to the Department of Company Affairs or just about implementing date changes.