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 business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company
One who acts as a manager and as a Director is the _______.

  1. Board of directors

  2. Secretary

  3. Managing Director

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Managing Director is the key managerial personnel of a company who represents the company and takes relevant and crucial decisions for the company. Managing Director is granted with powers to manage, by the Board.
Shareholders elect a team of members that represent the interests of shareholders and manages the company on behalf of the shareholders. They collectively form the Board of Directors which is headed by the Chairman or Chairperson.
Company Secretary is also a key managerial personnel of a company who is a link between the Board of Directors, shareholders, and government/regulatory authorities. He/She ensures that the procedures are followed and reviewed regularly, besides providing guidance on the responsibilities of Directors and Chairman.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company
A body of elected representatives of shareholders of a company is called ______________.

  1. Board of Directors

  2. Managing Directors

  3. Secretary

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Shareholders elect a team of members that represent the interests of shareholders and manages the company on behalf of the shareholders. They collectively form the Board of Directors which is headed by the Chairman or Chairperson.
Managing Director is the key managerial personnel of a company who represents the company and takes relevant and crucial decisions for the company. Managing Director is granted with powers to manage, by the Board.
Company Secretary is also a key managerial personnel of a company who is a link between the Board of Directors, shareholders, and government/regulatory authorities. He/She ensures that the procedures are followed and reviewed regularly, besides providing guidance on the responsibilities of Directors and Chairman.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company
A person who is qualified to carry out audit work of a company is called _____________.

  1. Auditor

  2. Secretary

  3. Director

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
1.An auditor is the person who prepares an independent report for the shareholders of the company. He/She is given the powers to audit the books of accounts of the company. A person shall be eligible for appointment as an auditor of a company only if he is a Chartered Accountant.
2.Company Secretary is also a key managerial personnel of a company who is a link between the Board of Directors, shareholders, and government/regulatory authorities. He/She ensures that the procedures are followed and reviewed regularly, besides providing guidance on the responsibilities of Directors and Chairman.
3.Director is the managerial personnel of a company who represents the company and takes relevant and crucial decisions for the company.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

The Registrar of Companies is appointed by the _________.

  1. State Government

  2. Central Government

  3. Local Government

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Registrar of Companies is appointed by Central Government with the power vested under Section 396 of the Companies Act 2013 the Central Government registrar and additional, joint, deputy, and assistant registrars for various states and union territories in India. Apart from the primary companies incorporated in the respective states and the union territories, Registrar of Companies is also responsible for ensuring that the companies comply with statutory requirements under the said Act .

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

An auditor has the right to communicate the audit results to _______.

  1. employers

  2. some other auditor

  3. company

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

An auditor is the person who does the audit of the company. He makes the financial statements of the company. He communicates the audit results tot he company so that the company may know about the frauds and errors in the statement.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

DIN is a unique identification number for _______.

  1. existing director of the company

  2. person intending to become director of the company

  3. existing Chairman of the company

  4. both a and b
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

DIN is an unique identification number given to an existing or a potential director of any company which is incorporated. Hence, DIN is a unique identification number for existing director of the company and person intending to become director of the company.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Management of a business organization should be on compulsory basis in the hands of ________.

  1. shareholders

  2. workers

  3. both a and b

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

Shareholders are the owners of the business. They look over all the operations of the business. They are simply managers of the business. Hence, the management of a business organization should be on compulsory basis in the hands of shareholders.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

For several reasons, it is important to determine whether or not a person is a promoter. Which one of the following reasons is not valid?

  1. Promoters owe fiduciary duties to the unformed company.

  2. Promoters are subject to certain provisions contained in the Companies Act.

  3. Promoters may be liable for acts entered into on behalf of the unformed company.

  4. Promoters who sign their name on behalf of an unformed company can face criminal liability if the company is not subsequently fully incorporated.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Promoter means a person—

 (a) who has been named as such in a prospectus or is identified by the Company in the annual return referred to in section 92; or
 (b) who has control over the affairs of the Company, directly or indirectly whether as a shareholder, director or otherwise; or

 (c) in accordance with whose advice, directions or instructions the Board of Directors of the Company is accustomed to act
 (d) Promoters owe fiduciary duties to the unformed company.
 (e) Promoters may be liable for acts entered into on behalf of the unformed company.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

A company operates its bank account only through _________.

  1. Shareholder

  2. Investors

  3. Persons authorized by the Board of Directors

  4. Company Secretary
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Person who are authorized by board of directors are only authorized to operates company bank account.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

For several reasons, it is important to be able to determine whether or not a person is a promoter. Which one of the following reasons is not a valid reason?

  1. Promoters owe fiduciary duties to the unformed company.

  2. Promoters are subject to certain provisions contained in the Companies Act.

  3. Promoters may be liable for acts entered into on behalf of the unformed company.

  4. Promoters who sign their name on behalf of an unformed company can face criminal liability if the company is not subsequently fully incorporated.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Promoter means a person—

 (a) who has been named as such in a prospectus or is identified by the Company in the annual return referred to in section 92; or
 (b) who has control over the affairs of the Company, directly or indirectly whether as a shareholder, director or otherwise; or

 (c) in accordance with whose advice, directions or instructions the Board of Directors of the Company is accustomed to Act
 (d) Promoters owe fiduciary duties to the unformed company.
 (e) Promoters may be liable for acts entered into on behalf of the unformed company.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

XYZ private company had reduced to minimum number of members and continued business more than 6 months. The company's liability will be ______________.

  1. limited

  2. unlimited

  3. no change in liability

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

Unlimited liability refers to the legal obligations of general partners and sole proprietors because they are liable for all business debts if the business can't pay its liabilities.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

As a promoter is in a fiduciary relationship with the unformed company, he is never permitted to make a profit out of the companys promotion. Statement is true of false.

  1. True

  2. False

  3. It depends on his own wish

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

True

The promoter stands in a fiduciary relationship to the corporation and its investors, as well as any co-promoters. Promoters have a fiduciary duty to act in good faith and with utmost honesty, and they must always put the interests of the corporation and its shareholders above their own interests.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Decision on which type of company should be formed depends on _______.

  1. liability

  2. control

  3. both a&b

  4. none of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Liability and control are two important things which forms a platform for a company to start its operation.
Liability of shareholders, owners, directors should be fixed. 
Control of company is the most important factor after deciding over the liability.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Who stands in the fiduciary position of the company?

  1. Directors

  2. Promoters

  3. Auditors

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

Certain fiduciary duties, like an agent, have been imposed on him under the Companies Act. As such he is said to be in & fiduciary position (a position full of trust and confidence) towards the company and the original allottee of shares. Consequently, a promoter must make full disclosure of the relevant facts, including any profit made.