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 companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Which of the following is characteristic of a company?
(1) Limited Profit
(2) Corporate Personality
(3) Limited Succession
Select the correct answer from the options given below:

  1. (1) only

  2. (2) and (3) only

  3. (3) only

  4. (2) only
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A company has a separate corporate personality, which is a legal characteristic. It does not have limited profit (profit is unlimited) and it has perpetual succession, not limited succession.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Characteristic of a company ________ .

  1. Capacity to sue and be sued

  2. Limited liability

  3. Optional common seal

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

A company is a separate legal entity with the capacity to sue and be sued, limited liability for members, and traditionally used a common seal (now optional).

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Perpetual succession means -

  1. Members may go and members may go but the company goes on forever

  2. Members may come and members may come but the company goes on forever

  3. Members may come and members may go but the company goes on forever

  4. Members may come and members may go but the company cannot go on forever
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Perpetual succession means that the existence of the company is independent of its members; they may come and go, but the company remains.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Which of the following is advantage of incorporation of company?

  1. Restriction on transfer of shares

  2. Unlimited liabilty

  3. Capacity not to sue

  4. Separate property
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Incorporation creates a separate legal entity, which allows the company to own property in its own name, distinct from its members.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Private company which is a subsidiary of a public company is treated as ________.

  1. Public Company

  2. Private Company

  3. Statutory Company

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

Under the Companies Act, 2013, a private company that is a subsidiary of a public company is deemed to be a public company.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

As per _____ of the Companies Act, 2013 "company" means a company incorporated under Companies Act, 2013 or under any previous company law.

  1. Section 2(3)

  2. Section 2(20)

  3. Section 2(12)

  4. Section 2)25)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Section 2(20) of the Companies Act, 2013 defines company to mean a company incorporated under the Companies Act, 2013 or under any previous company law. This broad definition ensures continuity for existing companies while accommodating new incorporations.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Which of the following is advantage of incorporation of company?
(I) Limited Personality
(II) Limited Liability
(III) Limited Succession
Select the correct answer from the options given below:

  1. (I) but not (II) and (III)

  2. (II) but not (I) and (III)

  3. (III) but not (I) and (II)

  4. (II) but not (III) and (I)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Limited liability is a key advantage of incorporation. Limited personality and limited succession are not correct terms; the company has a separate legal personality and perpetual succession.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

________ has homogeneous members.

  1. Partnership Firm

  2. Company

  3. Cooperatives

  4. Hindu Undivided Family
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A Hindu Undivided Family (HUF) consists of members who are related by blood, making them homogeneous in nature compared to the diverse membership of a company or partnership.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A company is legally required to have its accounts audited annually by a _______.

  1. Accountant in Practice

  2. <font color="#6d6d6d" face="Alegreya">Chartered accountant</font>

  3. Chartered Financial Analyst

  4. Chartered Secretary in Practice
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Companies Act requires that the annual audit of a company's accounts be conducted by a Chartered Accountant.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A society registered under the Societies Registration Act come within the term 'Body Corporate'

  1. True

  2. False

  3. Partly True

  4. Partly false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A society registered under the Societies Registration Act is generally not considered a 'body corporate' in the same sense as a company incorporated under the Companies Act.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A company consists of _______ members, whereas a Hindu Undivided Family business consists of _______ members since it consists of members of the joint family itself.

  1. Homogeneous, homogeneous

  2. Heterogeneous, homogeneous

  3. Homogeneous, Heterogeneous

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

A company is generally formed by diverse individuals (heterogeneous), whereas a Hindu Undivided Family (HUF) is composed of family members sharing a common lineage (homogeneous). This distinction highlights the difference between a voluntary association of persons and a family-based business structure.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

"Company Secretary" or "Secretary" means a company secretary as defined in ____of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a Company Secretary under the Act.  

  1. Section 2 (1) (c)

  2. Section 2 (1) (a)

  3. Section 2 (1) (d)

  4. Section 2 (1) (e)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 2(1)(c) of the Company Secretaries Act, 1980 defines the term 'Company Secretary' as a person who is a member of the Institute of Company Secretaries of India (ICSI) and is appointed by a company to perform the functions of a company secretary.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

A company may be _______________.

  1. Limited by shares

  2. Liimited by guarantee

  3. (A) or (B)

  4. (A) but not (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under the Companies Act, 2013, a company limited by liability can be either limited by shares or limited by guarantee. Both are valid forms of incorporation.