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

In the case of a company limited by guarantee, the members are liable only to the extent of the amount guaranteed by them. 

  1. true

  2. false

  3. partly true

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

In a company limited by guarantee, the liability of members is limited to the amount they have undertaken to contribute to the assets of the company in the event of its winding up.

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

PRINCIPLE: An incorporated company under the Companies Act has a separate entity and corporate liability.
FACTS: Certain persons transferred a tea estate to an incorporated company and claimed exemptions from 'ad valorem' duty on the ground that they themselves were shareholders in the company.

  1. The shareholders are liable to pay as the company is a separate legal person

  2. The shareholders are not liable to pay as it is a transfer from them in one name to themselves under another name

  3. The shareholders are liable because everybody has a duty to pay on a transfer or conveyance

  4. The shareholders will not pay, the company would pay on their behalf
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Because the company is a separate legal entity, the transfer of property from shareholders to the company is a transfer between two distinct legal persons, making the transaction subject to duty.

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

_____ is an artificial person created by law, having separate entity, with perpetual succession and a common seal.

  1. Partnership firm

  2. HUF

  3. Company

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

A company is defined as an artificial person created by law, having a separate entity, perpetual succession, and a common seal.

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

License under Section 8 of Companies Act, 2013 may be granted by Central Government if _______
(i) It is limited to form a company for promoting commerce, art, science, religion charity or any other useful object
(ii) The company allows the payment of dividend to its members
(iii) Apply its profits or other income in promotion of its objects
Select the correct answer from the options given below -

  1. (i), (ii), (iii) of the above

  2. (ii) of the above

  3. (ii) and (iii) of the above

  4. (i) and (iii) of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Similar to question 494150, a Section 8 company must apply its profits to its objects and cannot pay dividends. Thus, (i) and (iii) are the correct conditions for granting a license.

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

"Body Corporate" or "Corporation" includes a company incorporated outside India but does not include __________

  1. Companies registered under earlier company law before Companies Act, 2013 came into force

  2. A co-operative society registered under any law relating to co-operative societies; and

  3. Any other body corporate which the Central Government may notify

  4. (B) or (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Companies Act, 2013, the definition of 'Body Corporate' excludes co-operative societies registered under any law relating to co-operative societies and any other body corporate which the Central Government may notify.

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

Section 2(45) of the Companies Act, 2013 defines a "Government company" as any company in which not less than ____ of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government or partly by one or more State Governments.

  1. 31%

  2. 41%

  3. 51%

  4. 61%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As established in Section 2(45), a Government company requires at least 51% of the paid-up share capital to be held by the government.

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

Statement X: As a corporate person, the company is not entitled to own and hold property in its own name.
Statement Y: Member can claim ownership of any time of the company's assets.
Select the correct the answer from the options given below:

  1. Statement X is correct and Statement Y is correct explanation of Statement X

  2. Statement X is correct but Statement Y is not correct explanation of Statement X

  3. Statement X and Statement Y both are correct

  4. Statement X and Statement Y both are incorrect
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A company is a legal person capable of owning property in its own name, and members have no proprietary interest in the company's assets. Therefore, both statements are incorrect.

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

Which of the following as section permits the registration, under a licence granted by the Central Government, of associations not for profit with limited liability without being required to use the word "Limited" or the words "Private Limited" after their names?

  1. Section 8

  2. Section 25

  3. Section 18

  4. Section 20
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 8 of the Companies Act, 2013 allows associations not for profit to be registered without using the words 'Limited' or 'Private Limited' in their names.

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

As per section 2(51) of the Companies Act, 2013, "Key Managerial Personnel", in relation to a company, means -
(i) Chief Executive Officer or the managing director or the manager
(ii) Company Secretary
(iii) General Manager
(iv) Whole Time Director
(v) Chief Legal Officer
(vi) Chief Financial Officer
Select the correct the answer from the options given below:-

  1. (i), (ii), (iv) and (vi)

  2. (i), (iii), (iv), (v) and (vi)

  3. (i), (ii), (v) and (vi)

  4. (i), (iv), (v) and (vi)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
  • Key managerial personnel are the employees of a company who hold key positions in the company and greater responsibility of overall functioning of the company including the duty to protect the interest of all stakeholders.
  • Under Section 2 (51) of the Companies Act, 2013 inclusively defines key managerial personnel as:
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed.
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 incorporation of company?
(A) Capacity to sue
(B) Greater social responsibility
(C) Corporate personality
(D) Detailed winding-up procedure
Select the correct answer from the options given below:

  1. B and D only

  2. A, B and C

  3. C and B only

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

The advantages of incorporation include corporate personality and the capacity to sue in its own name. 'Greater social responsibility' is not a standard legal advantage of incorporation, and a 'detailed winding-up procedure' is generally considered a disadvantage.

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

On incorporation, a company acquires legal entity with perpetual succession and a __________.

  1. Seal which is optional

  2. Common seal which is compulsory

  3. Rubber stamp which is compulsory

  4. common seal which is optional
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Companies Act, 2013, the use of a common seal is now optional for a company.

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

A whole time KMP which includes Company Secretary shall not hold office in______________.

  1. More than one company except in its subsidiary company at the same time.

  2. More than two companies and its subsidiary company at the same time.

  3. More than one company except in its associate company at the same time.

  4. More than one company except in related company at the same time.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Key Managerial Personnel (KMP) are the employees of a company who hold key positions in the company and greater responsibility of overall functioning of the company including the responsibility to protect the interest of the stakeholders. 

According to Section 203(3), a whole time KMP shall not hold office in more than one company except in its subsidiary company at the same time. 

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

The first step towards incorporation of a company is -

  1. To print MOA and AOA

  2. To have certificate of incorporation

  3. To adopt a suitable name

  4. To appoint director
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The first and foremost task in the direction of formation of company is the selection of a name to be given to the proposed company. Having decided to launch a company, the promoter has to select a name for it and submit an application to the registrar of companies of the state in which the registered office of the company is to be situated, for its approval. The proposed name may be approved if it is not considered undesirable. It may happen that another company exists with the same name or a very similar name or the preferred name is misleading, say, to suggest that the company is in a particular business when it is not accepted but some alternate name may be approved. Therefore, three names, in order of their priority are given in the application to the Registrar of Companies before formation of company.

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

Which of the following statement is CORRECT in relation to Non-Profit making companies registered under Section 8 of the Companies Act, 2013?
(I) Non-profit making companies registered can pay 10% of their surplus as dividend on approval of central government.
(II) A firm may be a member of the non-profit making companies.
(III) Non-profit making companies registered cannot convert itself into company of any other kind.
(IV) Non-profit making companies has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
Select the correct answer from the options given below -

  1. (II) and (IV) of the aove

  2. (I, (II) and (IV) of the above

  3. (I), (II) and (III) of the above

  4. (I), (II), (III) and (IV) of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 8 companies cannot pay dividends to members (making I incorrect) and can convert into other types of companies (making III incorrect). Statements (II) and (IV) are correct.