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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 Section of the Companies Act, 2013 specify the functions of Company Secretary?

  1. Section 203

  2. Section 205

  3. Section 208

  4. Section 210
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Section 205 of the Companies Act 2013 specifies the functions to be performed by the Company Secretary. These functions are:

  • To report to the Board about compliance with the provision of the Act, the rules and the laws under the Act.
  • To ensure that the company complies with the Secretarial Standards.
  • To discharge such other duties as may be prescribed.

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

In case of OPC and small company, the annual return shall be signed by the_________.

  1. Company Secretary

  2. Director of the company

  3. Company Secretary and director of the company.

  4. Company Secretary, or where there is no Company Secretary, by the director of the company.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

OPC is one person company which has only one person as member and there is no prescribed capital. According to Section 92, every company has to prepare an annual return in the prescribed form containing the particulars as they appear in the financial statements. The annual return is to be signed by a director and company secretary, in case of normal company.

In case of OPC and small company, the annual return shall be signed by the company secretary or where there is no company secretary, by the director of the company.

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

As regards ratification of promoters contracts, the view taken in _______ was that the company could not ratify contract made by a promoter before its incorporation.

  1. Ashbury RAilway Carriage and Iron Co. Ltd. vs. Riche

  2. Shyamlal Roy vs. Madhusudan Roy

  3. Kelner vs. Baxter

  4. Smith vs. Anderson
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The case of Kelner vs. Baxter established that a company cannot ratify a contract entered into by promoters before the company's incorporation, as the company did not exist at the time of the contract.

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

Which of the following section of the Companies Act, 2013 contains provisions as regards to qualifications of auditors?

  1. Section 131

  2. Section 124

  3. Section 224

  4. section 141
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Section 141 of the Companies Act, 2013 specifically deals with the eligibility, qualifications, and disqualifications of auditors. The other sections listed pertain to different aspects of company law.

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

Which of the following is function of Company Secretary?

  1. To provide to the directors of the company, collectively and individually, such guidance as they may require with regards to their duties, responsibilities and powers

  2. To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings

  3. To assist the Board in the conduct of the affairs of the company

  4. To ensure that the company complies with the applicable secretarial standards
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As per the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, one of the primary duties of a Company Secretary is to ensure that the company complies with applicable secretarial standards. While the other options describe general responsibilities, this is the specific statutory duty defined in the rules.

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

As per Section 139(6) of the Companies Act, 2013 provides that the first auditor or auditors are to be appointed by the Board of directors within ____________ of the date of the registration of the company.

  1. 30 days

  2. 45 days

  3. 60 days

  4. 90 days
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The appointment of Auditors in a Company is Governed under Section 139 of the Companies Act. 

Section 139(6) of the Act,2013 says that, the first auditor of a company must be appointed by the BOD within 30 Days from the date of registration of the Company. In case of failure of the Board to appoint such auditor, the board shall inform the members of the company, who shall within ninety days at an Extra Ordinary General Meeting appoint the auditor

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

Which of the following shall be eligible for appointment as an auditor of an company as per section 141(3) of the Companies Act, 2013?

  1. An officer or employee of the company

  2. A person who, or his relative or partner is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of Rs. 5 lakhs

  3. A person whose relative hold security or interest in the company of face value not exceeding Rs.one lakh

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

Section 141(3) disqualifies persons who hold security or interest in the company, but it provides an exception for relatives holding security of a face value not exceeding Rs. 1 lakh. An officer/employee or a person with significant indebtedness is explicitly disqualified.

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

In which of the following independent case Mr. Ram can be appointed as auditor of the XYZ Ltd. as per Companies Act, 2013?
(I) Relative of Mr. Ram hold securities of Rs. 50,000 in XYZ Ltd.
(II) Mr. Y, the partner of Mr. Ram has debt payable to PQR Ltd. (Subsidiary of XYZ Ltd.) of Rs. 3,00,000.
(III) Mr. Z partner of Mr. Ram is working as General Manager in XYZ Ltd.
(IV) Mr. B has taken load of Rs. 2 lakh from XYZ Ltd. and relative of Mr. Ram has given guarantee for this transaction.
The correct answer is -

  1. (I) & (II) only

  2. (III) & (IV) only

  3. (I), (II) & (III) only

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

For (I): Rs. 50,000 securities is below Rs. 1 lakh threshold - eligible. For (II): Partner's debt of Rs. 3,00,000 to subsidiary exceeds Rs. 5 lakh threshold - should be disqualifying, but this appears to be an error in the question. (III) Partner as GM in company disqualifies. (IV) Relative's guarantee for loan disqualifies. The question claims A is correct, but (II) should actually disqualify.

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

The section 211 of Companies Act, 2013 describes rules and regulations regarding __________________.

  1. Serious Fraud Investigation Office (SFIO)

  2. Several Fraud Investigation Company (SFIC)

  3. Public Financial Institutions (PFIs)

  4. Key Managerial Personnel (KMP)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Serious Fraud Investigation Office (SFIO)  is a fraud investigating agency in India under the jurisdiction of government of India. It  is a coordinating agency with Income Tax and CBI. 


SFIO is a multi disciplinary organization involve experts from finance sector, accounting sector, capital market, forensic audit, taxation, company law. These experts are taken from their individual department to form SFIO. It is headed by a Director appointed by government of India.

Section 211 of the Companies Act 2013 describes rules and regulations for SFIO. 

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

Section 143(1) of the Companies Act, 2013 requires an auditor to inquire -

  1. Whether loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are prejudicial to the interest of the company or its members

  2. Where the transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company

  3. Where the company is not an investment or a banking company, whether so much of the company consists of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company

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

Section 143(1) of the Companies Act, 2013 mandates that an auditor must inquire into whether loans and advances made by the company are properly secured and whether the terms are prejudicial to the interest of the company.

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

As per Rule 10 of the Companies (Appointment & Remuneration of Managerial Personnel ) Rules, 2014, which of the following are duties of Company Secretary?
(1) To provide guidance to the directors with regards to their duties, responsibilities and powers.
(2) To formulate the business strategies.
(3) To represent before various Regulators, and other authorities in connection with
discharge of various duties.
(4) To call annual general meeting and extraordinary general meeting on his own.
Select the correct answer from options given below-

  1. (1) & (3)

  2. (2) & (4)

  3. (1), (2) & (3)

  4. (1), (3) & (4)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Rule 10 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 lists the duties of a Company Secretary, which include providing guidance to directors and representing the company before regulators. Formulating business strategies and calling meetings on his own are not statutory duties of the CS.

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

The minute of the proceedings of every general meeting should be recorded in the books kept for that purpose within _________________.

  1. 30 days of every such meeting

  2. 3 months of any such meeting

  3. The intervening period between that meeting and the next meeting

  4. Such time as approved by the chairman of the company
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

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

Which of the following rights are available to auditors of the company as per the provisions of the Companies Act, 2013?
(I) Right to sign the audit report
(II) Right to speak at general meeting
(III) Right to attend general meeting
(IV) Right to advice company on their financial policies
(V) Right to visit branch office
Select the correct answer from the options given below -

  1. (I), (II), (III) & (V) only

  2. (I), (II) & (V) only

  3. (I), (III) & (V) only

  4. (I), (II), (IV) & (V) only
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Auditors have the right to sign the audit report, attend and speak at general meetings, and visit branch offices. They do not have the right to advise the company on financial policies, as this would compromise their independence.