Commerce Accountancy · Law Legal Studies

Business Organizations and Corporate Governance

1,402 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

A company is a government company only if

  1. all the shares of the company are held by the central or state government

  2. at least 25% of shares are held by the central or state government

  3. majority of shares are held by the central or state government or both

  4. majority of directors are appointed by the central or state government

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A government company is any company in which not less than fifty-one percent 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 and partly by one or more.

Multiple choice

Match List – I with List – II and select the correct answer using the codes given below:

 
List – I List – II
i. Directors with unlimited liability a. Sections 202 and 203 of the Companies Act
ii. Prevention of management of a company by undesirable persons b. Section 312 of the Companies Act
iii. A director cannot assign his office in favour of any one else. c. Sections 322 and 323 of the Companies Act
iv. Appointment to a place of profit under the company d. Section 314 of the Companies Act

  1. i – a, ii – c, iii – b, iv – d

  2. i – c, ii – a, iii – b, iv – d

  3. i – c, ii – a, iii – d, iv – b

  4. i – b, ii – d, iii – a, iv – c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

i – c, ii – a, iii – b, iv – d

Multiple choice

Ownership of goodwill of a business is

  1. a limited ownership

  2. a corporeal ownership

  3. an incorporeal ownership

  4. a beneficial ownership
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Corporeal ownership implies ownership of a thing (material object). Incorporeal ownership implies ownership of a right. Thus, ownership of goodwill of a business is an incorporeal ownership.

Multiple choice

Who among the following said that there is in essence no difference between the legal personality of a company and that of an individual?

  1. Maitland

  2. Dicey

  3. Gierke

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

Kelson said that there is no difference between the legal personality of a company and that of an individual. Personality in the legal sense is only a technical personification of a complex of norms and assigning complexes of rights and duties. 

Multiple choice

In case of a public company

  1. there should be at least seven members and maximum number of members should not exceed fifty

  2. there should be at least seven members and maximum number of members should not exceed hundred

  3. there should be at least two members and maximum number of members should not exceed fifty

  4. there should be at least seven members and there is no restriction on the maximum number of members
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Companies Act, a public company must have a minimum of seven members (Section 3(1)(iv)). Unlike private companies which are capped at 200 members, public companies have no maximum membership limit - they can have any number of shareholders. This makes option D the correct statement.

Multiple choice

A share certificate

  1. Allows the person named therein to transfer the share mentioned therein by mere endorsement on the back of the certificate.

  2. Allows the person named therein to transfer the share mentioned therein by mere delivery of the certificate.

  3. Allows the person named therein to transfer the share mentioned therein by mere endorsement on the back of the certificate and the delivery of the certificate.

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

A share certificate requires BOTH endorsement (signature on the back) AND delivery for valid transfer. Mere endorsement alone is insufficient, and mere delivery alone without endorsement is also insufficient. Neither A nor B is complete, and C incorrectly combines them as alternatives rather than requirements. D correctly states none of these.

Multiple choice

In case of a firm carrying on the business other than banking

  1. there should be at least seven members and maximum number of members should not exceed fifty

  2. there should be at least two members and maximum number of members should not exceed ten

  3. there should be at least two members and maximum number of members should not exceed twenty

  4. there should be at least two members and maximum number of members should not exceed fifty
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under partnership law, a non-banking firm must have at least 2 partners and cannot exceed 20 partners. Banking partnerships are more restrictive, capped at 10 partners. This 20-partner limit for general firms and 10-partner limit for banking firms helps maintain manageable liability and regulatory oversight.

Multiple choice

In case of a firm carrying on the business of banking

  1. there should be at least seven members and maximum number of members should not exceed fifty

  2. there should be at least two members and maximum number of members should not exceed ten

  3. there should be at least ten members and maximum number of members should not exceed twenty

  4. there should be at least two members and maximum number of members should not exceed fifty
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the Indian Partnership Act, 1932, for firms carrying on banking business, the number of partners must be between 2 and 10. This special restriction exists because banking involves public trust and depositors' money. Option B correctly states this 2-10 limit. Option A incorrectly sets a minimum of 7 - any partnership needs at least 2. Option C's 10-20 range is wrong for banking. Option D's 2-50 limit applies to non-banking businesses, not banking firms which have stricter requirements.

Multiple choice

Which of the following statements, about the registration of firm, is not true?

  1. It must be done at the time of its formation.

  2. It may be done at the time of formation.

  3. It may be done before filing a suit against third party.

  4. It may be done at any time after its formation.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Partnership firm registration is optional, not mandatory - it can be done at the time of formation or any time afterward. It can also be done before filing a suit against a third party. The statement claiming it must be done at formation is false because registration is voluntary and can be completed at various times.

Multiple choice

Registration of a firm is

  1. compulsory

  2. optional

  3. occasional

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

Registration of a partnership firm is optional under the Indian Partnership Act, 1932. Unregistered firms can operate legally but face limitations - they cannot enforce contract claims in court. Registration provides legal benefits but is not compulsory for operation. 'Occasional' is not a recognized category in this context.