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

The articles of association establish the relationship between

  1. the company and its members

  2. the company and outsiders

  3. the company and its members and also between the members themselves

  4. the company and other companies

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

The articles of association is a contract between a company and its members and also between the members themselves that they shall abide by the rules and regulations of internal management of the company specified in the AA.

Multiple choice

The objects clause of the memorandum of association can be altered by a/an

  1. ordinary resolution

  2. special resolution

  3. special resolution and confirmation by the registrar of companies

  4. special resolution and confirmation by the company law board
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The objects clause of the memorandum of association can be altered by a special resolution and confirmation by the company law board.

Multiple choice

________ defines the scope of a company’s activities.

  1. Prospectus

  2. Statutory declaration

  3. Memorandum of Association

  4. Articles of Association
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Memorandum of Association defines the scope of a company’s activities. The main purpose of the memorandum is to limit the scope of activities and powers of the company. Thus, any act outside the memorandum is ultra vires the company.

Multiple choice

What is known as a charter of a company?

  1. Memorandum of Association

  2. Bye-laws

  3. Articles of Association

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

Memorandum of Association is known as a charter of a company and is a very important document as it contains the basic conditions on which the company is incorporated.

Multiple choice

_________ companies must have their own articles.

  1. Government companies

  2. Unlimited companies

  3. Companies limited by shares

  4. Registered companies
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Unlimited companies must have their own articles. The articles shall be signed by the subscribers of the memorandum and registered along with the memorandum.

Multiple choice

The name of a company can be changed by

  1. an ordinary resolution

  2. a special resolution

  3. the approval of the union government

  4. a special resolution and with the approval of the central government
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The name of a company can be changed by a special resolution and with the approval of the central government.

Multiple choice

An important case as to legal entity of a company is

  1. Salomon Vs. Salomon Ltd.

  2. Balfour Vs. Balfour

  3. Merit Vs. Merit

  4. Hyde Vs. Wrench
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Principle of separate legal entity in an incorporated company was established and confirmed under English law in 1895 by the House of Lords in Salomon Vs. Salomon and Co. Ltd. case.

Multiple choice

In case of a firm carrying on the business of banking,

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

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

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

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

Banking firms are subject to special regulations due to the fiduciary nature of their business involving public funds. The legal requirement specifies that a banking firm must have a minimum of 2 partners and cannot exceed 10 partners. This restriction is more stringent than general partnership rules to ensure proper oversight and accountability in handling depositors' money. The lower limit ensures shared responsibility while the upper limit prevents excessive diffusion of control.

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 generally optional, not compulsory. However, an unregistered firm faces certain disabilities - it cannot enforce contractual rights in court. The option to register provides evidentiary benefits and avoids these limitations, but is not mandatory for existence.

Multiple choice

A joint Hindu family business is governed by the principles of Hindu law.

  1. True

  2. False

  3. Partly true

  4. Cannot say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Joint Hindu Family business is indeed governed by Hindu law principles, not by the Indian Partnership Act. This is a distinct business structure recognized under Hindu law, with different rules governing formation, operation, and dissolution compared to partnership firms.