Company Law MCQ Quiz - Objective Question with Answer for Company Law - Download Free PDF

Key Points Company - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

Important Points Memorandum of Association -

• A legal document known as the Memorandum of Association outlines the reason the firm was founded.
• It outlines the company's authority and the circumstances under which it must function.
• It is a document that outlines all the guidelines that direct how a business interacts with the outside world.
• It is a foundation on which the company is made.
• The entire structure of the company is detailed in the Memorandum of Association.
• It is the company charter, a crucial document that outlines the fundamental terms on which the business was founded.

Company Law Question 2:

1. Shareholders
2. Directors
3. Subscribers to Memorandum of Association
4. Promoters

Answer (Detailed Solution Below)

Company Law Question 2 Detailed Solution

The correct answer is Subscribers to Memorandum of Association.

Key Points

• Simply said, a company's charter or bylaws are contained in its memorandum of association.
• Memorandum is defined as "memorandum of organisation of a company as originally established or as revised from time to time in pursuance of any earlier company law or of this Act" under the Companies Act of 2013.

Important Points

• Each member must print and sign the memorandum of association (7 members in case of Public Company and 2 in case of Private Company and 1 in case of One Person Company).
• A minimum of one witness who will verify the subscribers' signatures must be present when the memorandum is signed.
• In the case of a one-person business (OPC), the Memorandum of Association must include the nominee's name. The nominee will take over as a member of the company in the event of death or incapacity.

Company Law Question 3:

1. Articles of Association
2. Prospectus
3. Memorandum of Association
4. None of the above

Answer (Detailed Solution Below)

Company Law Question 3 Detailed Solution

The correct answer is Memorandum of Association.

Key Points

• Memorandum of Association is the company's principal constitutional document.
• When a corporation is established, one of at least two founder members must draw it up and sign it.
• It must include the name and address of the company's registered office, the reasons for the company's formation, the amount of authorised capital, if any, and, if applicable, whether the company is a limited (or public limited) company.

Important Points

1. The Memorandum of Association, which outlines information about the policies, plans, and securities issued by the firm, must be registered before it can be officially established.
2. Every firm must register its Memorandum of Association since it serves as the foundation for all businesses and outlines all of the important information about them, including their core values and motivations, which must be made clear prior to incorporation.
3. So, before the company is incorporated, a copy of the Memorandum of Association needs to be registered.

Additional Information

Article of Association: The "constitution of a firm" might be referred to as the articles of association (AoA).

• It specifies the guidelines that specify a company's internal operations.
• The organization's purpose and tactics for achieving its short- and long-term objectives are stated in the articles of association, which are also thought of as a user's guide for the organisation.
• The AoA typically contains information on a company's legal name, address, purpose, equity capital, organisational structure, financial provisions, and shareholder meeting provisions.

Prospectus: A prospectus is a written or printed statement made by or on behalf of a corporation that provides details about the character, nature, and intent of a share, bond, or other corporate securities offering and invites the public to buy the securities.

Company Law Question 4:

1. Internal rules of the Company
2. Guidelines for Board of Directors
3. Agreement between Company and Board of Directors
4. Charter of the Company

Answer (Detailed Solution Below)

Company Law Question 4 Detailed Solution

The correct answer is Charter of the Company.

Key Points Company - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

Important Points Memorandum of Association -

• A legal document known as the Memorandum of Association outlines the reason the firm was founded.
• It outlines the company's authority and the circumstances under which it must function.
• It is a document that outlines all the guidelines that direct how a business interacts with the outside world.
• It is a foundation on which the company is made.
• The entire structure of the company is detailed in the Memorandum of Association.
• It is the company charter, a crucial document that outlines the fundamental terms on which the business was founded.

Company Law Question 5:

The liquidator after realizing the assets of the company should distribute the proceeds among below mentioned claimants in the following order: (A) Legal charges (B) Liquidators remuneration and cost of expenses of winding up (C) Workman's dues and claims of the secured creditors (D) Preferential creditors and creditors secured by floating charge (E) Unsecured creditors Choose the correct answer from the options given below:

1. (B), (C), (A), (D), (E)
2. (D), (C), (B), (A), (E)
3. (A), (B), (C), (D), (E)
4. (B), (C), (E), (A), (D)

Answer (Detailed Solution Below)

Company Law Question 5 Detailed Solution

The correct answer is (A), (B), (C), (D), (E)

Key Points Liquidation of Company

• Liquidation is the process through which a debt-ridden firm shuts down operations and sells its assets to pay off its debts and other commitments.
• A corporation is liquidated when it is determined that it is unable to continue operating.
• This could be owing to a variety of factors, including insolvency (which is usually the primary reason), unwillingness to continue operations, and so on.
• When a business goes bankrupt, the liquidator sells the company's assets to pay off all debts.
• After repaying the creditors, the remaining positive balance is transferred to the company's shareholders.
• When there is liquidation of a company, one or more persons are required to be appointed specially for conducting the liquidation or winding up proceedings of the company. Such a person’s are called Liquidator’s. He is required to realise the assets, discharge the liabilities and distribute the surplus, if any among shareholders.

Important Points The liquidator after realizing the assets of the company should distribute the proceeds among below-mentioned claimants in the following order:

• Legal charges - The insolvency resolution process costs and the liquidation costs paid in full
• Liquidators remuneration and cost of expenses of winding up
• Workman's dues and claims of the secured creditors - Wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date.
• Preferential creditors and creditors secured by floating charge - debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52 of Insolvency Code, 2016.
• Unsecured creditors - Then the Financial debts owed to unsecured creditors are settled
• Any remaining debts and dues.
• Preference shareholders, if any, and
• Equity shareholders or partners, as the case may be.

Top Company Law MCQ Objective Questions

Company Law Question 6

1. A licensed Certifying Authority (CA) issues the digital signature.
2. The certifying authorities are authorised to issue a Digital Signature Certificate with a validity of one or two years.
3. Director Identification Number (DIN) is a pre-requisite to obtain a Digital Signature.
4. Digital signatures are legally admissible in a court of law.

Answer (Detailed Solution Below)

Company Law Question 6 Detailed Solution

The correct answer is Director ​Identification Number (DIN) is a pre-requisite to obtain a Digital Signature.

Key Points

• Statement 3 is false:
  • Director Identification Number (DIN) will be a pre-requisite only for filing certain company-related documents not to obtain a Digital signature.
  • Director Identification Number (DIN) is a unique identification number for an existing director or a person intending to become the director of a company.

  

  Additional Information

  • Statement 1 is true:
    • Certifying Authorities (CA) has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.
    • One can procure Class 2 or 3 certificates from any of the certifying authorities.
    • The Certifying Authorities are authorized to issue a Digital Signature Certificate (DSC) with a validity of one or two years.
    • The maximum period for which the DSC is issued is only two years.
    • On the expiry of the term, the Digital Signature Certificate can be revalidated by paying the fees again.
    • Digital signatures issued by licensed Certifying Authorities are legally valid in a court of law as per the IT Act, 2000.
    • Under Section 2(p) and Section 3 of the Act, digital signatures are considered reliable, legal, and secure because digital signatures employ hash functions and cryptosystems for electronic records.

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    Company Law Question 7

    The persons who sign the Memorandum of Association of a company are called:
    1. Shareholders
    2. Directors
    3. Subscribers to Memorandum of Association
    4. Promoters

    Answer (Detailed Solution Below)

    Option 3 : Subscribers to Memorandum of Association

    Company Law Question 7 Detailed Solution

    The correct answer is Subscribers to Memorandum of Association.

    

    Key Points

    • Simply said, a company's charter or bylaws are contained in its memorandum of association.
    • Memorandum is defined as "memorandum of organisation of a company as originally established or as revised from time to time in pursuance of any earlier company law or of this Act" under the Companies Act of 2013.

    

    Important Points

    • Each member must print and sign the memorandum of association (7 members in case of Public Company and 2 in case of Private Company and 1 in case of One Person Company).
    • A minimum of one witness who will verify the subscribers' signatures must be present when the memorandum is signed.
    • In the case of a one-person business (OPC), the Memorandum of Association must include the nominee's name. The nominee will take over as a member of the company in the event of death or incapacity.

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    Company Law Question 8

    Memorandum of Association is/are
    1. Internal rules of the Company
    2. Guidelines for Board of Directors
    3. Agreement between Company and Board of Directors
    4. Charter of the Company

    Answer (Detailed Solution Below)

    Option 4 : Charter of the Company

    Company Law Question 8 Detailed Solution

    The correct answer is Charter of the Company.

    

    Key Points Company - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

    

    Important Points Memorandum of Association -

    • A legal document known as the Memorandum of Association outlines the reason the firm was founded.
    • It outlines the company's authority and the circumstances under which it must function.
    • It is a document that outlines all the guidelines that direct how a business interacts with the outside world.
    • It is a foundation on which the company is made.
    • The entire structure of the company is detailed in the Memorandum of Association.
    • It is the company charter, a crucial document that outlines the fundamental terms on which the business was founded.

    Share on Whatsapp

    India’s #1 Learning Platform Start Complete Exam Preparation Daily Live MasterClasses Practice Question Bank Mock Tests & Quizzes Trusted by 6.1 Crore+ Students

    Company Law Question 9

    Every company has to file with registrar, a copy of
    1. Articles of Association
    2. Prospectus
    3. Memorandum of Association
    4. None of the above

    Answer (Detailed Solution Below)

    Option 3 : Memorandum of Association

    Company Law Question 9 Detailed Solution

    The correct answer is Memorandum of Association.

    

    Key Points

    • Memorandum of Association is the company's principal constitutional document.
    • When a corporation is established, one of at least two founder members must draw it up and sign it.
    • It must include the name and address of the company's registered office, the reasons for the company's formation, the amount of authorised capital, if any, and, if applicable, whether the company is a limited (or public limited) company.

    

    Important Points

    1. The Memorandum of Association, which outlines information about the policies, plans, and securities issued by the firm, must be registered before it can be officially established.
    2. Every firm must register its Memorandum of Association since it serves as the foundation for all businesses and outlines all of the important information about them, including their core values and motivations, which must be made clear prior to incorporation.
    3. So, before the company is incorporated, a copy of the Memorandum of Association needs to be registered.

    

    Additional Information

    Article of Association: The "constitution of a firm" might be referred to as the articles of association (AoA).

    • It specifies the guidelines that specify a company's internal operations.
    • The organization's purpose and tactics for achieving its short- and long-term objectives are stated in the articles of association, which are also thought of as a user's guide for the organisation.
    • The AoA typically contains information on a company's legal name, address, purpose, equity capital, organisational structure, financial provisions, and shareholder meeting provisions.

    Prospectus: A prospectus is a written or printed statement made by or on behalf of a corporation that provides details about the character, nature, and intent of a share, bond, or other corporate securities offering and invites the public to buy the securities.