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Formation of a Company Class 11 MCQs Questions with Answers
Formation Of A Company Class 11 MCQ Ch 7 Question 1.
Preliminary Contracts are
(a) binding on the Company
(b) binding on the Company, if ratified after incorporation
(c) binding on the Company, after incorporation
(d) not binding on the Company
Answer
Answer: (d) Not binding on the Company
Formation Of Company Class 11 MCQ Chapter 7 Question 2.
Stages in the formation of a public company are in the following order
(a) Promotion, Commencement of Business, Incorporation, Capital Subscription
(b) Incorporation, Capital Subscription. Commencement of Business, Promotion
(c) Promotion, Incorporation, Capital Subscription, Commencement of Business
(d) Capital Subscription, Promotion, Incorporation, Commencement of Business
Answer
Answer: (c) Promotion, Incorporation, Capital Subscription, Commencement of Business
Question 3.
A proposed name of Company is considered undesirable if
(a) It is identical with the name of an existing company
(b) It resembles closely with the name of an existing company
(c) It is an emblem of Government of India, United Nations etc.
(d) In case of any of the above
Answer
Answer: (d) In case of any of the above
Question 4.
Minimum number of members to form a public company is
(a) 5
(b) 7
(c) 12
(d) 21
Answer
Answer: (b) 7
Question 5.
The company needs to obtain prior permision from central government when it changes the address of its registered office from
(a) one city to another city
(b) with in the same city
(c) one state to another
(d) one country to another country
Answer
Answer: (c) one state to another
Question 6.
A person cannot hold directorship in more than ____ public companies
(a) 3
(b) 10
(c) 20
(d) 7
Answer
Answer: (c) 20
Question 7.
Powers, rights, remuneration, qualification and duties of directors are discussed clearly in
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) none of the above
Answer
Answer: (b) Articles of Association
Question 8.
__________ means the total amount of called up capital on the shares issued and subscribed by the shareholders on capital account.
(a) Called-up capital
(b) subscribed capital
(c) nominal capital
(d) Paid-up capital
Answer
Answer: (a) Called-up capital
Question 9.
_____________ share capital has priority both in repayment of dividend as well as capital.
(a) Equity
(b) non preference
(c) Preference
(d) all of the above
Answer
Answer: (c) Preference
Question 10.
Par value of shares means the __________ value of the shares
(a) Actual
(b) face
(c) Market
(d) dividend
Answer
Answer: (b) face
Question 11.
The Prospectus must be issued to the public within ______________ days of its date
(a) 30
(b) 60
(c) 90
(d) 100
Answer
Answer: (c) 90
Question 12.
A copy of the ________________ must accompany each from of application for shares offered to the public.
(a) Memorandum of association
(b) Prospectus
(c) Articles of association
(d) None of the above
Answer
Answer: (b) Prospectus
Question 13.
___________ cannot give invitation to the public to subscribe for any shares in or debentures of the company
(a) Subsidiary company
(b) Statutory Company
(c) Private company
(d) Registered company
Answer
Answer: (c) Private company
Question 14.
A private company means a company which has a minimum paid up capital of Rs.————-
(a) 1,00,000
(b) 5,00,000
(c) 50,00,000
(d) none of the above
Answer
Answer: (a) 1,00,000
Question 15.
The shares of a _______________ company can be freely transferable
(a) Private ltd
(b) Public ltd
(c) Partnership
(d) all of the above
Answer
Answer: (b) Public ltd
Question 16.
“Men may come and men may go but the company exist”- this explains which characteristics of the company as per companies Act 1956
(a) Separate legal entity
(b) Perpetual Succession
(c) Capacity to sue
(d) None of the above
Answer
Answer: (b) Perpetual Succession
Question 17.
Which of the following clause of Memorandum of Association cannot be altered
(a) Name
(b) Object
(c) situation
(d) liability
Answer
Answer: (d) liability
Question 18.
Which of the following is not a clause of memorandum of association
(a) situation
(b) capital
(c) subscription
(d) directors
Answer
Answer: (d) directors
Question 19.
The company will be considered as separate person and different from its members from the date (when the) _____________
(a) start of business
(b) Apply for registration
(c) receive incorporation certificate
(d) mentioned in certificate
Answer
Answer: (d) mentioned in certificate
Question 20.
The certificate of capital will be issued by
(a) Registrar of companies Act
(b) Controller of companies Act.
(c) Registrar of capital issues
(d) controller of capital issues
Answer
Answer: (d) controller of capital issues
Question 21.
A statement of nominal capital must be given at the time of incorporation by the company when the share capital is less than
(a) 50 Lakh
(b) 1 crore
(c) 10 Lakh
(d) 25 Lakh
Answer
Answer: (d) 25 Lakh
Question 22.
The address of the registered office of the company must be notified to the registrar within _________ days of registration, if it is not done at the time of incorporation
(a) 15
(b) 30
(c) 60
(d) 45
Answer
Answer: (b) 30
Question 23.
The application for registration of a company should be presented to the _______________ of the state appointed under Companies Act 1956
(a) Controller
(b) registrar
(c) Governor
(d) registration officer
Answer
Answer: (b) registrar
Question 24.
Minimum number of members required to apply for incorporation certificate in a public ltd company is
(a) 3
(b) 2
(c) 7
(d) 50
Answer
Answer: (c) 7
Question 25.
Preliminary Contracts are signed
(a) Before the incorporation
(b) After incorporation but before capital subscription
(c) After incorporation but before commencement of business
(d) After commencement of business
Answer
Answer: (a) Before the incorporation
Question 26.
A prospectus is issued by
(a) A private company
(b) A public company seeking investment from public
(c) A public enterprise
(d) A public company
Answer
Answer: (b) A public company seeking investment from public
Question 27.
Application for approval of name of a company is to be made to
(a) SEBI
(b) Registrar of Companies
(c) Government of India
(d) Government of the State in which Company is to be registered
Answer
Answer: (b) Registrar of Companies
Question 28.
Minimum number of members to form a private company is
(a) 2
(b) 3
(c) 5
(d) 7
Answer
Answer: (a) 2
Question 29.
Private company prohibits any invitation or acceptance of deposits from persons other than its ___________
(a) Members
(b) directors
(c) Partners
(d) banks
Answer
Answer: (a) Members
Question 30.
A company is known as the _______company of another company if it has control over that other company.
(a) subsidiary
(b) holding
(c) controlling
(d) statutory
Answer
Answer: (b) holding
Question 31.
For example Par value is Rs10 and it is issued at Rs15 then Rs5 is the ___________ amount
(a) Profit
(b) Market value
(c) dividend
(d) premium
Answer
Answer: (d) premium
Question 32.
__________ means the total amount of called up share capital which is actually paid to the company by the members
(a) nominal capital
(b) reserve capital
(c) called up capital
(d) Paid-up capital
Answer
Answer: (d) Paid-up capital
Question 33.
The dividend payable to ___________ share holders is payable on fixed figure or percent
(a) Equity
(b) non preference
(c) Preference
(d) all of the above
Answer
Answer: (c) Preference
Question 34.
_______________ capital means the sum mentioned in the capital clause of Memorandum of Association
(a) Full capital
(b) Maximum capital
(c) share capital
(d) Nominal Capital
Answer
Answer: (d) Nominal Capital
Question 35.
If the company can make arrangements for raising the capital privately so that pubic appeal is unnecessary, the company is required to prepare a _________________
(a) Prospectus
(b) statement in lieu of Prospectus
(c) certificate of Prospectus
(d) none of the above
Answer
Answer: (b) statement in lieu of Prospectus
Question 36.
A Government Company means any company in which not less than 51% of the paid-up share capital is held by
(a) Central Government
(b) State government
(c) Both a & b
(d) Neither a nor b
Answer
Answer: (c) Both a & b
Question 37.
A private company means a company which has a minimum paid up capital of Rs.————-
(a) 1,00,000
(b) 5,00,000
(c) 50,00,000
(d) none of the above
Answer
Answer: (b) 5,00,000
Question 38.
_________ are the company created by special act of the legislature
(a) Registered company
(b) Public Ltd Company
(c) Private ltd company
(d) Statutory company
Answer
Answer: (d) Statutory company
Question 39.
The liability of the members of the company can be limited by
(a) Share
(b) Guarantee
(c) Both a & b
(d) Neither a nor b
Answer
Answer: (c) Both a & b
Question 40.
When the registered office of a company is changed within a city then it has to be intimated to the registrar within ________ days of such change
(a) 60
(b) 45
(c) 30
(d) 7
Answer
Answer: (c) 30
Question 41.
If a company is instructed to change its name which resembles the name of an existing company then the company can change the name by
(a) Passing a special resolution
(b) obtaining permission from central government
(c) Passing an ordinary resolution
(d) Both a & b
Answer
Answer: (c) Passing an ordinary resolution
Question 42.
Number of clauses in Memorandum of Association is
(a) 5
(b) 6
(c) 7
(d) 8
Answer
Answer: (b) 6
Question 43.
The articles of association needs to be signed by
(a) all proposed directors
(b) registrar
(c) subscribers of memorandum
(d) none of the above
Answer
Answer: (c) subscribers of memorandum
Question 44.
If the proposed nominal capital is more than 25 lakh at the time of incorporation then the company needs to submit ________________ along with the application
(a) statement of capital
(b) certificate of incorporation
(c) certificate of capital
(d) certificate of incorporation
Answer
Answer: (c) certificate of capital
Question 45.
Among the following which documents are not mandatory to be submitted to the registrar along with incorporation application by a private company.
(a) Address of Registered office & undertaking
(b) Undertaking and statement of capital
(c) statement of capital & list of directors
(d) list of directors and statement of capital
Answer
Answer: (a) Address of Registered office & undertaking
Question 46.
Number of documents to be submitted, by a public ltd company, to the registrar while applying for incorporation of the company is
(a) 3
(b) 2
(c) 7
(d) 50
Answer
Answer: (c) 7
Question 47.
The application for registration of a company should be presented to the registrar of the state in which the _______________ of the company is to be situated
(a) Manufacturing plant
(b) first branch
(c) business office
(d) any of the above.
Answer
Answer: (c) business office
Question 48.
Section 12 of Companies Act 1956, deals with
(a) Incorporation
(b) Share capital
(c) Number of Directors
(d) Share holders
Answer
Answer: (a) Incorporation
True/False Questions
1. It is necessary to get every company incorporated, whether private or public.
Answer
Answer: True
2. Statement in lieu of prospectus can be filed by a public company going for a public issue.
Answer
Answer: True
3. A private company can commence business after incorporation.
Answer
Answer: True
4. Experts who help promoters in the promotion of a company are also called promoters.
Answer
Answer: False
5. A company can ratify preliminary contracts after incorporation.
Answer
Answer: False
6. If a company is registered on the basis of fictitious names, its incorporation is invalid.
Answer
Answer: False
7. ‘Articles of Association’ is the main document of a company.
Answer
Answer: False
8. Every company must file Articles of Association.
Answer
Answer: Flase
9. A provisional contract is signed by promoters before the incorporation of the company.
Answer
Answer: False
10. If a company suffers heavy issues and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.
Answer
Answer: False
One Mark Questions
1. Mention minimum and maximum number if members in private company. Minimum of two members and maximum is
Answer
Answer: fifty
2. Mention minimum and maximum number of members in public company.
Answer
Answer: Minimum of seven members and maximum is unlimited.
3. Which type of company issue prospectus?
Answer
Answer: Public Company issue prospectus.
4. Is it necessary to get company incorporated?
Answer
Answer: Yes.
5. At what stage private company a can commence its business.
Answer
Answer: A private company can commence its business after getting incorporation certificate.
6. ‘ Which is the main document of Joint Stock Company?
Answer
Answer: Memorandum of Association and Article of Association are the main documents of Joint Stock Company.
7. Name two stages in formation of company.
Answer
Answer: (a) Promotion
(b) Incorporation
8. Mention two certificates required for Joint Stock Company.
Answer
Answer: (a) Incorporation certificate
(b) Commencement of Business Certificate.
9. What is Article of association?
Answer
Answer: Article of association are the rules regarding internal management of a company.
10. Mention any one type of Joint Stock Company.
Answer
Answer: Public company is one of the type of Joint Stock Company
11. Name the company in which shares are freely transferable.
Answer
Answer: Public company shares are freely transferable.
12. State the minimum capital required in public companies.
Answer
Answer: Public companies should have a minimum Paid up capital of Rs.5,00,000.
13 State the minimum capital required in private companies.
Answer
Answer: Private companies should have a minimum Paid up capital of Rs. 1,00,000.
14. Mention any one function of promoters.
Answer
Answer: Identification of Business Opportunity
15. What are qualification shares?
Answer
Answer: It refers to the requirement that a member of the board must hold a vested interest in the operation of the enterprise in the form of company stock.
16. At what stage public company can start its business?
Answer
Answer: After getting commencement of business certificate a public company can start its business
17. Name the act which governs Joint Stock Companies in India.
Answer
Answer: Company act of 1956.
18. How many members have to sign the Memorandum of Association in public limited companies?
Answer
Answer: At least 7 members have to sign the Memorandum of Association in public limited companies
19. How many members have to sign the Memorandum of Association in private limited companies?
Answer
Answer: At least 2 members have to sign the Memorandum of Association in public limited companies
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