PRACTICE MCQS (CORPORATE LAW)

Q1. To whom shall the application for Director Identification Number (DIN) be filed
with?

a. Central Government

b. Registrar

c. State Government

d. Both a and b

Q2. Which one of these is a disqualification for a person to be appointed as a Director?

a. Having the age of 62 and above

b. Previous conviction of 3 months for moral turpitude

c. Unpaid calls on share and 4 months have elapsed

d. Convicted of the offence dealing with related party transaction under sec 188 in preceding
last five years.

Q3. What is the maximum number of directors in a company without passing special
resolution?

a. 12

b. 20

c. 15

d. 25

Q4. Which option stands true and mandatory for an Independent Director?

a. Is holding any security of or interest in the company, its holding, subsidiary or associate
company during the two immediately preceding financial years or during the current financial
year

b. Has given a guarantee or provided any security in connection with the indebtedness of any
third person to the company, its holding, subsidiary or associate company or their promoters,
or directors of such holding company, for such amount as may be prescribed during the two
immediately preceding financial years or during the current financial year

c. Who is or was not a promoter of the company or its holding, subsidiary or associate
company

d. Has any other pecuniary transaction or relationship with the company, or its subsidiary, or
its holding or associate company amounting to two per cent. or more of its gross turnover

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Q5. How many Directors retire by rotation in each general meeting?

a. Two-third

b. One-third

c. Half

d. One-fourth

Q6. A person “A” is a Director of 12 public companies and 15 private companies,

however 8 public companies are dormant and he is alternate director in 4 companies. Is
he permitted to do this under the Act?

a. Yes, as maximum directorships of public companies are 20

b. No, as the maximum directorships exceeds 20.

c. Yes, as the directorships are within 20

d. No, as the public companies exceed 10.

Q7. When a Director’s office does stand vacant?

a. he absents himself from all the meetings of the Board of Directors held during a period of
six months with or without seeking leave of absence of the Board

b. he is convicted by a court of any offence, whether involving moral turpitude or otherwise

and sentenced in respect thereof to imprisonment for not less than three months

c. he becomes disqualified by an order of a court or the Tribunal, and where an appeal or

petition is preferred within thirty days as aforesaid against the conviction resulting in
sentence or order, until expiry of seven days from the date on which such appeal or petition is
disposed of

d. he fails to disclose his interest in any contract or arrangement in which he is directly or

indirectly interested, in contravention of the provisions of section 184

Q8. Till when does an additional director hold his office?

a. Upto 5 years

b. Upto retirement by rotation

c. Upto next annual general meeting

d. Upto next Board meeting

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Q9. What is the minimum number of Resident Director to be appointed on the Board of
Director?

a. One

b. Two

c. Five

d. Three

Q10. When and under which section does a Director have to disclose his Director
Identification Number to the Company?

a. Sec 156, One month

b. Sec 149, 15 days

c. Sec 156, 15 days

d. Sec 152, 10 days

Q11. After how many days after incorporation a company must hold its Annual
General Meeting?

a. Nine months

b. One year

c. Six months

d. Three months

Q12. Board of Karawan Ltd. seeks to appoint Mr. Karan as Alternate Director of Mr.
Kiran, an Independent Director. What is the basic requirement?

a. Shall not be an Individual rejected by the Company

b. The individual so proposed shall also be eligible to be appointed as Independent Director.

c. Board can appoint only if AOA gives power.

d. All of above

Q13. ……….is the proper authority to call annual general meeting

a. promoters 
b. manager
c. board of directors 
d. secretary

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Q14. A general meeting may be called after giving shorter notice than that specified in
this sub-section if consent, in writing or by electronic mode of how many members?

a. 50%
b. 95%
c. 65%
d. 25%

Q15. Mr. A was a person having property, accounts & papers of company in his
possession and was about to leave India for evading payment of calls or of avoiding
examination affairs of company. The tribunal has the power to detain him and seize his
property under section:

a. sec 300

b. sec 304

c. sec 302

d. sec 301

Q16. Mr. A and Mr. B, members of company ABC Developers Private Limited filed two
different applications under section 245 to the Tribunal requesting suitable action
against the auditor of the company for the improper and misleading statements in audit
report regarding the company. Advice the company on the following application of class
action

a. Both the application shall be filed and proceeded by making it a joint application

b. Two class action applications for the same cause of action shall not be allowed

c. Both the application shall be rejected and filled with the appellate tribunal

d. None of the above

Q17. The Board of directors of Say Limited has indulged in the following acts. Whether
the following acts can be said to be mismanagement:

(i) Not filing documents with Registrar of Companies

(ii) Sale of assets at glaringly low price.

(iii) Violations of provisions of law and of memorandum or articles of association.

(iv) Application of company finances.

a. i), (ii) & (iv) are mismanagement

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b. (ii), (iii) & (iv) are mismanagement

c. (i), (ii) & (iii) are mismanagement

d. All are mismanagement

Q18. Does the following acts by the board amount to oppression?

(i) Denial of inspection of books of accounts.

(ii) Not holding board meeting in timely manner.

(iii) Non declaration of dividend

(iv) Company is incurring looses for last 3 years

a. (i), (ii), (iii) - Amount to oppression

b. (i), (ii)- Amount to oppression

c. (iii), (iv)- Amount to oppression

d. None of the above is oppression

Q19. Rule of majority was established in which case law:

a. Elder v Elder & Watson Ltd.

b. Foss v. Harbottle

c. Shanti Prasad Jain v. Kalinga Tubes

d. Thomas Veddon V. J. v Kuttanad Robber Co. Ltd.

Q20. In which of the following cases majority rule does not prevail?

a. Where the act is ultra vires the company

b. Where the act is illegal to the company

c. Where the act infringes personal rights

d. All of above

Q21. In the case of an annual general meeting, all business to be transacted thereat shall
be deemed special, other than:

a. the consideration of financial statements and the reports of the Board of Directors and
auditors

b. the declaration of any dividend

c. he appointment of, and the fixing of the remuneration of, the auditors

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d. All of above

Q22. Which statement is correct for the quorum of a General Meeting?

a. In case of a public company 10 members, personally present if the number of members as

on the date of meeting is not more than one thousand

b. In case of public company 50 members personally present if the number of members as on

the date of the meeting exceeds five thousand

c. In case of public company 30 members personally present if the number of members as on

the date of the meeting exceeds five thousand

d. In case of public company 75 members personally present if the number of members as on

the date of the meeting exceeds five thousand

Q23. What is the right of a Proxy?

a. Right to speak at the meetings

b. Right to discuss the motion

c. Right to vote on poll

d. Right to every kind of vote at the meetings

Q24. Who has the right to demand poll?

a. in the case a company having a share capital, by the members present in person or by
proxy, where allowed, and having not less than one-tenth of the total voting power or holding
shares on which an aggregate sum of not less than five lakh rupees or such higher amount as
may be prescribed has been paid-up

b. in the case a company having a share capital, by the members present in person or by
proxy, where allowed, and having not less than one-fifth of the total voting power or holding
shares on which an aggregate sum of not less than five lakh rupees or such higher amount as
may be prescribed has been paid-up

c. in the case of any other company, by any member or members present in person or by
proxy, where allowed, and having not less than one-fifth of the total voting power

d. in the case of any other company, by any member or members present in person or by
proxy, where allowed, and having not less than one-twelfth of the total voting power

Q25. Every company shall cause minutes of the proceedings of every general meeting of
any class of shareholders or creditors, and every resolution passed by postal ballot and
every meeting of its Board of Directors or of every committee of the Board, to be
prepared and signed in such manner as may be prescribed and kept within how many
days of the conclusion of every such meeting concerned, or passing of resolution by
postal ballot in books kept for that purpose with their pages consecutively numbered?

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a. 30 days

b. 60 days

c. 15 days

d. 45 days

Q26. Who are the persons who can file petition for winding up of the company?

a. Company & its Contributories

b. The Central Government or State Government
c. Registrar on his own account
d. Both A and B

Q27. For the Registrar who wants to file a petition for winding of a company what are
the Conditions to be fulfilled?

a. Registrar needs to take permission of CG

b. The Company needs to be given opportunity of being heard
c. Registrar can directly approach tribunal
d. Both A and B

Q28. When petition for winding up has been filed before the tribunal, in how many days
should the Company file its objections and Statement of Affairs by an order of the
Tribunal?

a. 15 days
b. 30 days
c. 45 days
d. 60 days

Q29. When a petition for winding up is made to tribunal, the tribunal shall pass its
order within how many days?

a. 90 Days
b. 190 Days
c. 270 Days
d. 360 Days

Q30. The Registrar of Company can approach the central government to accord
sanction to present a petition to the tribunal if financial statements are defaulted for a
period

a. Two consecutive years

b. Four consecutive years
c. Five Consecutive Years
d. Any Five years

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Q31. A scheme of merger or amalgamation may be entered into between two or more
small companies or between a holding company and its wholly-owned subsidiary
company or such other class or classes of companies must be approved by majority
representing what value of the creditors or class of creditors of respective companies
indicated in a meeting convened by the company?

a. Nine Tenth

b. One-Fourth

c. One-Fifth

c. One half

Q32. Who has the authority to appoint the provisional liquidator?

a. Tribunal

b. Central Government

c. Registrar of Companies

d. None of the above

Q33. Within ……. from the date of passing of winding up order, the Company
Liquidator shall make an application to the Tribunal for constitution of a winding up
committee to assist and monitor the progress of liquidation proceedings by the
Company Liquidator.

a. 3 weeks

b. 15 days

c. 30 days

d. 25 days

Q34. What is the Jurisdiction of the Tribunal?

a. any claim made by or against the company, including claims by or against any of its
branches in India

b. any question of priorities or any other question whatsoever, whether of law or facts,
including those relating to assets, business, actions, rights, entitlements, privileges, benefits,
duties, responsibilities, obligations or in any matter arising out of, or in relation to winding up
of the company

c. any suit or proceeding by or against the company

d. All of the Above

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Q35. What shall not be included in the minutes of the meeting?

a. Which is in the opinion of the Chairman is or could reasonably be regarded as defamatory

of any person;

b. the names of the directors present at the meeting

c. a fair and correct summary of the proceedings thereat

d. in the case of each resolution passed at the meeting, the names of the directors, if any,
dissenting from, or not concurring with the resolution

Q36. The remuneration payable to any one managing director; or whole-time director
or manager shall not exceed..?

a. five per cent. of the net profits of the company and if there is more than one such director
remuneration shall not exceed seven per cent. of the net profits to all such directors and
manager taken together

b. five per cent. of the net profits of the company and if there is more than one such director
remuneration shall not exceed ten per cent. of the net profits to all such directors and manager
taken together

c. ten per cent. of the net profits of the company and if there is more than one such director
remuneration shall not exceed twenty per cent. of the net profits to all such directors and
manager taken together

d. None of the Above

Q37. What is known as a charter of a Company?

a. Memorandum of Association

b. Bye laws

c. Articles of Association

d. Prospectus

Q38 The name of a company can be changed by__________.

a. an ordinary resolution

b. a special resolution

c. the approval of the union government

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d. a special resolution and with the approval of the central government

Q39. A company licenced under section 8 of the Companies Act, 2013 to operate as an
association not-for profit, cannot alter its memorandum or Articles without prior
approval from:

a. Its Members

b. Its Board

c. Central Government

d. Registrar of Companies

Q40. Mark out the type of alteration that is permitted in the articles of association____.

a. that may not be in the companys interest .

b. that is contrary to the provisions of the companies act.

c. that increases a members liability without his written consent .

d. that is consistent with the memorandum of association .

Q41 Liability of a member in case of a private company is

(a) Limited

(b) Unlimited

(c) Both (a) or (b)

(d) None of the above

Q42 A private company enjoys which of the following privileges over a public company:

a. Not required a report on an annual general meeting

b. Not to appoint an independent director

c. Not to appoint more than two directors

d. All of the above

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Q43 The share capital of a company may be reduced by __________.

a. an ordinary resolution

b. a special resolution

c. a resolution of the board of directors

d. obtaining permission from the company law board

Q44 The amount of minimum subscription may be learnt from the ______________.

a. prospectus

b. memorandum of association

c. articles of association

d. records of general meetings

Q45 An exception to the doctrine of constructive notice is____________.

[A] the doctrine of ultra vires .

[B] the doctrine of indoor management .

[C] lifting the corporate veil

[D] the doctrine of ultra vires in Articles of Association.

Q46 A prospectus is to be issued within _______days of registration.

a. 30

b. 60

c. 90

d. 180

Q47 A company is a juristic person with a perpetual succession _____________

a. as such it dies.

b. its life depends on the life of its members.

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c. it is created by a process of law and can be put to an end only by a process of law

d. none

Q48 On a share of Rs. 100 of a company, a shareholder has already paid Rs. 30.His
Liability is now limited to ___________

a. Rs. 100.

b. Rs. 30

c. Rs. 70.

d. Rs.10

Q49 A shareholder purchased in the open market shares of a company whose

prospectus contained some misstatements. He ____________.

a. can rescind the contract only but cannot claim damages

b. can claim damages only but cannot rescind the contract

c. has no remedy against the company

d. has remedy against the directors responsible for the issue of the prospectus

Q50 Share capital of a company means ______________.

a. equity share capital .

b. preference share capital

c. equity and preference share capital .

d. equity and preference share capital and debentures

Q51 Which Doctrine is also known as Turquand Rule?

a. Doctrine of Ultra Vires

b. Doctrine of Indoor Management
c. Doctrine of Constructive notice
d. Doctrine of Intra vires

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Q 52 Which of the following case is an example for lifting of corporate veil by Judiciary
on the grounds of Prevention of Fraud?

a. Daimler company Ltd v. Continental Tyre & Rubber Co.( Great Britain) Ltd
b. Gilford Motor Company v. Horne
c. J.B.Exports Ltd v. BSES RAJDHANI Power Ltd.
d. Jyoti Ltd. V. Kanwaljit Kaur Bhasin

Q 53 An additional clause in Memorandum of Association i.e. Nominee clause is

mandatory in

a. Small Companies
b. Producer companies
c. Private Companies
d. One Person Companies

Q54 For conversion of Private company into Public Company which step is not
required?

a. Increase in no. of members

b. Increase in no. of Directors
c. Passing of a General Resolution
d. Alterations in Articles

Q55 Government Copany is defined under:

a. Section 2(46)
b. Section 2(47)
c. Section 2 (44)
d. Section 2(45)

Q56 Which among the following is wrong in context of a Government Company?

a. In a government company 51% Paid up share capital is held by Central Government

or state Government or together by them
b. Government company can sue and can be sued in its own name
c. Employees of Government Company are the members of government.
d. It can be wound up like any other registered company

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Q 57 Four Stages of Process of Incorporation of a company does not include:

a. Promotion
b. Registration
c. Raising of Capital
d. Winding up

Q58 A Promoter can be made liable for Pre-incorporation contracts under following
Act:

a. Specific Relief Act,1963; Section 15(h) and Sec. 19

b. Specific Relief Act, 1963; Section 15(g) and Sec. 19(h)
c. The Companies Act,2013; Sec. 34 & 449
d. The Companies Act,2013; Sec. 35 & 449

Q59 The provision regarding Commencement of Buisiness is mentioned under

a. Sec. 10
b. Sec 10A
c. Sec 11
d. Sec 11A

Q 60 Lakshmanaswami Mudaliar v. LIC is one of the leading case for

a. Doctrine of Ultra Vires

b. Separate Legal Identity
c. Doctrine of Indoor Management
d. Lifting of Corporate Veil

Q61 Which case is an example to exception to doctrine of indoor management?

a. Royal British Bank v. Turquand

b. Rayfield v. Hand
c. Howard v. Patent Ivory Co.
d. Borland’s Trustee v. Steel Bros. Co. Ltd.

Q62 “A Share is undoubtedly movable property but it is not a movable property in the
same way in which a bale of cloth or bag of wheat is movable property” This was held
in:

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 a. Bucha F. Guzdar v. commissioner of IT, Bombay
b. Vishwanathan v. East India Distilleries
c. Borland’s Trustee v. Steel Bros. Co. Ltd.
d. CIT v. Standard vacuum Oil Co.

Q63 A Public Company can issue Securities through

a. Public Offer
b. Private Placement
c. Either a or b
d. Neither a nor b

Q64 Preference Share can be redeemed as per the provisions of which section of
Companies Act, 2013?

a. Section 55
b. Section 56
c. Section 45
d. Section 46

Q65 Shareholders can have variation of rights as per the provisons of companies act if
the same is consented by:

a. not less than three-fourths of said class share holders

b. not less than 10% of said class share holders
c. not less than 100 of such class share holders
d. not less than two-third of said class share holders

Q66 Which is not true about Bonus shares

a. Bonus shares are free of charge

b. Bonus shares need not to be returned in case of failure of Minimum subscription
c. Bonus shares are always fully paid up
d. Bonus shares may be renounced in favour of his nominee

Q67 A company shall unless otherwise prescribed, make investment through not more
than ……. Layers of investment companies.

a. Two

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 b. Three
c. Four
d. Five

Q68 Which of the following statement is not true about stock?

a. A stock has no nominal value

b. A stock can never be partly paid-up
c. A stock cannot be transferred in fractions
d. Stock may be of different denominations.

Q69 Which is not one of the general Principles of allotment of shares?

a. Allotment must be done by Proper Authority

b. Allotment must be against application only
c. Allotment must be within reasonable time i.e.3 months of application
d. Allotment must be Communicated.

Q70 Ram Lal is a shareholder of a company holding 100 shares. Ram Lal dies leaving
Mohan as his legal representative. Mohan is not a member of the company. Mohan
Transfers all 100 shares of the deceased to Anil.

a. Transfer is valid as Mohan is the LR of Deceased

b. Transfer is not valid as Mohan is not a member of the company
c. Transfer is not valid as Anil is not a member of the company
d. Transfer is not valid because Mohan has not validly registered with the company
the succession of shares in his favour.

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