Test your Knowledge on Companies Act

October 10, 2019

AIBE: Companies Act

Quiz on Companies Act- 1 

1.)As per the Companies Act, a body corporate or corporation does not include which of the following?

  1. A company incorporated in Maharashtra
  2. A company incorporated outside India
  3. A corporation sole
  4. A co-operative society

A.) Both (1) and (2)

B.) Both (1) and (3)

C.) Both (2) and (4)

D.) Both (3) and (4)

2.)Any security which has the character of more than one type of security, including their derivatives is known as a:

A.) Hybrid security

B.) Debenture

C.) Preferred Security

D.) Participating Security

3.) An industrial company which has accumulated losses in any financial year equal to fifty per cent, or more of its average net worth (of the past four years)or has failed to repay its debts in three consecutive quarters on demand made by a creditor is known as –

A.) Defunct Industrial Company

B.) Bankrupt Industrial Company

C.) Sick Industrial Company

D.) Indebted Industrial Company

4.) Company XYZ is a private company, which is a subsidiary of a public company, and has a paid up capital of 8 lakh rupees with a total number of 65 members (not including those in the employment of the company). This makes XYZ a:

A.) Private Company

B.) Listed Company

C.) Limited Company

D.) Public Company

5.) The Company Law Board gave its decision regarding a certain matter involving A and B in January 2013, in favor of B. A, aggrieved by the same, wants to appeal against the order in February 2013.Will his appeal be sustained?

A.) No, one can’t appeal against the decision of the Company Law Board

B.) Yes, if A is aggrieved, he can appeal against the decision to the High Court

C.) No, since the limitation period has expired

D.) He can appeal to the National Company Law Tribunal

6.)As per the Companies Act, the maximum number of people who can form a company, association or partnership for carrying on the business of banking (for an unregistered company) is-

A.) 10

B.) 15

C.) 20

D.) 35


The Memorandum of Association of a Company should be in one of the forms as prescribed in-

A.) Schedule I, Tables A,B,C

B.) Schedule II, Tables F,G,H, I

C.) Schedule I, Tables B,C,D,E

D.) Schedule III, Tables J,K,L

8.) The Memorandum of Association of a Company may be altered in which of the following cases-

A.) to carry on its business more economically or more efficiently

B.) to attain its main purpose by new or improved means

C.) to enlarge or change the local area of its operations

D.) All of the above

9.) Who is authorized to make a certified copy of the order of alteration of Memorandum of Association and what is the limitation period for the registry of the alteration?

A.) Board of Directors; 60 days

B.) Council of Company Secretaries; 90 days

C.) Registrar of Companies; 90 days

D.) Director and Additional Director; 60 days

10.) Section 25 talks about the circumstances where a charitable or other company can drop ‘limited’ from their name. In which of the following cases can this be achieved?

  1. The company is formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object
  2. The company intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members

iii. There is a shuffle in the Board of Directors and the whole management is reconstituted.

A.) Both (i) and (iii)

B.) Both (i) and (ii)

C.) Only (iii)

D.) Both (ii) and (iii)

11.) Which of the following should be in the prescribed format- printed, divided into paragraphs numbered consecutively, and be signed by each subscriber:

A.) Memorandum of Association

B.) Articles of Association

C.) Both (a) and (b)

D.) None of the above

12.) A certificate of incorporation given by the Registrar in respect of any association shall be ________ evidence that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, and that the association is a company authorized to be registered and duly registered under this Act.

A.) supporting

B.) proof

C.) compelling

D.) conclusive

13.) Which of the following is the most apt definition of a member of a company?

A.) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members

B.) Every other person who agrees in writing to become a member of a company and whose name is entered in its register of members, shall be a member of the company

C.) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company

D.) All of the above

14.) When a private company does not comply with provisions in its Articles of Association, then which of the following is the most likely consequence?

A.) The company shall cease to be entitled to the privileges and exemptions conferred on private companies

B.) The company shall be treated like a public company

C.) The company becomes defunct

D.) The company is sued by the Registrar of Companies for the default

15.) The minimum percentage of paid up share capital of a private company that is to be held by one or more bodies corporate for it to be treated as a deemed public company (under section 43 A) is-

A.) 10%

B.) 25%

C.) 50%

D.) 12.5%

16.) LMN is a public company and its has 7 members- A, B, C, D, E, F and G. The company was started in 2004 and in 2006, F, E and G left the company. The company continued to function somehow with A, B, C and D as members till 2008, and they were doing reasonably well. Post 2008, the company’s turnover decreased and it started taking loans to meet its requirements. Who all will be liable for the debts of the company?

A.) All the members- A,B,C,D,E,F,G

B.) Only E, F and G because the condition of the company worsened after they left

C.) A, B, C and D, because they continued to function even after some of the members left

D.) The Board of Directors

17.) Whenever a company having a share capital makes any allotment of its shares, the company shall, within thirty days-

A.) File a return of the allotments with the Registrar

B.) Distribute money to the shareholders

C.) File a return with the Chairman of the Company

D.) Issue shares at a discount

18.) XYZ is company with ZZZ as its subsidiary. Is it possible for ZZZ to buy shares of XYZ?

A.) Yes, there is no problem

B.) No, a subsidiary cannot buy the shares of the holding company

C.) Yes, such a transaction requires a special resolution

D.) No, the transaction will require a special resolution and government approval

19.) True or False: The shares or debentures or interests of any member in a company are immovable property and non-transferable in nature.

A.) True, they are immovable property and non-transferable

B.) True, they are immovable, however, they are transferable

C.) False, they are both movable and transferable

D.) True, they are non-transferable, but they are movable

20.) The two kinds of share capital are:

A.) Preference share capital and Interest share capital

B.) Equity and debentures

C.) Provident share capital and Equity share capital

D.) Equity share capital and Preference share capital

Answer Key on Companies Act- 1 

1.) D 2.) A 3.) C 4.) D 5.) B 6.) A 7.) C 8.) D 9.) C 10.) B 11.) C 12.) D 13.) D 14.) A 15.) B 16.) C 17.) A 18.) B 19.) C 20.) D

Quiz on Companies Act- 2 

1.) One cannot be appointed the Debenture Trustee of a company if he-

A.) beneficially holds shares in the company

B.) is beneficially entitled to moneys which are to be paid by the company to the debenture trustee

C.) has entered into any guarantee in respect of principal debts secured by the debentures or interest thereon.

D.) All of the above

2.)A condition contained in any debentures or in any deed for securing any debentures, whether issued or executed before or after the commencement of the Companies Act, shall not be invalid by reason only that thereby, the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long. This describes-

A.) Perpetual Debentures

B.) Secured Debentures

C.) Redeemable Debentures

D.) Convertible Debentures

3.) Who keeps the register of charges of each company, and maintains an index for the same?

A.) Chairman of the company

B.) Director of the company

C.) HR department of the company

D.) Registrar of companies

4.) A company shall have a registered office to which all communications and notices may be addressed –

A.) From the day it begins to carry on business

B.) From the thirtieth day after its date of incorporation

C.) Either- whichever of the above is earlier

D.) Either- whichever of the above is later

5.) What is the maximum time frame within which every company having a share capital must file a return with the Registrar?

A.) within sixty days from the day on which each of the annual general meetings is held

B.) within thirty days from the day on which each of the annual general meetings is held

C.) within six months from the day on which each of the annual general meetings is held

D.) within three months from the day on which each of the annual general meetings is held

6.)Match the following (use the Companies Bare Act for this)-

  1. Statutory meeting I. Within 15 months
  2. Extraordinary General Meeting II.Between 1-6 months

iii.Annual General Meeting III. On requisition

A.) (i-I) (ii-II) (iii-III)

B.) (i-II) (ii-III) (iii-I)

C.) (i-III) (ii-II) (iii-I)

D.) None of the above

7.) As a general rule, dividends are only to be paid out of:

A.) Budget

B.) Expenses

C.) Profits

D.) Loans

8.) Every company is required to keep at its registered office:

A.) Books of Accounts

B.) Register of Charges

C.) None of the above

D.) Both of the above

9.)A person shall not be qualified for appointment as auditor of a company unless he is a _____________.

A.) Chartered Accountant

B.) Graduate

C.) Economist

D.) Lawyer

10.) Alpha Beta Gamma is a public company with two thousand shareholders and paid up capital of 7 crore rupees. The minimum number of directors that the company should have is-

A.) Three

B.) One

C.) Four

D.) Six

11.) At the Annual General Meeting of a public company, one third of the directors are required to retire by rotation. What is the criterion for deciding the same?

A.) Seniority

B.) Drawing of lots

C.) both a and b

D.) None of the above

12.) What is the time period till the completion of which an Additional Director of a company continues to hold office?

A.) Till one year

B.) Till the next Annual General Meeting of the company

C.) Till one of the directors retire by rotation

D.) Out of the above, whichever takes place before

13.) Which of the following is a not true statement about Director Identification Number?

A.) Every individual, intending to be appointed the Director of a company should make an application to the Government for an Identification Number

B.) An individual can have up to five Director Identification Numbers at a time, not more

C.) A Director should intimate his Director Identification Number to the concerned company/companies

D.) The Director Identification Number should be intimated to the Registrar

14.) Which one of the following is eligible to be appointed as the Managing Director of a company?

A.) A person who is an undischarged insolvent

B.) A person who suspends payments

C.) A person has been employed in the same company for 10 years or more

D.) He has been convicted of an offence of moral turpitude

15.) As per the Companies Act, at one time, a person cannot hold the office of a Director for more than ________ companies.

A.) 10

B.) 20

C.) 5

D.) 2

16.) In the case of every company, a meeting of its Board of directors shall be held at least once in every ______ months and at least _______ such meetings shall be held in every year.

A.) Six, Two

B.) Four, Three

C.) Three, Five

D.) Three, Four

17.) According to section 425 of the Companies Act, winding up of a company may be either _________ or ____________.

A.) Voluntary; by the Court

B.) Involuntary; by the Board of Directors

C.) Due to insolvency; Voluntary

D.) By the Tribunal; by force

18.) In which of the following cases will a company not be wound up by the Tribunal, as under section 433 of the Companies Act?

A.) Company is unable to pay its debts

B.) If the number of members of a public company is below 10

C.) If the Tribunal is of the opinion that the company should be wound up

D.) If the company defaults in holding the Statutory Meeting

19.) Which of the following statements are true, in the context of winding up of companies?

A.) If, in the case of a winding up commenced after the commencement of this Act, the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration, or that period has expired without the debts having been paid in full, he shall forthwith summon a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.

B.) In the event of the winding up continuing for more than one year, the liquidator shall call a general meeting of the company at the end of the first year from the commencement of the winding up, and at the end of each succeeding year

C.) As soon as the affairs of the company are fully wound up, the liquidator shall make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of

D.) All of the above

20.) A company having a permanent paid-up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons is known as a ___________

A.) Limited Stock Company

B.) Joint Stock Company

C.) Transferrable Stock Company

D.) None of the above

21.) According to the Companies Act, a Government company means any company in which not less than _____________ 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 State Governments and includes a company which is a subsidiary of a Government company as thus defined.

A.) 25%

B.) 50%

C.) 51%

D.) 75%

Answers Quiz on Companies Act- 2 

1.) D 2.) A 3.) D 4.) C 5.) A 6.) B 7.) C 8.) D 9.) A 10.) A 11.) C 12.) B 13.) B 14.) C 15.) B 16.) D 17.) A 18.) B 19.) D 20.) B 21.) C

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