COMPANY LAW AND

PRACTICE
TEST 1.
MM-60

Q1. The persons who sign the

Memorandum of Association of a
company are called:

a)Shareholders

b)Directors

c)Subscribers to Memorandum of
Association

d)Promoters
2. A company being a legal
person is also a citizen under the
Constitution of India
(a) True
(b) False
(c) Partly True
(d) Partly False

3. In case of a company limited

by guarantee, the liability of the
members can be enforced

(a) At any time when the

company so decides

(b) Only at the time of winding up

of the company

(c) Only by an order of court

(d) Only by an order of Registrar

of Companies

4.If at the time of registration, a

company limited by shares does
not file Articles of
Association with the Registrar,
then

(a) The company cannot be

registered without this document

(b) The directors become liable

to be punished with fine at the
rate of 250 for each day during
which the default continues

(c) The company is deemed to

have become a company with
unlimited liability

(d) The company is deemed to

be adopted Table F"
5.On 14th July, the Registrar of
Companies issued a Certificate
of

Incorporation, but it was dated

10th July instead of 14th July.
From which
date the company will legally
come into existence?

(a) 10th July

(b) 14th July
(c) 31stJuly
(d) None of these

6. A company comes into

existence when

(a) the memorandum of

association is signed by the
required number of members.

(b) the memorandum of

association' is submitted for
registration to the Registrar of
Companies.
(c) lt is registered under the
Companies Act, 2013.

(d) It establishes its registered

office and
starts functioning there form.

7. Which of the following

statements is correct ?

(a) In limited companies, the

liability of members holding fully
paid up shares is nil.

(b) In companies limited by

guarantee, the liability of
members is limited to the amount
which they have agreed to pay.

(c) Both (a) and (b) are correct.

(d) None of these is correct.

8. Which of the following

statements is correct ?

(a) The memorandum and

articles' are binding on the
members in their relation to the
company.
(b) The memorandum and
articles are binding on the
company in their relation to the
members.

(c) None of these is true

(d) Both of these are true

9. If company does not follow the

principle of separate legal
entity------------------can be done.

(a) Lifting of corporate veil

(b) Principle of equity
(c) Principle of natural justice
(d) All of above
10. Any Corporate
Body/Association of Firm can be
appointed as director of the
company. This statement is:

(a) True
(b) False
(c) Partly True
(d) Partly False

11. 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

NCLT
12. The total managerial
remuneration to the directors and
the manager in respect of any
financial year must not exceed
_________ percent of the net
profit.

(a)one
(b)three

(c)eleven

(d) ten

13. A directors election takes

place in a general meeting
through a separated Resolution
passed by a _______ majority

(a) single
(b)Two-thirds
(c)three-fourths
(d) five-sixths .

14. Mark out the document that

need not be prepared and
registered with the registrar of
companies in public limited
companies.

(a)statutory declaration
(b)memorandum of association .

(c)articles of association .

(d) directors undertakings to take

up and pay for qualification
shares

15. The name of a company can

be changed by__________.

(a) an ordinary resolution

(b)a special resolution

(c) the approval of the union

government
(d) a special resolution and with
the approval of the central
government

16. What is known as a charter

of a Company?
(a)Memorandum of Association

(b) Bye laws

(c)Articles of Association
(d)Prospectus

17. . 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

18. Which of the following

companies need not have their
own articles of Association?
(a)unlimited companies.
(b)Companies limited by
guarantee
(c)Private companies limited by
shares.
(d)Public companies limited by
shares.
 19.Under the companies act,
which of the following powers
can be exercised by the board of
directors?

Ÿ [A] Power to sell any of the

companies undertaking

Ÿ [B] Power to make call.

Ÿ [C] Power to borrow money in

excess of the paid up capital.

Ÿ [D] Power to reappoint on auditor

20. The existence of a joint stock

company is interrupted by
______________.

(a) the death of its members

(b) the death of its directors.
(c)the death or insolvency of its
manigins; director
(d)none of these

21. Explain the provisions of the

Companies Act, 2013 relating to
'secretarial audit'. State whether
'secretarial audit' is mandatory
for all companies.
4

22. As a company secretary

referring to the provisions of
Companies Act, 2013 examine
the validity of following
propositions:

(a) A company wishes to call its

annual general meeting on a
working day at 6.30 p.m.
(b) Due to the availability of
chairman, the AGM of the
company can be held only on
15th August, 2018. All members
are ready to give consent in
writing in advance for the same.
(c) Due to technical problem,
company wants to hold its AGM
at a city other than a city at which
registered office of the company
is situated.

(1+2+1= 4 marks)
23. XYZ Limited has office
building in London. The company
has been granted a term loan of
15 crore from a Bank. The
company wants to mortgage
office building of London.
Examining the provisions of the
Companies Act, 2013, answer
the following:
(1) Whether the company can
mortgage the above office
building?

(2) Whether a charge can be

created for property situated
outside India?

(4 marks)
24. Can a Private Limited
Company and a banking
company accept deposits from
the members freely?
(4 marks)

25 HIJ Engineers Ltd. has a

paid-up capital of 20 lakh, Free
Reserves of * 3 lakh and
Securities Premium of 2 lakh. It
has granted a loan of 14 lakh to
KLM Traders Ltd. The Board of
Directors is proposing the
following transactions without
securing approval of the
members:
(1) Sanctioning a loan of 2 lakh
to KLM Cement Ltd. and
(II) Sanctioning a loan of 3 lakh
to an employee of the company.

Can the Board of Directors

sanction the aforesaid loans?
(4 marks)

26. Extra Power Ltd. desires to

appoint an additional director on
its Board of directors. The
Articles of Association of the
company confer upon the Board
to exercise the power to appoint
such a director. As such Mohan
is appointed as an additional
director on 12th December,
2020. The 5 Annual General
Meeting of the company was
scheduled to be held on 17
September, 2021; however, the
meeting was adjourned to and
held on 30 September, 2021.
Decide the date up to which
Mohan can continue as an
additional director in Extra Power
Ltd. ?
(5 marks)

27. The Board of Directors of

Peculiar Ltd. proposes to

recommend a final dividend of 25

each to
all the equity shareholders of the
company. The company seeks
your opinion on the following:

(1) The company wants to

deposit the dividend amount to
co-operative bank

(2) The company is a defaulter in

the repayment of deposits and
proposes to repay its all deposit
after the payment of dividend
within 10 days. (3) Dividend will
be declared out of the capital
reserves of the company.

(4) The company wants to pay

such dividend through the cash
counter by way of cash voucher.
28. Manish, a director of PQR
Ltd., defaulted in filing financial
statements and annual return
with the Registrar of Companies
for a continuous period of three
financial years ended 31 March,
2012. Based on the provisions of
the Companies Act, 2013,
validate the following:

(Whether Manish can continue to

be a director of PQR Ltd. when
he is also a director in UV Ltd.?
Also narrate whether he can be
reappointed in PQR Ltd. as well
as in UV Ltd.

If the defaulting company is a

private limited company, what
would be your answer?

29. A has been appointed as a

Company Secretary in the
Company by a circular
resolution. In addition, he has
also been advised to act as a
Group Company Secretary and
head of the parent Company and
its subsidiary. Examine with
reference to the provisions of the
Act. (4 marks)