BUSINESS LAW - II (MCQS) - Study For Buddies

Thursday, June 10, 2021




1. As per the Companies Act, which of the following are the sources of the dividend?

A) Current years Profit of the Company
B) Undistributed or Accumulated Profits of the previous years.
C) Free Reserves
D) All of the above

2. As per the Companies Act, 2013, declaration of dividends can be declared out of surplus reserves on which of the following conditions ?

A) The amount of declared dividend can’t be more than that of an average rate of dividends which was declared in past 2 years.
B) The amount drawn from the reserves shall not exceed the amount which is equal to 1/10th of the sum paid up capital and free reserves.
C) The remaining balance of the reserve shall not fall below 20% of the paid up capital.
D) B and C

3. Appointment of 1st Auditor in case of government company is made within ______ days from the date of registration ?

A) 15 days
B) 30 days
C) 45 days
D) 60 days

4. The amount in the Unpaid Dividend Account of companies can be transferred to the Fund Investor Education and Protection Fund if it remains unpaid or unclaimed for a period of _____ years?

A) 4
B) 5
C) 6
D) 7

5. What is the procedure for removal of an auditor before the expiry of the term?

A) An ordinary resolution by the board of Directors of the Company.
B) An ordinary resolution by the Shareholders of the Company.
C) Special resolution with the approval by the Central Government.
D) An ordinary resolution by SEBI.

6. According to provisions of Companies Act, 2013 an individual auditor cannot be appointed for more than ____ consecutive years?

A) 4
B) 5
C) 6
D) 7

7. Which of the following is responsible for prescribing the standards of auditing according to Section 143(10) of Companies Act?

A) Central Government
B) National Financial Reporting Authority
C) Institute of chartered Accountants of India
D) B and C

8. Which of the following situations is considered as the casual vacancy in case of the post of an auditor?

A) Vacancy caused by Death
B) Vacancy caused by Disqualification
C) Vacancy caused by expiry of term
D) A and B

9. Section 62 ,Companies Act 2013 mentions about further issue of share capital is applicable to which of the following companies?(1 M)

A) Private Companies.
B) Public Companies.
C) Listed Companies.
D) All of the above

10. Which of the following section of Companies Act,2013 deals with bonus shares ?

A) Section 45
B) Section 52
C) Section 59
D) Section 63

11. Bonus shares shall be issued from which of the following reserves?

A) Capitalizing reserves created by revaluation of assets.
B) Capital Redemption Reserve Account
C) Free Reserves
D) B and C

12. Buyback means repurchase by a company of its own shares. Which of the following is correct with respect to buy back shares?

A) It is exercised to increase the number of shares of a company.
B) It eliminates the threats from shareholders who may be looking for a controlling stake.
C) A company cannot buy back its equity shares.
D) A and B

13. Which of the following are incorrect with respect to debentures?

A) A company may issue debentures with an option to be converted into shares wholly or partly.
B) It can be issued with or without voting rights.
C) A company cannot issue debentures to more than 500 people without appointing a debenture trustee.
D) A and C

14. The power to look into issues of capital reduction of a company vests with which of the following organization?

A) High courts and appeal with Supreme court
B) Supreme Court

15. As per Companies Act 2013, what is maximum tenure of preference shares except for infrastructure projects?

A) 20 years
B) 15 years
C) 10 years
D) 5 years

16. Declaration of Dividend is mentioned in which of the following Sections of Company Act 2013?

A) Section 120
B) Section 121
C) Section 122
D) Section 123

17. Which among the following is correct with respect to Interim Dividend?

A) It is declared during Annual General Meeting.
B) It is recommended by the Directors and approved by the Share Holders.
C) An interim dividend is typically one of two dividends given out by a company that is providing shareholders with income on a semi-annual basis.
D) B and C

18. Preference shareholders have the right to vote in which of the following cases?

A) On every resolution of the company.
B) Resolutions which affect their rights.
C) Resolution for winding up of the company.
D) B and C

19. According to Section 48 of Companies Act,2013, the rights attached to the shares of any class can be varied with the consent of _______ of the shareholders of that class?

A) 1/3
B) 1/2
C) 1/4
D) 3/4

20. Company can issue shares at premium under which of the following sections of CompaniesAct,2013?

A) Section 50
B) Section 49.
C) Section 51.
D) Section 52.

21. Sweat Equity Shares can be issued to which of the following employees?

A) A permanent employee of the company who is working in India.
B) A permanent employee of the company who is working outside India.
C) A director of the company working in the subsidiary of the holding company.
D) All of the above.

22. In case of a unlisted startup company, the sweat equity share should not increase more than _________ of paid up capital up to 5 years from the date of incorporation?

A) 30%
B) 35%
C) 40%
D) 50%

23. CRR is mentioned in Companies Act 2013, What does CRR stand for?

A) Current Redemption Reserve.
B) Cash Reserve Ratio
C) Capital Redemption Reserve
D) Cash Redeemable Reserve

24. Which section of companies act mentions about the transfer and transmission of shares?

A) Section 52
B) Section 53
C) Section 54
D) Section 56

25. Which of the following is the new category of company introduced in Companies Act 2013?

A) Public Private Partnership
B) Two Person Company
C) Limited Liability Partnership
D) One Person Company

26. Which among the following is type of share issued to existing shareholders to increase its subscribed share capital?

A) Bonus Shares
C) Right Issue
D) Preference Shares

27. Which of the following alterations of share capital requires the approval of NCLT(National Company Law Tribunal)?

A) Increase of authorized share capital.
B) Consolidation & division all or any share capital which results in increase in voting percentage of shareholders.
C) Conversion of all or any of the fully paid-up shares into stock.
D) Cancellation of shares.

28. Which of the following is correct with respect to Shelf Prospectus?

A) It does not need a separate prospectus for each offering.
B) It is a prospectus that lacks complete particulars about the quantum or price of the securities.
C) The validity period of the shelf prospectus cannot exceed more than 2 years.
D) None of the above

29. Which of the following section in the Companies Act, 2013 mentions about Red Herring Prospectus?

A) Section 30
B) Section 31
C) Section 32
D) Section 33

30. According to Section 29, Demat (Dematerialized form) is compulsory for which of the following?

A) Companies going for public offer.
B) Companies going for private placement.
C) Prescribed unlisted companies.
D) A and C

31. Global depository receipt is mentioned in which of the following sections of Companies Act, 2013?

A) Section 38
B) Section 39
C) Section 40
D) Section 41

32. Which of the following are correct with respect to Private Placement.?

1. It is mentioned in Section 40 of Companies Act ,2013
2. Maximum limit for the private placement in a financial year cannot exceed 200.
3. Private placement must be made within 60 days.

A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 3 only

33. Which of the following legislations regulate the public issue in India?

A) Companies Act 2013
B) Securities (Contract) Regulation Act, 1952
C) Securities and Exchange Board of India,1992
D) All of the above

34. Which of the following cases will be acted upon based on Section 38, Companies Act, 2013?

A) A person fraudulently inducing persons to invest money in securities.
B) A person making an application in a fictitious name.
C) Mis-Statements in the prospectus.
D) A and C

35. Variation of the terms of contract or objects in prospectus is mentioned in which of the following sections of Companies Act,2013?

A) Section 27
B) Section 25
C) Section 29
D) Section 32

36. According to Section 43 of Companies Act, 2013, How many types of share capital exists?

A) 2
B) 3
C) 4
D) 5

37. Which of the following Section of the Companies Act, 2013 mentions about the voting rights of the members?

A) Section 47
B) Section 45
C) Section 46
D) Section 49

38. Which of the following is incorrect with respect to shares with differential rights?

A) They are a issued as a part of preferential shares.
B) Companies (share capital and debenture) rules 2014, mention the condition for issue of shares with differential voting rights.
C) It cannot exceed 26% of the total post issue paid up capital.
D) A and C

39. According to Section 23 of Companies Act, 2013, in how may ways can a public company raise funding?(1M)

A) Through Public Offering
B) Through Private placement
C) Through existing shareholders
D) All of the above

40. Power of securities and exchange board to regulate issue and transfer of securities is dealt under which of the following section of Companies Act, 2013?

A) Section 24
B) Section 25
C) Section 26
D) Section 27

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