MCQs on Company Act Part 1

Q.1:- What is the meaning of ‘Red Herring Prospectus’:

• It means a prospectus which include complete particulars of the quantum or price of the securities included therein.
• It means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.
• It means a prospectus which include complete particulars of the securities traded on the Courses in last 12 months.
• It means a prospectus which include the major particulars of the quantum or price of the securities included therein.

Q.2:- Which section deals with the punishment for fraudulently inducing persons to invest money:

• Section 37
• Section 34
• Section 36
• Section 35

Q.3:- If a default is made in complying with the provisions of section 40, which deals with the listing of securities, what penalty is imposed on the company

• The company shall be punishable with a fine which shall not be less than three lakh rupees but which may extend to fifty lakh rupees
• The company shall be punishable with a fine which shall not be less than one lakh rupees but which may extend to fifty lakh rupees.
• The company shall be punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees.
• The company shall be punishable with a fine which shall not be less than one lakh rupees but which may extend to fifty lakh rupees

Q.4:- A company may issue depository receipts provided it is eligible to do so in terms of the Scheme and relevant provisions of the:

• Foreign Contribution (Regulation) Act, 2010
• Reserve Bank of India
• Foreign Exchange Management Act, 1999, its Rules and Regulations.
• foreign Exchange Regulation Act, 1973

Q.5:- A company may, after passing a __________, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed

• Special resolution in its Committee meeting
• Special resolution in its General meeting
• Ordinary resolution in its General meeting
• Ordinary resolution in its Board meeting

Q.6:- The offer of securities or invitation to subscribe securities, shall be made to persons or such higher number as may be prescribed (excluding QIB, and ESOS), in a financial year:

• not exceeding one hundred
• not exceeding fifty
• not exceeding twenty five
• not exceeding seventy five

Q.7:- The offer document for the issue of depository receipt. _________shall not be treated as:

• An offer document
• A prospectus
• Information Memorandum
• Only A and B are correct

Q.8:- In how much time, a company making an offer or invitation for private placement under section 42 shall allot its securities:

• Within forty five days from the date of receipt of the application money for such securities:
• Within fifteen days from the date of receipt of the application money for such securities:
• Within thirty days from the date of receipt of the application money for such securities:
• Within sixty days from the date of receipt of the application money for such securities.

Q.9:- subscription to its debentures:

• It shall not exceed five percent of the price at which the debentures are issued or a rate authorized by the articles, whichever is less.
• It shall not two and a half five percent of the price at which the debentures are issued or a rate authorized by the articles, whichever is less.
• It shall not two and a half five percent of the price at which the debentures are issued or a rate authorized by the articles, whichever is higher.
• It shall not exceed five percent of the price at which the debentures are issued or a rate authorized by the articles, whichever is higher.

Q.10:- Preference share holders would NOT carry preferential right with respect:

• Repayment, in the case of a winding up or repayment of capital
• Payment of dividend
• With voting right
• Only A and B are correct.

Q.11:- A company cannot issue fully paid-up bonus shares to its members, in any manner whatsoever, out of the following:

• the capital redemption reserve account
• Its free reserves
• the securities premium account
• by capitalizing reserves created by revaluation of assets

Q.12:- What is the time period within which a company shall deliver the certificates of all debentures in case of allotment:

• within a period of four months from the date of allotment in the case of any allotment of debenture
• within a period of one month from the date of allotment in the case of any allotment of debenture.
• within a period of two months from the date of allotment in the case of any allotment of debenture
• within a period of six months from the date of allotment in the case of any allotment of debenture

Q.13:- What is the time period within which a company shall deliver the certificates of all shares in case of allotment:

• within a period of four months from the date of allotment
• within a period of two months from the date of allotment
• within a period of one months from the date of allotment
• within a period of three months from the date of allotment

Q.14:- What is the consequence, where a company issue shares at a discount:

• Any share issued by a company at a discounted price shall be valid, if authorized by the share holders in the General Meeting.
• Any share issued by a company at a discounted price shall be valid
• Any share issued by a company at a discounted price shall be void.
• Any share issued by a company at a discounted price shall be voidable at the option of the shareholder

Q.15:- What are the penal provisions against the company, where it issues shares at a discount

• The company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
• The company shall be punishable with fine which shall not be less than three lakh rupees but which may extend to five lakh rupees.
• The company shall be punishable with fine which shall not be less than four lakh rupees but which may extend to five lakh rupees.
• The company shall be punishable with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees.

Q.16:- A company limited by shares may, if so authorized by its articles, issue preference shares (other than infrastructure projects) which a reliable to be redeemed from the date of their issue subject to such conditions as may be prescribed:

• within a period not exceeding ten years
• within a period not exceeding fifteen years
• within a period not exceeding five years
• within a period not exceeding twenty years

Q.17:- Where a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to:

• To employees under a scheme of employees’ stock option, subject to special resolution passed by company.
• Toper sons who, at the date of the offer, are holders of equity shares of the company.
• To any persons, if it is authorized by a special resolution.
• All the options are correct.

Q.18:- Who appoints the Regional Director:

• The National Company Appellate Tribunal
• The Concerned State Government
• The Central Government
• The National Company Law Tribunal

Q.19:- In which Form the certificate of share or shares shall be issued:

• SH-1
• SH-4
• SH-2
• SH-3

Q.20:- A start-up company, may issue sweat equity shares of its paid up capital up to five years from the date of its incorporation or registration.

• not exceeding forty per cent
• not exceeding sixty per cent
• not exceeding fifty percent
• not exceeding thirty per cent

Q.21:- Which Form is to be used for cancellation or variation of nomination:

• SH 12
• SH 11
• SH 13
• SH 14

Q.22:- Form SH Disused for:

• Declaration of Solvency
• Securities Transfer Form
• Notice for transfer of partly paid securities
• Notice to Registrar of any alteration of share capital

Q.23:- What is the lock-in period of sweat equity shares issued to directors or employees:

• It shall be locked in for a period of four years from the date of allotment.
• It shall be locked in for a period of one year from the date of allotment.
• It shall be locked in for a period of three years from the date of allotment.
• It shall be locked in for a period of two years from the date of allotment.

Q.24:- An instrument of transfer of securities held in physical form shall be in which Form:

• SH 3
• SH 5
• SH 4
• SH 2

Q.25:- In which Form the notice to Registrar for alteration of share capital shall be filed :

• SH 8
• SH 5
• SH 7
• SH 6

Q.26:- A company engaged in the setting up and dealing with of infrastructural projects may issue preference shares for a period

• Exceeding 15 years but not exceeding 30 years
• Exceeding 5 years but not exceeding 10 years.
• Exceeding 10 years but not exceeding 20 years
• Exceeding 20 years but not Exceeding 30 years

Q.27:- The sweat equity shares to be issued shall be valued at a price determined as the fair price giving justification for such valuation.

• By the Board of Directors
• By the Registrar
• By the Company Secretary
• By a registered valuer

Q.28:- Who shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates, including the blank forms of share certificates

• The company secretary, where there is company secretary.
• Where the company has no company secretary, a Director specifically authorized by the Board for such purpose.
• The committee of the Board, if so authorized by the Board.
• Any of the options mentioned above are correct.

Q.29:- No company shall capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares unless:

• It has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus
• It is authorized by its articles
• It has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it
• All the options are correct.

Q.30:- Whether dividend can be paid on the partly paid-up shares:

• The dividend scan be paid in proportion to the amount paid-upon each share'
• Yes, if authorised by the articles
• No, dividend cannot be paid on partly paid shar
• Only A and B are correct.

Q.31:- How a public company may issue securities:

• through a rights issue or a bonus issue
• to public though prospectus
• through private placement
• all of the above

Q.32:- What is the penalty to a company, if a prospectus is issued in contravention of the provision of section 26:

• The company shall be punishable with fine which shall not be less than fifty thousand rupees but which extend to one lakh rupees.
• The company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
• The company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to ten lakh rupees.
• The company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees.

Q.33:- No prospectus shall be valid if it is issued_____________ after the date on which a copy thereof is delivered to the Registrar.

• More than One Hundred Eighty days
• More than ninety days
• Less than ninety days
• Less than One Hundred Eighty days

Q.34:- who shall exercise all powers relating to all other matters relating to prospectus, return of allotment, redemption of preference shares, and any other matter specifically provided in the companies Act, 2013;

• The Registrar
• The Central Government,
• The Tribunal
• All of above.

Q.35:- A company proposing to issue a red herring prospectus shall file it with the Registrar ________to the opening of the subscription list and the offer.

• at least three days prior
• six days prior
• at least six days prior
• three days prior

Q.36:- A company may issue preference shares for a period exceeding twenty years ___________,subject to the redemption of such percentage of shares as maybe prescribed on an annual basis at the option of such preferential shareholders:

• for infrastructure projects
• for construction of factory premises
• for renovation of office building
• for repayment of loans

Q.37:- How the share certificate shall be signed where the a company does not have a common seal:

• It shall be signed by three directors or by two directors and the Company Secretary, wherever the company has appointed a Company Secretary.
• It shall be signed by one director and the Company Secretary
• It shall be signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary.
• It shall be signed by two directors

Q.38:- Which Form is to be used for nomination by securities holders:

• SH 12
• SH 10
• SH 11
• SH 13

Q.39:- In which Form a company referred to in section 73 (2) intending to invite deposit from its members shall issue a circular to all its members by registered post with acknowledgement due or speed post or by electronic mode:

• Form DPT-1
• Form DPT-3
• Form DPT-2
• Form DPT-4

Q.40:- Every company shall pay a for the overdue period in case of deposits, whether secured or unsecured, matured and claimed but remaining unpaid.

• Penal rate of interest of 24% p.a.
• Penal rate of interest of 18 % p.a.
• Penal rate of interest of 30% p.a.
• Penal rate of interest of 12% p.a.

Q.41:- he trustee for depositors shall call a meeting of all the depositors on:

• Requisition in writing signed by at least 1/15th of the depositors in value for the time being outstanding.
• Requisition in writing signed by at least 1/1Oth of the depositors in value for the time being outstanding.
• Requisition in writing signed by at least l/20th of the depositors in value for the time being outstanding.
• Requisition in writing signed by at least l/5th of the depositors in value for the time being outstanding

Q.42:- A company shall from the date of the payment or satisfaction in full of any charge registered under Chapter VI, give intimation of the same to the Registrar in FormNo.CHG-4 along with the fee.

• Within a period of 45 days
• Within a period of 30 days
• Within a period of 60 days
• Within a period of 15 days

Q.43:- What is the punishment for a company if it contravenes the provisions of Chapter VI which deals with the Registration of charges:

• The company shall be punishable with fine which shall not be less than one rupees but which may extend to eight lakh rupees.
• The company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to four lakh rupees.
• The company shall be punishable with fine which shall not be less than one rupees but which may extend to six lakh rupees
• The company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees.

Q.44:- The Registrar may, on an application by the company, allow registration of charge to be made of such creation on payment of such additional fees as may be prescribed:

• Within a period of 200 days
• Within a period of 365 days
• Within a period of 300 days
• Within a period of 100 days

Q.45:- In which Form the notice of appointment or cessation of a receiver or of a person to manage, the property, subject to charge, of a company shall be filed with the Registrar:

• CHG.7
• CHG.6
• CHG.8
• CHG.5

Q.46:- What is the time period with in which a company shall give intimation to the Registrar of the payment or satisfaction in full of any charge registered:

• Within a period of 60 days from the date of such payment or satisfaction
• Within a period of 30 days from the date of such payment or satisfaction.
• Within a period of 15 days from the date of such payment or satisfaction.
• Within a period of 45 days from the date of such payment or satisfaction.

Q.47:- On which assets a company may register the charge:

• Assets situation outside India
• Tangible assets or otherwise
• Assets situated in India
• All of the above.

Q.48:- Certificate of registration of modification of charge shall be issued in Form:

• CHG 2
• CHG 1
• CHG 3
• CHG 4

Q.49:- It shall be the duty of every company creating a charge to register the particulars of the charge with the Registrar of its creation:

• Within 45 days
• Within 15 day
• Within 30 days
• Within 60 days

Q.50:- Particulars of satisfaction charge shall be in:

• CHG 4
• CHG 2
• CHG 3
• CHG 1