29 extra multiple-choice questions for Companies Act, 2013 (12th Standard Commerce, Samacheer Kalvi), beyond the ones printed in the textbook — each with the correct option highlighted and a clear, worked explanation. Free to read in English and Tamil.
Q1
The East India Company was established in the year 1600 by
- A. an Act of Parliament
- B. a Royal CharterCorrect
- C. the Joint Stock Companies Act
- D. a Merchant Guild
Explanation. Section 26.01 records that a Royal Charter established the East India Company in 1600, long before any Joint Stock Companies Act was passed in England.
Q2
Arrange the following events in the history of company law in chronological order.
1. Indian Companies Act introducing private companies
2. English Joint Stock Companies Act passed for the first time
3. Companies Act 1956 came into force
4. Provision for registration of joint stock companies in India
- A. 2, 4, 1, 3Correct
- B. 4, 2, 1, 3
- C. 2, 1, 4, 3
- D. 4, 2, 3, 1
Explanation. The order is: English Joint Stock Companies Act 1844, registration of joint stock companies in India 1850, Indian Companies Act 1913 introducing private companies, and the Companies Act 1956 in force from 1 April 1956.
Q3
Which of the following statements about the amendments to the Companies Act 1956 are correct?
1. The Company Law Board was abolished and the National Company Law Tribunal was formed.
2. Rehabilitation of sick companies is now done by the NCLT instead of the BIFR.
3. The Sick Industrial Companies Act 1985 still governs the revival of sick companies.
- A. 1 and 2 onlyCorrect
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Explanation. The CLB was abolished and the NCLT formed, and NCLT took over rehabilitation from BIFR. Statement 3 is wrong: SICA has been replaced by the Sick Industrial Companies Repeal Act.
Q4
The Companies Act 2013 received the assent of the President on
- A. 18th December, 2012
- B. 8th August, 2013
- C. 29th August, 2013Correct
- D. 1st April, 2013
Explanation. The Act was passed in the Lok Sabha on 18th December 2012 and in the Rajya Sabha on 8th August 2013, and received the President's assent on 29th August 2013.
Q5
The Companies Act 2013 consists of
- A. 13 chapters, 658 sections and 15 schedules
- B. 29 chapters, 470 sections and 7 schedulesCorrect
- C. 29 chapters, 658 sections and 7 schedules
- D. 13 chapters, 470 sections and 15 schedules
Explanation. The 2013 Act has 29 chapters, 470 sections and 7 schedules, as against 13 chapters, 658 sections and 15 schedules in the Companies Act 1956.
Q6
Under the Companies Act 2013, a private company can have a maximum of
- A. 50 members
- B. 100 members
- C. 200 membersCorrect
- D. 500 members
Explanation. The table of changes made by the Companies Act 2013 states that a private company can have a maximum of 200 members, and it also introduced the new concept of One Person Company.
Q7
Which of the following is NOT listed as a Key Managerial Person under Section 2(51) of the Companies Act 2013?
- A. Company Secretary
- B. Chief Financial Officer
- C. Whole-time Director
- D. Statutory AuditorCorrect
Explanation. Section 2(51) lists the CEO or MD or Manager, the Company Secretary, the Whole-time Director and the CFO as Key Managerial Persons. An auditor is not in the list.
Q8
The word 'corporation' is derived from a Latin word which means
- A. bread
- B. bodyCorrect
- C. together
- D. trade
Explanation. Section 26.03 explains that 'corporation' comes from the Latin word for 'body' (corpus), because the persons composing it are made into one body by incorporation.
Q9
Public corporations such as LIC, RBI and SBI have been brought into existence through
- A. the Companies Act, 1956
- B. special Acts of ParliamentCorrect
- C. a Royal Charter
- D. the Companies Act, 2013
Explanation. The lesson contrasts public corporations like LIC, RBI and SBI, created by special Acts of Parliament, with companies like Tata Steel and Reliance Industries formed under company law.
Q10
According to Section 2(11) of the Companies Act 2013, which of the following is NOT included in the term 'body corporate'?
- A. One Person Company
- B. Foreign company incorporated outside India
- C. A co-operative society registered under co-operative lawCorrect
- D. Limited Liability Partnership
Explanation. Section 2(11) includes private, public, one person and small companies, LLPs and foreign companies, but excludes co-operative societies registered under co-operative law.
Q11
Under Section 3(1) of the Companies Act 2013, the minimum number of persons required to form a public company is
- A. one
- B. two
- C. five
- D. sevenCorrect
Explanation. Section 3(1) allows a company to be formed by seven or more persons for a public company, two or more for a private company, and one person for a One Person Company.
Q12
Assertion (A): A private company can start its business immediately after registration.
Reason (R): Only promotion and registration are necessary for a private company; capital subscription and commencement of business are additional stages for a public company.
- A. Both A and R are true and R is the correct explanation of ACorrect
- B. Both A and R are true but R is not the correct explanation of A
- C. A is true but R is false
- D. A is false but R is true
Explanation. Of the four stages of formation, promotion and registration apply to both types. A private company starts right after registration; a public company must also pass capital subscription and commencement of business.
Q13
A company's share capital of Rs.10,00,000 is divided into shares of Rs.100 each. How many shares does it have?
- A. 1,000
- B. 10,000Correct
- C. 1,00,000
- D. 10,00,000
Explanation. Number of shares = Rs.10,00,000 / Rs.100 = 10,000 shares. The book gives this example, adding that the same capital could instead be 1,00,000 shares of Rs.10 each.
Q14
Preference shares that can be converted into equity shares after a time period or as per the conditions laid down in the terms are called
- A. Cumulative preference shares
- B. Participating preference shares
- C. Convertible preference sharesCorrect
- D. Redeemable preference shares
Explanation. Convertible preference shares can be changed into equity shares after a period or as per the terms of issue; non-convertible preference shares can never be converted.
Q15
Preference shares that have a right to share in the surplus profits remaining after the equity shareholders are paid are
- A. Participating preference sharesCorrect
- B. Non-participating preference shares
- C. Non-cumulative preference shares
- D. Non-redeemable preference shares
Explanation. Participating preference shares share in the additional profits left after paying the equity shareholders, apart from their fixed dividend. Non-participating shares have no such right.
Q16
Companies with infrastructure projects may issue preference shares for more than 20 years but up to
- A. 25 years
- B. 30 yearsCorrect
- C. 35 years
- D. 40 years
Explanation. The tenure of preference shares is normally 20 years, but companies with infrastructure projects can issue them for up to 30 years, subject to redemption of at least 10% of such shares.
Q17
A share with a face value of Rs.10 is issued at Rs.12. The share is said to be issued at
- A. par
- B. a premiumCorrect
- C. a discount
- D. a bonus
Explanation. Shares issued above face value are issued at a premium. Here the premium is Rs.12 - Rs.10 = Rs.2, which must be credited to the Securities Premium Account.
Q18
Which of the following is NOT a permitted use of the Securities Premium Account according to the lesson?
- A. Writing off preliminary expenses
- B. Writing off expenses, commission or discount on issue of shares or debentures
- C. Distributing dividend to shareholdersCorrect
- D. Providing for premium payable on redemption of redeemable preference shares
Explanation. The Securities Premium Account (Section 78) may be used to write off preliminary and issue expenses and to provide premium on redemption. It is capital in nature and is not available for distribution as dividend.
Q19
Under the Companies Act 2013, which shares alone may be issued at a discount?
- A. Equity shares
- B. Bonus shares
- C. Right shares
- D. Sweat equity sharesCorrect
Explanation. Section 53 prohibits issue of shares at a discount, but Section 54 allows sweat equity shares, given to employees or directors for know-how or intellectual property rights, to be issued at a discount.
Q20
Bonus shares can be issued by a company by
- A. making partly paid-up shares fully paid, or issuing new sharesCorrect
- B. offering shares to the public at a premium
- C. converting debentures into shares
- D. issuing share warrants to bearers
Explanation. Bonus shares capitalise the company's reserves and surpluses without any consideration from shareholders. They are issued by making partly paid shares fully paid or by issuing new fully paid shares.
Q21
A company issues the share certificate under its common seal within how many months of the allotment of shares?
- A. One month
- B. Two months
- C. Three monthsCorrect
- D. Six months
Explanation. Section 26.07 says the share certificate is issued within three months of allotment of shares under the common seal of the company, as legal proof of ownership of the shares stated in it.
Q22
If a public company wants to issue share warrants, whose prior approval is required?
- A. Registrar of Companies
- B. Central GovernmentCorrect
- C. National Company Law Tribunal
- D. Board of Directors
Explanation. Section 26.07 says issue of share warrants is not compulsory, but a public company that wants to issue them needs the prior approval of the Central Government, and the issue must be authorised by its Articles.
Q23
Stock is created by a company by converting
- A. partly paid shares
- B. fully paid sharesCorrect
- C. debentures
- D. share warrants
Explanation. Section 26.08 explains that a company can convert its fully paid shares into stock, and stock back into shares, following Table A (Articles 36-39), if the Articles permit it.
Q24
According to Section 2(30) of the Companies Act 2013, 'debenture' includes
- A. debenture stock, bonds or any other instrument of a company evidencing a debtCorrect
- B. only secured loans taken from banks
- C. equity shares with differential voting rights
- D. fixed deposits accepted from the public
Explanation. Section 2(30) defines debenture to include debenture stock, bonds or any other instrument evidencing a debt, whether or not it creates a charge on the company's assets.
Q25
Which of the following statements about debentures are correct?
1. Debenture holders are creditors of the company.
2. Debenture holders enjoy voting rights.
3. Debentures may be either secured or unsecured.
4. Interest on debentures is a tax-deductible expenditure.
- A. 1, 2 and 3 only
- B. 1, 3 and 4 onlyCorrect
- C. 2, 3 and 4 only
- D. 1, 2, 3 and 4
Explanation. Debenture holders are creditors, debentures may be secured or unsecured, and the interest is a business expenditure deducted from profits. Statement 2 is wrong: debenture holders have no voting right.
Q26
Debentures that are fully converted into equity shares at the issuer's notice, after which the investors enjoy the status of ordinary shareholders, are
- A. Non Convertible Debentures
- B. Partly Convertible Debentures
- C. Fully Convertible DebenturesCorrect
- D. Optionally Convertible Debentures
Explanation. Fully Convertible Debentures (FCD) are wholly converted into equity shares at the issuer's notice and ratio; on conversion the holders enjoy the same status as ordinary shareholders.
Q27
Match the basis of classification of debentures with a type under it.
(a) Convertibility - (i) Bearer debentures
(b) Security - (ii) Irredeemable debentures
(c) Redemption - (iii) Unsecured debentures
(d) Registration - (iv) Optionally convertible debentures
- A. (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)Correct
- B. (a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
- C. (a)-(iv), (b)-(ii), (c)-(iii), (d)-(i)
- D. (a)-(i), (b)-(iii), (c)-(ii), (d)-(iv)
Explanation. OCD fall under convertibility, unsecured debentures under security, irredeemable (perpetual) debentures under redemption, and bearer debentures, transferable by delivery, under registration.
Q28
Which of the following is a difference between shares and debentures given in the book?
- A. Shares carry a charge on the company's assets, debentures do not
- B. Shareholders get a fixed rate of interest, debenture holders get a varying dividend
- C. Interest on debentures is payable even if there are no profits, even out of capital, whereas dividend is paid only out of profitsCorrect
- D. Debenture holders enjoy voting rights, shareholders do not
Explanation. The differences table says debenture interest is payable even if there are no profits, but dividend on shares is paid only out of profits. The other options reverse the book's points.
Q29
Which of the following is listed as a Navratna company in the lesson?
- A. Hindustan Aeronautics Limited (HAL)Correct
- B. National Thermal Power Corporation (NTPC)
- C. Oil and Natural Gas Corporation (ONGC)
- D. Steel Authority of India Limited (SAIL)
Explanation. HAL appears in the book's list of Navratna companies. NTPC, ONGC and SAIL are listed as Maharatna companies.
