30 extra multiple-choice questions for Company Management (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
Which section of the Companies Act, 2013 defines a director as a director appointed to the Board of a company?
- A. Section 2(34)Correct
- B. Section 2(51)
- C. Section 149(1)
- D. Section 165
Explanation. Section 2(34) of the Companies Act, 2013 defines a director as a director appointed to the Board of a company. Section 2(51) defines Key Managerial Personnel.
Q2
Which of the following is NOT listed as Key Managerial Personnel under Section 2(51) of the Companies Act, 2013?
- A. Chief Executive Officer
- B. Company Secretary
- C. Chief Financial Officer
- D. Independent DirectorCorrect
Explanation. Section 2(51) lists the CEO, the Managing Director or Manager, the Company Secretary, the Whole-time Director, the Chief Financial Officer and other prescribed officers. An independent director is not in this list.
Q3
Consider the following statements on the general composition of the Board of Directors:
1. The Board should have at least one woman director.
2. Not less than fifty percent of the Board should be non-executive directors.
Which of the statements given above is/are correct?
- A. 1 only
- B. 2 only
- C. Both 1 and 2Correct
- D. Neither 1 nor 2
Explanation. The Board should have an optimum combination of executive and non-executive directors with at least one woman director, and not less than fifty percent of the Board should be non-executive directors.
Q4
Under Section 149(3), every company should appoint a director who has stayed in India for a total period of not less than ________ days in the previous calendar year.
- A. 120
- B. 150
- C. 182Correct
- D. 240
Explanation. Section 149(3) requires every company to have a resident director who stayed in India for not less than 182 days in the previous calendar year.
Q5
A public company must appoint at least two independent directors if its paid-up share capital is ________ or more.
- A. Rs. 5 crores
- B. Rs. 10 croresCorrect
- C. Rs. 50 crores
- D. Rs. 100 crores
Explanation. At least two independent directors are needed in public companies with paid-up share capital of 10 crores or more, turnover of 100 crores or more, or loans, debentures and deposits of 50 crores or more.
Q6
Which of the following public companies must appoint at least one woman director?
1. Every listed company
2. A public company with paid-up share capital of one hundred crore rupees or more
3. A public company with turnover of three hundred crore rupees or more
Select the correct answer:
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3Correct
Explanation. Section 149(1)(a) requires every listed company, and every other public company with paid-up capital of 100 crore rupees or more or turnover of 300 crore rupees or more, to appoint at least one woman director.
Q7
A director appointed by the Board of Directors as a substitute for a director who is absent from India is called a/an ________.
- A. Additional director
- B. Alternate directorCorrect
- C. Nominee director
- D. Shadow director
Explanation. An alternate director is appointed by the Board as a substitute for a director absent from India. He is not a representative or agent of the original director.
Q8
A person who is not a member of the Board but has some power to run it is known as a ________.
- A. Shadow directorCorrect
- B. Resident director
- C. Independent director
- D. Whole-time director
Explanation. A shadow director is a person who is not a member of the Board but has some power to run it; such a person can later be appointed as a director if he or she wishes.
Q9
A person who accepts appointment as a director in excess of the limit on directorships is punishable with a fine of not less than Rs. 5,000, which may extend to ________ for every day after the first day.
- A. Rs. 10,000
- B. Rs. 15,000
- C. Rs. 25,000Correct
- D. Rs. 50,000
Explanation. The lesson says such a person is punishable with a fine of not less than Rs. 5,000 which may extend to Rs. 25,000 for every day after the first day of the excess directorship.
Q10
Assertion (A): Directors are not full-fledged agents of the company.
Reason (R): Directors are elected persons, whereas agents are appointed persons.
- 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. The lesson says directors are not full-fledged agents of the company because they are elected persons, while agents are appointed. So R correctly explains A.
Q11
The directors of a company issue shares to the public and collect Rs. 100 per share, but do not pay Rs. 100 for the shares taken by themselves. In which legal position have they failed?
- A. As agents
- B. As trusteesCorrect
- C. As employees
- D. As officers
Explanation. In the Eswar Company example, not paying for their own shares is a breach of trust, so the directors must pay Rs. 100 each. Directors are trustees of the company's money and property.
Q12
Under Section 152, in a public company, what portion of the total number of directors is generally appointed by the shareholders?
- A. One-half
- B. One-third
- C. Two-thirdsCorrect
- D. Three-fourths
Explanation. Generally, in a public company or a private subsidiary of a public company, two-thirds of the directors are appointed by the shareholders and the remaining one-third as per the Articles.
Q13
Which number is compulsory for the appointment of a director of a company?
- A. Permanent Account Number
- B. Director Identification NumberCorrect
- C. Corporate Identity Number
- D. Membership number of the Institute of Company Secretaries
Explanation. The general provisions on appointment state that the Director Identification Number is compulsory, and every proposed director must furnish it with a declaration that he is not disqualified.
Q14
The company should file the particulars of appointment of directors with the Registrar of Companies within ________ of the appointment.
- A. 15 days
- B. 30 daysCorrect
- C. 60 days
- D. 90 days
Explanation. The company must file a form with the Registrar giving particulars of the appointment of directors and KMP, with the signed consent form and fee, within 30 days of the appointment.
Q15
Under Section 169, shareholders can remove a director before the expiry of his term by giving a special notice and passing a/an ________.
- A. Ordinary resolutionCorrect
- B. Special resolution
- C. Board resolution
- D. Circular resolution
Explanation. Under Section 169 a public or private company may remove a director by giving a special notice and passing an ordinary resolution in a general meeting, without proof of misconduct.
Q16
The Central Government removes managerial personnel from office on the recommendation of the ________.
- A. Registrar of Companies
- B. Board of Directors
- C. Company Law BoardCorrect
- D. Shareholders in general meeting
Explanation. The Central Government is empowered to remove managerial personnel on the recommendation of the Company Law Board, for example for fraud, misfeasance or persistent negligence.
Q17
A public company having adequate profits can pay remuneration to its directors, including the Managing Director and Whole-time Directors, and its managers, not exceeding ________ of the net profit.
- A. 5%
- B. 9.91%
- C. 11%Correct
- D. 15%
Explanation. With adequate profits, total managerial remuneration shall not exceed 11% of the net profit, calculated as laid down in Section 198; with only one Managing Director, Whole-time Director or manager it is 5%.
Q18
Where a company has no profit or inadequate profit and its effective capital is negative or less than 5 crore, the yearly remuneration payable shall not exceed ________.
- A. Rs. 30 lakhCorrect
- B. Rs. 42 lakh
- C. Rs. 60 lakh
- D. Rs. 60 lakh plus 9.91% of the excess capital
Explanation. The table gives Rs. 30 lakh for effective capital negative or below 5 crore, Rs. 42 lakh for 5 to 100 crore, Rs. 60 lakh for 100 to 250 crore, and Rs. 60 lakh plus 9.91% of the excess above 250 crore.
Q19
The power to make calls on shareholders, to issue debentures and to approve financial statements are exercised by passing a resolution in a meeting. Under which head of directors' powers do they fall?
- A. Statutory powersCorrect
- B. Managerial powers
- C. Powers only with a resolution
- D. Other powers
Explanation. The statutory powers of directors include the power to make calls, issue debentures, borrow, invest, make loans, diversify, approve amalgamation and approve financial statements and Board reports.
Q20
Match the power with its head:
(a) Power to contract with a third party - 1. Other powers
(b) To sell or lease any asset of the company - 2. Statutory powers
(c) Power to fill casual vacancy - 3. Managerial powers
(d) Power to invest the funds of the company - 4. Powers only with a resolution
- A. (a)-3, (b)-4, (c)-1, (d)-2Correct
- B. (a)-4, (b)-3, (c)-2, (d)-1
- C. (a)-3, (b)-1, (c)-4, (d)-2
- D. (a)-2, (b)-4, (c)-1, (d)-3
Explanation. Contracting with third parties is a managerial power; selling or leasing assets needs a resolution; filling casual vacancies is among other powers; investing company funds is a statutory power.
Q21
Which of the following is a collective right of directors and not an individual right?
- A. Right to inspect books of accounts
- B. Right to receive notices of board meetings
- C. Right to inspect minutes of board meetings
- D. Right to refuse to transfer sharesCorrect
Explanation. Individual rights include inspecting books and minutes and receiving notices. Collective rights include refusing transfer of shares, electing a chairman, appointing a managing director and recommending dividend.
Q22
Consider the following statements on the right to recommend dividend:
1. Shareholders can compel the directors to pay dividend.
2. Shareholders can reduce the rate of dividend recommended by the Board.
Which of the statements given above is/are correct?
- A. 1 only
- B. 2 onlyCorrect
- C. Both 1 and 2
- D. Neither 1 nor 2
Explanation. The Board decides whether dividend is to be paid; shareholders cannot compel the directors to pay it, though they can reduce the recommended rate. Payment of dividend is the prerogative of the Board.
Q23
Among the specific duties of a director, he must hold the minimum qualification shares within ________ after his appointment.
- A. One month
- B. Two monthsCorrect
- C. Three months
- D. Six months
Explanation. The specific duties of directors include the duty to hold minimum qualification shares within two months after appointment, along with disclosing shareholding and interest in contracts.
Q24
In which of the following cases are directors NOT personally liable to outsiders?
- A. When they contract with outsiders in their personal capacity
- B. When they contract as agents of an undisclosed principal
- C. When they enter into a contract on behalf of a prospective company
- D. When they act within the scope of powers vested in themCorrect
Explanation. Directors are not personally liable to outsiders if they act within the scope of their powers. They are personally liable when contracting personally, for an undisclosed principal, for a prospective company, or ultra vires.
Q25
Directors are liable to the company for misfeasance. The word misfeasance covers ________.
- A. Wilful negligenceCorrect
- B. Mere failure to recover debts due to the company
- C. Acting within the powers given in the Articles
- D. Refusing to register a transfer of shares
Explanation. Misfeasance covers wilful negligence. The lesson adds that mere failure of a director to take steps to recover debts due to the company does not constitute misfeasance.
Q26
Which one of the following is NOT a situation of criminal liability of directors?
- A. Mis-statement in the prospectus
- B. Default in holding the Annual General Meeting
- C. Failure to issue share and debenture certificates
- D. Recommending a lower rate of dividendCorrect
Explanation. Directors face fine, imprisonment or both for mis-statement in a prospectus, failure to file returns, failure to issue certificates, failure to maintain registers, default in holding the AGM and failure to provide financial statements.
Q27
The register of directors and Key Managerial Personnel is kept as per Rule ________.
- A. 7
- B. 12
- C. 17Correct
- D. 21
Explanation. Section 27.16 deals with the register of directors and KMPs under Rule 17. Every company keeps this register with particulars such as DIN, name, address, nationality and date of appointment.
Q28
Consider the following statements on the difference between a manager and a director:
1. A manager comes under the executive or middle level of management.
2. A director comes under top-level management and plays an important role in decision making.
Which of the statements given above is/are correct?
- A. 1 only
- B. 2 only
- C. Both 1 and 2Correct
- D. Neither 1 nor 2
Explanation. The comparison table says a manager is at the executive, that is middle, level of management and implements plans, while directors are at top-level management and formulate plans and policies.
Q29
No individual can be appointed as Managing Director for more than ________ at a time.
- A. Three years
- B. Five yearsCorrect
- C. Seven years
- D. Ten years
Explanation. The table comparing the Managing Director and the Whole-time Director says no individual can be appointed Managing Director for more than five years at a time; there is no such restriction for a whole-time director.
Q30
Consider the following statements on the number of directors:
1. A company can appoint a maximum of 15 directors.
2. To appoint more than 15 directors, a special resolution in general meeting and the approval of the Central Government are both needed.
Which of the statements given above is/are correct?
- A. 1 onlyCorrect
- B. 2 only
- C. Both 1 and 2
- D. Neither 1 nor 2
Explanation. A company can appoint up to 15 directors and may appoint more after passing a special resolution in general meeting. The lesson states that the approval of the Central Government is not required.
