CMA Final Law Practice Set 1

TCC

Company Law MCQ Quiz — Interactive (Click an answer)

Teal Coral Clean theme (TCC-Quiz). Click any option to reveal the correct answer and explanation.

Instructions: Click an option for each question. The selected option will show whether it's correct and display a concise explanation.

Questions: 10

Style: TCC Quiz Template

Q1

How many minimum members are required to form a public limited company?

A 3

B 4

C 6

D 7

Answer: D — 7

Explanation: Under company law, a public limited company requires a minimum of seven members (subscribers/shareholders) at the time of incorporation.

Q2

In order to be a Government Company, 51% shares shall be held by:

A Central Govt.

B State Govt.

C Both Central and State Govt. jointly

D Any or all of the above

Answer: D — Any or all of the above

Explanation: A Government Company is one in which not less than 51% of the paid-up share capital is held by the Central Government, or by one or more State Governments, or partly by the Central Government and partly by one or more State Governments.

Q3

In case of “limited” companies, what is limited?

A Shares

B Liability of members

C Capital of the company

D Powers of the shareholders

Answer: B — Liability of members

Explanation: In a limited company, the liability of members (shareholders) is limited — typically to the unpaid amount on their shares or to the amount they have guaranteed to contribute.

Q4

Restriction in transfer of shares can be there in____

A Private Ltd. company

B Public Ltd. Company

C Govt. company

D Unlimited company

Answer: A — Private Ltd. company

Explanation: Private limited companies commonly include restrictions on transfer of shares (e.g., right of first refusal, board approval) to maintain control and limit public ownership. Public companies generally have freely transferable shares.

Q5

A foreign company is a company, registered outside India and_____

A Having a place of business in India

B Conducts any business in India

C Need not have any business in India

D Either (1) or (2)

Answer: D — Either (1) or (2)

Explanation: A foreign company is one incorporated outside India which either has a place of business in India or conducts any business in India (directly or through an agent). Either condition qualifies it as a foreign company for regulatory purposes.

Q6

Company which do not have any significant accounting transaction is called

A Asocial Company

B Non-functional company

C Dormant company

D Sleeping company

Answer: C — Dormant company

Explanation: A dormant company is one that has no significant accounting transactions during a specified period. It may be registered but inactive for business operations.

Q7

Life Insurance Corporation is:

A A statutory corp. but not PFI

B A statutory corp. and PFI

C Govt. Company

D None of the above

Answer: A — A statutory corporation but not a Government Company

Explanation: LIC was established by a specific statute (Life Insurance Corporation Act) and is a statutory corporation. It is not a government company (which is defined by shareholding) though it is government‑owned in character; classification as a public financial institution depends on statutory lists and definitions.

Q8

Persons who sign the Memorandum of Association (MOA) are called:

A Promoters

B Shareholders

C Subscribers to MOA

D Members

Answer: C — Subscribers to MOA

Explanation: The persons who sign the Memorandum of Association at the time of incorporation are called subscribers to the MOA; they agree to take specified shares and become the first members of the company.

Q9

Certificate of incorporation is issued by:

A Regional director

B Registrar of companies

C Central Govt.

D None of the above

Answer: B — Registrar of Companies

Explanation: The Registrar of Companies (ROC) issues the certificate of incorporation after verifying the incorporation documents and compliance with statutory requirements.

Q10

Declaration by professional at the time of incorporation of a company means declaration by:

A Practicing CS

B Practicing CA

C Practicing CMA

D Any of the above

Answer: D — Any of the above

Explanation: At incorporation, a declaration (e.g., compliance with requirements) may be made by a qualified professional such as a practicing Company Secretary (CS), Chartered Accountant (CA), or Cost & Management Accountant (CMA), depending on the statutory requirement and context.

Answer Key

Q1: D; Q2: D; Q3: B; Q4: A; Q5: D; Q6: C; Q7: A; Q8: C; Q9: B; Q10: D