Legal Aspects of Business | Memorandum | MCQs
Memorandum of Association
-
What is the primary purpose of the Memorandum of Association of a company?
- A) To define the company’s internal policies
- B) To list the powers and scope of the company
- C) To determine the shareholding structure
- D) To decide the dividend policy
Answer: B) To list the powers and scope of the company
-
Which of the following clauses is found in the Memorandum of Association?
- A) Lien on shares
- B) Name clause
- C) Appointment of directors
- D) Accounts & Audit
Answer: B) Name clause
-
What does the Registered Office clause of the Memorandum of Association state?
- A) The capital structure of the company
- B) The location of the company's registered office
- C) The names of company shareholders
- D) The objects of the company
Answer: B) The location of the company's registered office
-
Which clause defines the company's business activities in the Memorandum of Association?
- A) Objects clause
- B) Capital clause
- C) Subscription clause
- D) Liability clause
Answer: A) Objects clause
-
Which clause of the Memorandum of Association limits the liability of members in a company?
- A) Capital clause
- B) Name clause
- C) Liability clause
- D) Registered Office clause
Answer: C) Liability clause
-
What is the purpose of the Capital clause in the Memorandum of Association?
- A) To define the objects of the company
- B) To outline the share capital and its division
- C) To state the names of shareholders
- D) To describe the company's registered office
Answer: B) To outline the share capital and its division
-
Which clause of the Memorandum of Association contains the names and signatures of subscribers?
- A) Subscription clause
- B) Objects clause
- C) Liability clause
- D) Name clause
Answer: A) Subscription clause
-
To change the name of the company, which resolution must be passed?
- A) Ordinary resolution
- B) Special resolution
- C) Board resolution
- D) Shareholder resolution
Answer: B) Special resolution
-
Which of the following is NOT a way the Memorandum of Association can be altered?
- A) Change of company name by passing a special resolution
- B) Change of objects clause by passing a special resolution
- C) Change of liability clause by passing an ordinary resolution
- D) Change of registered office by passing a special resolution
Answer: C) Change of liability clause by passing an ordinary resolution
Articles of Association
-
The Articles of Association govern the:
- A) Shareholding structure
- B) Internal affairs and management of the company
- C) Objects of the company
- D) Shareholder agreements
Answer: B) Internal affairs and management of the company
-
Which of the following is NOT typically included in the Articles of Association?
- A) Transfer of shares
- B) Appointment of directors
- C) Capital clause
- D) Dividends & reserves
Answer: C) Capital clause
-
The Articles of Association can be altered by:
- A) Special resolution at a general meeting
- B) Ordinary resolution at a general meeting
- C) Board resolution
- D) Approval of the Central Government
Answer: A) Special resolution at a general meeting
Prospectus
-
What does a prospectus contain?
- A) Invitations to subscribe to shares or debentures
- B) Details about the company’s employees
- C) Names of directors only
- D) Details of the company’s products
Answer: A) Invitations to subscribe to shares or debentures
-
Which of the following is true about an abridged prospectus?
- A) It contains all details of the company
- B) It should not contain extraneous matters
- C) It is only issued to foreign investors
- D) It must be printed in a small font size
Answer: B) It should not contain extraneous matters
-
What is a red-herring prospectus?
- A) A prospectus with incomplete information about securities
- B) A prospectus that contains complete details about securities
- C) A prospectus issued by financial institutions only
- D) A prospectus containing only the company’s financials
Answer: A) A prospectus with incomplete information about securities
-
What is a "Deemed Prospectus"?
- A) A document issued to institutional investors only
- B) A document that avoids the statutory requirements of a prospectus
- C) A prospectus issued by a company without any financial information
- D) A prospectus issued after the subscription list is closed
Answer: B) A document that avoids the statutory requirements of a prospectus
-
What is the main purpose of an information memorandum?
- A) To attract investors based on indicative pricing
- B) To provide full details of the company’s financials
- C) To replace the requirement for a prospectus
- D) To announce dividends to shareholders
Answer: A) To attract investors based on indicative pricing
Kinds of Shares
-
Which type of shares gives the right to vote and share profits of a company?
- A) Preference shares
- B) Equity shares with differential rights
- C) Equity shares with voting rights
- D) Convertible preference shares
Answer: C) Equity shares with voting rights
-
Which type of shares is issued with the right to a fixed dividend but no voting rights?
- A) Preference shares
- B) Equity shares
- C) Preference shares with differential rights
- D) Convertible equity shares
Answer: A) Preference shares
-
Equity shares with differential voting rights are restricted to what percentage of total issued capital?
- A) 15%
- B) 25%
- C) 30%
- D) 50%
Answer: B) 25%
-
Which of the following must approve the issue of equity shares with differential voting rights?
- A) The Board of Directors
- B) Shareholders by a special resolution
- C) Central Government
- D) Securities and Exchange Board of India (SEBI)
Answer: B) Shareholders by a special resolution
-
Which condition makes a company ineligible to issue equity shares with differential voting rights?
- A) If the company is listed
- B) If the company has defaulted in filing annual returns in the last three years
- C) If the company has a small capital base
- D) If the company has not declared dividends in the last 5 years
Answer: B) If the company has defaulted in filing annual returns in the last three years
-
Which of the following is an example of preference shares with differential rights?
- A) Shares with fixed dividend rates but voting rights
- B) Shares without a fixed dividend but with voting rights
- C) Shares with fixed dividend rights and no voting rights
- D) Shares with no rights to dividend or vote
Answer: C) Shares with fixed dividend rights and no voting rights
General Questions
-
Which of the following is NOT included in the contents of a prospectus?
- A) Terms of the present issue
- B) General information
- C) Company’s bylaws
- D) Company’s capital structure
Answer: C) Company’s bylaws
-
What is required when a company changes its registered office from one State to another?
- A) Board resolution
- B) Shareholder special resolution and approval of the Central Government
- C) Only Central Government approval
- D) Ordinary resolution in the general meeting
Answer: B) Shareholder special resolution and approval of the Central Government
-
Which clause of the Memorandum of Association lists the amount of share capital and the number of shares?
- A) Objects clause
- B) Capital clause
- C) Subscription clause
- D) Liability clause
Answer: B) Capital clause
