Class 11 Business Studies

Formation of Company

NCERT Solution

MCQ Answers

Question 1: Minimum number of members to form a private company is

  • 2
  • 3
  • 5
  • 7

    Answer: (a) 2

Question 2: Minimum number of members to form a public company is

  • 5
  • 7
  • 12
  • 21

    Answer: (b) 7

Question 3: Application for approval of name of a company is to be made to

  • SEBI
  • Registrar of Companies
  • Government of India
  • Government of the State in which Company is to be registered

    Answer: (b) Registrar of Companies

Question 4: A proposed name of Company is considered undesirable if

  • It is identical with the name of an existing company
  • It resembles closely with the name of an existing company
  • It is an emblem of Government of India, United Nations etc.
  • In case of any of the above

    Answer: (d) In case of any of the above

Question 5: A prospectus is issued by

  • A private company
  • A public company seeking investment from public
  • A public enterprise
  • A public company

    Answer: (b) A public company seeking investment from public

Question 6: Stages in the formation of a public company are in the following order

  • Promotion, Commencement of Business, Incorporation, Capital Subscription
  • Incorporation, Capital Subscription. Commencement of Business, Promotion
  • Promotion, Incorporation, Capital Subscription, Commencement of Business
  • Capital Subscription, Promotion, Incorporation, Commencement of Business

    Answer: (c) Promotion, Incorporation, Capital Subscription, Commencement of Business

Question 7: Preliminary Contracts are signed

  • Before the incorporation
  • After incorporation but before capital subscription
  • After incorporation but before commencement of business
  • After commencement of business

    Answer: (a) Before the incorporation

Question 8: Preliminary Contracts are

  • binding on the Company
  • binding on the Company, if ratified after incorporation
  • binding on the Company, after incorporation
  • not binding on the Company

    Answer: (d) Not binding on the Company

True/False Questions

  • It is necessary to get every company incorporated, whether private or public.
  • Statement in lieu of prospectus can be filed by a public company going for a public issue.
  • A private company can commence business after incorporation.
  • Experts who help promoters in the promotion of a company are also called promoters.
  • A company can ratify preliminary contracts after incorporation.
  • If a company is registered on the basis of fictitious names, its incorporation is invalid.
  • ‘Articles of Association’ is the main document of a company.
  • Every company must file Articles of Association.
  • A provisional contract is signed by promoters before the incorporation of the company.
  • If a company suffers heavy issues and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.

Answer: (1) T, (2) T, (3) T, (4) F, (5)F, (6) F, (7) F,(8) F, (9) F, (10) F



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