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