Company Law (MCQs)

What is the primary purpose of Company Law?
a) To regulate trade
b) To govern the formation and operation of companies
c) To protect consumer rights
d) To enforce contracts
What is a “limited liability” company?
a) A partnership with unlimited liability
b) A company where the owners’ liability is limited to their investment
c) A non-profit organization
d) A government-owned corporation
Which document is essential for the incorporation of a company?
a) Memorandum of Association
b) Articles of Association
c) Both Memorandum and Articles of Association
d) Shareholder agreement
What is the maximum number of members allowed in a private company?
a) 50
b) 200
c) 100
d) Unlimited
Which of the following is NOT a type of company?
a) Private Limited Company
b) Public Limited Company
c) Sole Proprietorship
d) Limited Liability Partnership
What is the primary responsibility of a company’s board of directors?
a) To manage the company’s affairs and make strategic decisions
b) To hire employees
c) To conduct audits
d) To represent the company in court
Which of the following is a characteristic of a public limited company?
a) Shares are not freely transferable
b) Shares can be bought and sold on a stock exchange
c) Limited to family ownership
d) Cannot issue debentures
What does the term “incorporation” refer to in company law?
a) The process of liquidating a company
b) The legal process of forming a corporation
c) The merger of two companies
d) The dissolution of a company
Which document outlines the rules for the internal governance of a company?
a) Memorandum of Association
b) Articles of Association
c) Company Act
d) Shareholders’ agreement
What is the role of a company secretary?
a) To manage the company’s finances
b) To ensure compliance with legal requirements and corporate governance
c) To represent the company in litigation
d) To prepare financial statements
What does “share capital” represent in a company?
a) The total assets of the company
b) The funds raised by issuing shares to shareholders
c) The profits earned by the company
d) The liabilities of the company
Which of the following is true regarding company resolutions?
a) Only shareholders can pass resolutions
b) Resolutions can be ordinary or special, depending on the nature of the decision
c) All resolutions require a unanimous vote
d) Resolutions are not necessary for decision-making
What is a “debenture”?
a) A type of share
b) A long-term security yielding a fixed interest rate
c) An agreement between shareholders
d) A document for company registration
In which type of company is the liability of members limited by shares?
a) Sole Proprietorship
b) Limited Company
c) Non-Governmental Organization
d) Partnership
What is the minimum number of directors required for a public company?
a) 1
b) 3
c) 5
d) 7
What is the purpose of the “Memorandum of Association”?
a) To outline the company’s internal regulations
b) To define the company’s objectives and scope of activities
c) To set the rules for board meetings
d) To list shareholders’ rights
What does “dissolution” of a company mean?
a) The merging of two companies
b) The legal termination of a company’s existence
c) The liquidation of company assets
d) The transfer of ownership
Which of the following is an advantage of a company structure?
a) Unlimited liability
b) Limited liability
c) Difficult to raise capital
d) Increased personal responsibility
What is a “private placement”?
a) Selling shares to the general public
b) Selling shares to a select group of investors
c) Offering shares at a public auction
d) Issuing bonds instead of shares
Who is responsible for a company’s debts in a limited liability company?
a) The shareholders personally
b) The company itself
c) The board of directors
d) The company secretary
What does “good corporate governance” ensure?
a) High profits
b) Accountability, fairness, and transparency in a company’s relationships
c) Strict regulations
d) Limited shareholder involvement
Which of the following statements is correct regarding company meetings?
a) Annual General Meetings (AGMs) are mandatory for public companies
b) Private companies do not need to hold meetings
c) Resolutions cannot be passed at meetings
d) Board meetings are optional
What is the “Articles of Incorporation”?
a) A summary of company profits
b) A document that establishes a company as a legal entity
c) A financial statement
d) A tax filing
What is the primary purpose of an Annual General Meeting (AGM)?
a) To discuss employee welfare
b) To present the company’s financial statements and elect directors
c) To decide on product launches
d) To review company policies
What is “insider trading”?
a) Buying shares at a low price
b) Buying or selling a company’s stock based on non-public information
c) Selling shares to the public
d) Trading stocks on a stock exchange
What is the purpose of an “auditor”?
a) To manage company operations
b) To independently review and verify the company’s financial statements
c) To set company policies
d) To represent the company in legal matters
What is a “shareholder”?
a) A company employee
b) An individual or entity that owns shares in a company
c) A board member
d) A government official
Which law governs companies in most jurisdictions?
a) Contract Law
b) Companies Act
c) Tax Law
d) Property Law
What does the term “dividend” refer to?
a) The total revenue of a company
b) A portion of a company’s earnings distributed to shareholders
c) The company’s liabilities
d) The investment in the company
What is “liquidation”?
a) The sale of company shares
b) The process of winding up a company’s affairs and distributing its assets
c) The merger of two companies
d) The issuance of new shares

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