TN Board 12th Commerce Important Questions Chapter 26 Companies Act, 2013

Students get through the TN Board 12th Commerce Important Questions Chapter 26 Companies Act, 2013 which is useful for their exam preparation.

TN State Board 12th Commerce Important Questions Chapter 26 Companies Act, 2013

Very short answer questions

Question 1.
What is a company?
Answer:
Company form of business has certain distinct advantages over other forms of business like a sole proprietorship, partnership, etc., It includes features such as limited liability, perpetual succession, etc.

Question 2.
What are the different stages of the formation of the company?
Answer:

Promotion
Registration
Capital subscription
Commencement of business

Question 3.
What is a public company?
Answer:
A corporation whose ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange or in the counter market.

Question 4.
Explain articles of association.
Answer:
Articles of association is a document which along with the memorandum of association from the company’s constitution defines the responsibilities of the directors the kind of business to be undertaken and them by which the shareholder’s extent control over the board of directors.

Question 5.
What is share capital?
Answer:
Share capital consists of all funds raised by a company in exchange for shares of either common or prepared shares of stock. The amount of share capital or equity financing a company has can change over time.

Question 6.
Mention the kinds of preference shares.
Answer:

Cumulative preference shares
Non-cumulative preference shares
Redeemable preference shares
Non – Redeemable preference shares
Convertible preference shares
Non – Convertible preference shares
Participating preference shares
Tenure of preference shares

Question 7.
Define share certificate.
Answer:
A share certificate is an instrument in writing that is legal proof of the ownership of the number of shares in it. Every company limited by shares whether it is public or private must issue the share certificate to its shareholders except in the case where shares are held in a dematerialization system.

Question 8.
What is stock?
Answer:
A stock is a general term used to describe the ownership certificates of any company. A share on the other hand refers to the stock certificate of a particular company. Holding a particular company’s shares makes you a shareholder.

Question 9.
When the certificate of incorporation issued by the registrar?
Answer:
After scrutinizing all the documents filed by the promoter the registrar enters the name of the company in the register of companies and charges a registration fee. The registrar then issues the “Certificate of Incorporation”.

Question 10.
Mention a few features of debentures.
Answer:

It is issued by the company in the form of a certificate under the common seal.
It is a movable property.
Debenture holders are the creditors of the company.
Debentures carry a fixed rate of interest.
Debentures may be either secured or unsecured.

Short answer questions

Question 1.
Discuss the history of company law in India.
Answer:
The earliest business association in England was the “Merchant Guilds”. Some of the merchant Association or guilds who have regulated the companies-

A Royal charter established the East India Company in the year 1600.
In England, the joint-stock companies act was passed for the first time in 1844.
In the year 1850, taking the English joint-stock companies Act, 1844 as a base, a provision was made for the registration of joint-stock companies in India.
The joint-stock companies act was passed in India by introducing the concept of limited liability in the year 1857.
In 1913, the Indian companies act of 1913 was passed. The act introduces the institution of private companies in the corporate sector in India.

After Independence based on the recommendation of Shri. H.C. Baba committee in 1950 and the provisions of the English Companies Act 1948 the Companies Act 1956 was introduced in the Parliament.

Question 2.
Explain different kinds of share capital.
Answer:
According to section 43 of the Act, a company that is limited by shares can issue two classes of shares. They are

Equity share capital
(a) With voting rights or
(b) With differential rights as to dividend, voting, or otherwise in accordance with such rules as may be prescribed.
Equity shares: Those shares which are not called as preference share are known as equity share or the share of a company which does not have any preferential rights with regard to dividend and repayment of the share capital at the time of liquidation of a company.
Preference shares: Section 42 of the companies Act, 2013 the term “Preference shares” means that part of the share capital the holders of which have a preferential right overpayment of dividend and repayment of share capital in the event of winding up of the company.

Question 3.
What are the details contains in the share certificate?
Answer:

Company name
Date of issue
Details of the member
Shares held
Nominal value
Paid-up value
Definite number

Long answer questions

Question 1.
Explain briefly the formation of a company.
Answer:
Section 3(1) of the Act states that a company may be formed for any lawful purpose by:

Seven or more persons, where the company to be formed is to be a public company.
Two or more persons where the company to be formed is to be a private company or
One person, where the company to be formed is to be one person company, that is to say, a private company by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration “Formation of a company” has been divided into four stages:
(a) Promotion
(b) Registration
(c) Capital subscription
(d) Commencement of business
Out of the four stages, the first two stages promotion and registration are necessary for both public and private companies. A private company can start operating its business immediately after registration, but a public company has to pass through two more stages capital subscription and commencement. of business.

Question 2.
Discuss private placement.
Answer:

Private placement means an offer of securities or invitation to subscribe to securities to a select group of persons through a private placement offer.
The number of subscribers under private placement should not exceed 50 members or such numbers prescribed.
Qualified institutional buyers and employees holding shares under stock option plans should be excluded in a country the maximum members mentioned above.
But, companies going for private placement should fulfill certain conditions mentioned in the Companies Act 2013 in this regard. Then only they can collect capital through private placement.

Multiple-choice questions

1. In which year a Royal Charter established the East India company?
(a) 1605
(b) 1603
(c) 1601
(d) 1600
Answer:
(d) 1600

2. In which act introduces the institution of private companies in the corporate sector in India?
(a) The Indian Companies Act
(b) Industrial and financial reconstruction
(c) Joint-stock companies Act
(d) None
Answer:
(a) The Indian Companies Act

3. According to section 2(11) “body corporate” or corporate includes:
(a) Private company
(b) Public company
(c) Small company
(d) All the above
Answer:
(d) All the above

4. How many stages of information of a company?
(a) 8
(b) 6
(c) 4
(d) 2
Answer:
(c) 4

5. According to sec 35 of companies act issued by the registrar.
(a) Certificate of incorporation
(b) Power of attorney
(c) Verification
(d) Article of association
Answer:
(a) Certificate of incorporation

6. A fraction or portion of the total capital of the company which has equal denomination is known as:
(a) Share
(b) Debentures
(c) Promoter
(d) Bond
Answer:
(a) Share

7. ………. is issued under the common seal of the company acknowledging the receipt of money.
(a) Stock
(b) Debenture
(c) Bank loan
(d) None
Answer:
(b) Debenture

8. The debentures which are issued with a condition ………. at a fixed date or upon demand.
(a) Redeemable
(b) Irredeemable
(c) Secured
(d) All the above
Answer:
(a) Redeemable

9. Instruments are secured by a charge on the fixed asset of the issuer company is known as:
(a) Unsecured debentures
(b) Secured debentures
(c) Redeemable debentures
(d) Irredeemable debentures
Answer:
(b) Secured debentures

10. …………. generally have a charge on the assets of the company.
(a) Share
(b) Bond
(c) Debentures
(d) Loan
Answer:
(c) Debentures

11. When a company needs ……….. for extension and development purpose.
(a) Interest
(b) Funds
(c) Labour
(d) Loan
Answer:
(b) Funds

12. Instruments that retain the debt character and cannot be converted into equity shares are called as:
(a) Partly convertible debentures
(b) Fully convertible debentures
(c) Non convertible debentures
(d) All the above
Answer:
(c) Non convertible debentures

13. ………. became payable on the company going to liquidation.
(a) Redeemable debenture
(b) Irredeemable debenture
(c) Both (a) and (b)
(d) None
Answer:
(c) Both (a) and (b)

14. ……….. is an instrument in writing that is legal proof of the ownership of a number of shares stated in it.
(a) Share warrant
(b) Share certificate
(c) Certificate incorporation
(d) Issue of securities
Answer:
(b) Share certificate

15. ………… can raise funds from the public by issuing shares.
(a) Public company
(b) Private company
(c) Joints stock company
(d) Sole proprietorship
Answer:
(a) Public company