MCQ on Issue of Share and Share Capital : Multiple choice questions and answers


1. Match the following: Minimum number of members in

a)      Private Company
2 members
b)      Public Company
7 members

2. Match the following: Maximum number of members in:

a)      Private Company
200 members
b)      Public Company
Any number of members/Limited upto number of shares
c)       Partnership Firm

3. Match the following: Minimum Capital: (No Minimum capital is necessary as per Companies Amendment Act’ 2013)

a)      Private Company
1 lac (Previously)
b)      Public Company
5 lacs (Previously)

4. Match the following:

a)      Interest on calls in advance
12% p.a.
b)      Interest on calls in arrear
10% p.a.
c)       Minimum subscription in case of public company
90% of the entire issue within 90 days
d)      Minimum application money in case of public limited company
5% of the nominal face value [Sec.39]
As per SEBI guidelines 25% of the issue price
e)      Maximum Rate of discount
10% of the nominal value of share

5. Match the following with relevant sections:

a)      Definition of company
Section 2(20)
b)      Issue of share at a premium
Section 52
c)       Issue of share at a discount
Section 53
d)      Books of accounts
Section 128
e)      Sweat Equity Share
Section 54

6. Which of the following statement is false?

a)      A company is a legal entity quite distinct from its members.
b)      A company can buy its own share
c)       A shareholder is the agent of the company
d)      Same person can agent and creditor of the company

7. Which of the following are the characteristics of a company?

a)      Liability of the members is limited upto the face value of shares held by them
b)      It is a voluntary association of persons.
c)       A company is a separate body can sue and be sued in its own name
d)      Perpectual succession
e)      All of the above

8. The term Company and Body corporate denote the same thing.                                           False

9. Body corporate does not include Co- operative society.                                                            True

10. Match the following:

a)      Statutory Company
Formed by special act of the legislature or parliament.
b)      Guarantee company
Liability of the member is limited upto the amount he guaranteed to contribute in the event of winding up.
c)       Deemed public company
Holds 25% of paid up capital of a public company
d)      Chartered companies
Incorporated under special charter by the king or sovereign

11. Minimum and Maximum number of directors:

a) Public Company
Minimum: 3
Maximum: 15 (Not applicable to govt. company)
b) Private Company
Minimum :2
Maximum: 15
c) One Person Company
Minimum: 1
Maximum: 15

12. Minimum number of Quorum:

a) Public Company
Minimum: 5
b) Private Company
Minimum :2
c) One Person Company

13. Which of the following capital is not shown in company’s balance sheet?

a)      Authorised capital
b)      Issued and Subscribed capital
c)       Called and paid up capital
d)      Reserve Capital

14. Permission from central government to issue share capital is required if Nominal capital exceeds Rs. 1 crore.                True

15. A company is said to be Deemed Public Company as per Companies Act, 2013: Deemed Company would mean a company which is subsidiary of a public company. It does not matter if such companies are private by its articles.     false

16. Share application and allotment account is a:

a)      Personal account
b)      Real account
c)       Nominal account

17. Only sweat equity shares can be issued at a discount.                              True

18. Securities premium account is shown on the liabilities side of the balance sheet under the head:

a)      Share capital
b)      Reserves and surplus
c)       Current liabilities

19. As per Section 52 of the companies act, amount collected as premium on securities cannot be utilised for:

a)      Issuing fully paid bonus shares to the members
b)      Purchase of fixed assets
c)       Writing off preliminary expenses
d)      Buy back of its own shares
e)      Premium payable on redemption of preference shares

20. As per SEBI guidelines, a new company (Less than 12 months) without any track record can issue share at a premium.

21. A new company set up by existing companies with five year track record can issue share at premium provided:

a)      Participation of existing companies are not less that 50%
b)      Prospectus contains justification for issue price
c)       The issue price is made applicable to all new investors uniformly.
d)      All of the above

22. Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the central government.                                                 True

23. A company can issue share at a discount if

a)      One year have been elapsed since the date at which the company was allowed to commence business
b)      Sweat Equity Shares issued at a discount must belong to a class of shares already issued
c)       Issue must take place within two must after the date of sanction by the court or within extended time.
d)      All of the above