MCQ on Issue of Share and Share Capital (2020)

MCQ ON ISSUE OF SHARES (REVISED UPTO DATE)

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	100

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	Waived

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.

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. The portion of the authorised capital which can be called-up only on the liquidation of the company is called

a)      Authorised capital

b)      Reserve capital

c)       Issued capital

d)      Called up capital

21. Penalty for delay in refunding application money @ ___ after the expiry of 60 days of the receipt of application money

a)      6%

b)      5%

c)       12% p.a.

d)      20%

22. Payment of interest on calls-in-advance is at the discretion of the company.             False

23. Which of the following statement is false?

a)      Declared dividend should be classified in the balance sheet as a current liability.

b)      Dividends are usually paid as a percentage of paid-up-capital.

c)       A company can raise funds beyond its Authorised capital.

d)      As per the companies act, only preference shares which are redeemable within 20 years can be issued.

24. Which of the following statements are correct?

a)      Subscribed capital is that part of capital which is offered to the public for subscription.

b)      Called-up-capital is that part of the subscribed capital that has been called up.

c)       Paid-up-capital = called-up-capital - calls in arrear

d)      Issued capital is that part of authorised capital which is applied by the public and allotted by company.

25. Which of the following statements are incorrect?

a)      A company registered in India issues only Equity and Preference shares.

b)      The preference share is that part of share capital which enjoys preferential rights regarding repayment of Capital and payment of Dividend.

c)       A Public limited company can commence business as soon as it is incorporated.

d)      All companies having share capital is required to obtain certificate of commencement of business.

26. Securities premium once received cannot be cancelled.                         True

27. Which of the following is not a statistical book of a company?

a)      Share application and allotment book

b)      Register of share warrants

c)       Register of shares and debentures transferred

d)      Register of debenture holders

28. Which of the following is not a statutory book of a company?

a)      Annual returns

b)      Minutes book

c)       Register of fixed deposits

d)      Agenda book

29. Technique used for marketing a public offer of equity shares of a company is called book building process.   True

30. Free pricing mechanism is used in pricing issue of share.                                         True

31. Match the following:

a)      Rematerialization	Conversion of electronic securities into physical form
b)      Dematerialization	Conversion of physical shares into electronic securities
c)       Sweat equity shares	Shares issued at a discount or consideration other than cash for providing know how or rights or value addition.
d)      Employee’s stock option schemes	Option given to the whole time directors, officers and employees to purchase securities.

32. Share capital suspense account is opened when:

a)      Balance sheet is not tallied

b)      When dividend is declared but not paid

c)       When shares are forfeited

d)      When application money is received but balance sheet is prepared before allotment of shares.

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

34. 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

35. 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

36. 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