Company law MCQ Quiz in తెలుగు - Objective Question with Answer for Company law - ముఫ్త్ [PDF] డౌన్‌లోడ్ కరెన్

Key Points

Correct Answer Explanation:
A Red Herring Prospectus (RHP) is indeed issued prior to the issue of the main prospectus. It is a preliminary registration document filed with the securities regulator, which is not complete in terms of details on the price and number of shares to be issued. The purpose of the RHP is to gauge investor interest in the offering.
Overview of Incorrect Options:
After the issue of the main prospectus: This is incorrect because the Red Herring Prospectus comes before the final prospectus. The main prospectus is issued after the RHP and contains all final details including price and number of shares.
With the consent of shareholders: This is not accurate as the issuance of a Red Herring Prospectus is a regulatory requirement for companies seeking to go public and does not directly involve shareholder consent at this stage.
On the behest of ROC (Registrar of Companies): While the ROC plays a role in the registration of companies, the issuance of a Red Herring Prospectus is specifically related to securities regulation and is typically filed with securities regulators, not directly at the behest of the ROC.

The correct answer is Option 4.

Key Points

Chronological Arrangement of Sections under the Companies Act, 2013:

• The Companies Act, 2013, contains various provisions related to different types of prospectuses. These sections are organized in a specific order within the Act.

1. Abridged Prospectus (Section 2(1)):

   • The abridged prospectus is a summary of the prospectus, which includes key information about the company and the public offering.

2. Prospectus (Section 2(70):

   • A prospectus is a formal legal document required by and filed with the relevant regulatory authority that provides details about an investment offering for sale to the public.

3. Deemed Prospectus (Section 25):

   • A deemed prospectus is any document that offers for sale or purchase of securities to the public and is deemed to be a prospectus by virtue of the company’s declaration.

4. Shelf Prospectus (Section 31):

   • A shelf prospectus allows a company to issue securities in multiple tranches over a period of time without the need to file a new prospectus each time.

5. Red-herring Prospectus (Section 32):

   • A red-herring prospectus is a preliminary prospectus filed by a company with the Securities and Exchange Commission (SEC), usually in connection with an initial public offering.

Conclusion:

• The correct chronological order as per the sections of the Companies Act, 2013, is:
  • C. Abridged Prospectus (Section 2(1))
  • E. Prospectus (Section 2(70)
  • B. Deemed Prospectus (Section 25)
  • D. Shelf Prospectus (Section 31)
  • A. Red-herring Prospectus (Section 32)

Therefore, the correct answer is Option 4: C, E, B, D, A.

The correct answer is Option 2.

Key Points

Corporate Social Responsibility (CSR) Committee Requirements:

• As per the Companies Act, 2013 in India, specific companies are required to constitute a Corporate Social Responsibility (CSR) Committee of the Board. This mandate is to ensure that companies contribute towards social and environmental sustainability.

• Criteria for CSR Committee:

  • The Companies Act, 2013 stipulates that every company meeting certain financial thresholds must constitute a CSR Committee.
  • The thresholds are based on net worth, net profit, or turnover during any financial year.

• Specific Thresholds:

  • Net Worth: Rs. 500 Crores or more
  • Net Profit: Rs. 5 Crores or more
  • Turnover: Rs. 1000 Crores or more

Additional Information

• Responsibilities of CSR Committee:
  • The CSR Committee is responsible for formulating and recommending a CSR policy to the Board, indicating the activities to be undertaken as specified in Schedule VII of the Companies Act.
  • The committee also recommends the amount of expenditure to be incurred on the activities and monitors the CSR policy of the company from time to time.
• As per the requirements of the Companies Act, 2013, any company with a net worth of Rs. 500 Crores or more, a net profit of Rs. 5 Crores or more, or a turnover of Rs. 1000 Crores or more during any financial year is required to constitute a Corporate Social Responsibility Committee of the Board. Therefore, the correct answer is Option 2.

The correct answer is 'Lord Macnaghten'

Key Points

• Incorporation Certificate as Conclusive Proof:
  • The incorporation certificate issued by the Registrar of Companies serves as conclusive proof that all statutory requirements regarding registration have been complied with.
  • This principle was first established by Lord Macnaghten in the landmark case of "Jubilee Cotton Mills Ltd. v. Lewis" in 1924.
  • It signifies that once the certificate is issued, the existence of the company cannot be challenged on the grounds of procedural irregularities.

Additional Information

• Other Options:
  • Lord Dunnedt: There is no significant legal precedent attributed to Lord Dunnedt regarding the conclusive nature of the incorporation certificate.
  • Lord Cairns: Known for other legal contributions, particularly in equity and trusts, but not related to this specific principle.
  • Lord Chelmsford: His contributions were more towards parliamentary reforms and legal matters unrelated to company incorporation.

'Equity share capital' with reference to any company limited by shares, means all share capital which is not preference share capital.

Key Points

• Equity Share Capital:
  • Equity share capital represents the ownership stake of shareholders in a company.
  • It is different from preference share capital, which provides certain privileges such as fixed dividends and priority over equity shares in the event of liquidation.
  • Equity shareholders have voting rights and can participate in the company's decision-making process.
  • The value of equity shares can fluctuate based on the company's performance and market conditions.

Additional Information

• Option 2 - All share capital including preference share capital:
  • This option is incorrect because equity share capital specifically excludes preference share capital.
  • Preference shares have different characteristics and rights compared to equity shares.
• Option 3 - The amount of the share capital paid-up or deemed to have been paid-up:
  • This option is incorrect because it refers to the status of payment on shares rather than the distinction between equity and preference shares.
  • Paid-up capital can include both equity and preference shares, and does not specifically define equity share capital.
• Option 4 - All of the above:
  • This option is incorrect because it combines all previous options, including the incorrect ones.
  • Equity share capital must be clearly distinguished from preference share capital, which this option fails to do.

The correct answer is Section 2(20)

Key Points

• Definition of Company under Companies Act, 2013:
  • Section 2(20) of the Companies Act, 2013 defines the term "company".
  • According to this section, a company means a company incorporated under this Act or under any previous company law.
  • This definition is crucial for understanding the legal framework and regulatory requirements applicable to companies in India.

Additional Information

• Section 2(15):
  • Section 2(15) defines "charges" and is not related to the definition of a company.
• Section 2(5):
  • Section 2(5) defines "articles" as in the Articles of Association of a company, which are a document that specifies the regulations for a company's operations and defines the company's purpose.
• Section 2(18):
  • Section 2(18) defines "Chief Executive Officer (CEO)", which is not related to the definition of a company.

Key Points

• Board of Directors as the Brain of the Company:
  • The statement emphasizes the crucial role that the Board of Directors plays in the functioning of a company.
  • It compares the Board of Directors to the brain of a company, implying that they are responsible for making key decisions and guiding the company's actions.
  • The company, represented as the body, acts through its Board of Directors, highlighting their importance in corporate governance.

Additional Information

• Other Options Explained:
  • Greer LJ in Fanton V. Denville: This case does not relate to the statement about the Board of Directors being the brain of the company.
  • Madras High Court in Ramasamy Iyer V. Brahmayya and Co.: This case is also unrelated to the specific context of the Board of Directors' role as described in the correct statement.
  • Supreme Court in State Trading Corporation V. CTO: This case deals with different legal principles and does not address the analogy of the Board of Directors and the company as a body.

The correct answer is Option 4.

Key Points

The correct answer is Option 4.

Key Points

Chronological Arrangement of Sections under the Companies Act, 2013:

• The Companies Act, 2013, contains various provisions related to different types of prospectuses. These sections are organized in a specific order within the Act.

1. Abridged Prospectus (Section 2(1)):

   • The abridged prospectus is a summary of the prospectus, which includes key information about the company and the public offering.

2. Prospectus (Section 2(70):

   • A prospectus is a formal legal document required by and filed with the relevant regulatory authority that provides details about an investment offering for sale to the public.

3. Deemed Prospectus (Section 25):

   • A deemed prospectus is any document that offers for sale or purchase of securities to the public and is deemed to be a prospectus by virtue of the company’s declaration.

4. Shelf Prospectus (Section 31):

   • A shelf prospectus allows a company to issue securities in multiple tranches over a period of time without the need to file a new prospectus each time.

5. Red-herring Prospectus (Section 32):

   • A red-herring prospectus is a preliminary prospectus filed by a company with the Securities and Exchange Commission (SEC), usually in connection with an initial public offering.

Conclusion:

• The correct chronological order as per the sections of the Companies Act, 2013, is:
  • C. Abridged Prospectus (Section 2(1))
  • E. Prospectus (Section 2(70)
  • B. Deemed Prospectus (Section 25)
  • D. Shelf Prospectus (Section 31)
  • A. Red-herring Prospectus (Section 32)

Therefore, the correct answer is Option 4: C, E, B, D, A.

The correct answer is Option 2.

Key Points

Corporate Social Responsibility (CSR) Committee Requirements:

• As per the Companies Act, 2013 in India, specific companies are required to constitute a Corporate Social Responsibility (CSR) Committee of the Board. This mandate is to ensure that companies contribute towards social and environmental sustainability.

• Criteria for CSR Committee:

  • The Companies Act, 2013 stipulates that every company meeting certain financial thresholds must constitute a CSR Committee.
  • The thresholds are based on net worth, net profit, or turnover during any financial year.

• Specific Thresholds:

  • Net Worth: Rs. 500 Crores or more
  • Net Profit: Rs. 5 Crores or more
  • Turnover: Rs. 1000 Crores or more

Additional Information

• Responsibilities of CSR Committee:
  • The CSR Committee is responsible for formulating and recommending a CSR policy to the Board, indicating the activities to be undertaken as specified in Schedule VII of the Companies Act.
  • The committee also recommends the amount of expenditure to be incurred on the activities and monitors the CSR policy of the company from time to time.
• As per the requirements of the Companies Act, 2013, any company with a net worth of Rs. 500 Crores or more, a net profit of Rs. 5 Crores or more, or a turnover of Rs. 1000 Crores or more during any financial year is required to constitute a Corporate Social Responsibility Committee of the Board. Therefore, the correct answer is Option 2.