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Test: Alteration Of Share Capital - B Com MCQ


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10 Questions MCQ Test - Test: Alteration Of Share Capital

Test: Alteration Of Share Capital for B Com 2024 is part of B Com preparation. The Test: Alteration Of Share Capital questions and answers have been prepared according to the B Com exam syllabus.The Test: Alteration Of Share Capital MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Alteration Of Share Capital below.
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Test: Alteration Of Share Capital - Question 1
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What is the main characteristic of a company as defined by Justice James?

Detailed Solution for Test: Alteration Of Share Capital - Question 1
A company is defined as a voluntary association of persons who contribute money or money's worth to a common stock and use it for a common purpose. This is a fundamental characteristic of a company.
Test: Alteration Of Share Capital - Question 2
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Which type of shares enjoy preferential rights to dividend and repayment of capital in the event of winding up of the company over equity shares?

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Cumulative preference shares have the feature of carrying forward arrears of dividend to subsequent years, ensuring that shareholders receive their dividend even if it couldn't be paid in previous years.
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Test: Alteration Of Share Capital - Question 3
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What is the maximum amount of capital that a company is authorized to raise by way of public subscription called?

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Authorized capital represents the maximum amount of capital a company can raise through the issuance of shares to the public. It is mentioned in the company's Memorandum of Association.
Test: Alteration Of Share Capital - Question 4
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Which type of shares are issued to shareholders at a price higher than their face value?
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Participating preference shares are those that receive a fixed dividend along with a share in the surplus profits after meeting equity dividend. The additional share in profits is what differentiates them from other types of shares.
Test: Alteration Of Share Capital - Question 5
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What is the purpose of converting fully paid-up shares into stock?
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Converting fully paid-up shares into stock allows for a more flexible distribution of dividends. Stock can be easily divided and allocated to shareholders, allowing for dividend payments in a more precise manner.
Test: Alteration Of Share Capital - Question 6
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In the context of capital reorganization, what is the primary reason for a company to consolidate its shares?
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Consolidation of shares involves combining a certain number of existing shares into a smaller number of new shares. This reduces the number of shares in circulation, making each share more valuable.
Test: Alteration Of Share Capital - Question 7
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When can shares be issued at a discount?
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Shares can be issued at a discount only when authorized by a special resolution passed by the company in a general meeting. The maximum allowable discount is 10% of the nominal value of the shares.
Test: Alteration Of Share Capital - Question 8
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What legal process is generally required when a company wishes to reduce its share capital?
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Reducing share capital is a sensitive issue as it affects the rights and interests of creditors. Thus, a court or tribunal's approval is generally required for such actions to ensure fair treatment to all stakeholders.
Test: Alteration Of Share Capital - Question 9
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Under what circumstances might a company need to reduce its capital through internal reconstruction?
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Internal reconstruction involves reorganizing a company's capital and balance sheet to address issues like accumulated business losses or fictitious assets, providing a true and fair view of the company's financial position.
Test: Alteration Of Share Capital - Question 10
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What is the primary reason for a company to undertake external reconstruction?
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External reconstruction might involve creating distributable reserves by reorganizing the company's capital structure. This allows the company to have resources for future dividend distributions to shareholders.
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