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Test: Company Law- 1 - B Com MCQ


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10 Questions MCQ Test - Test: Company Law- 1

Test: Company Law- 1 for B Com 2024 is part of B Com preparation. The Test: Company Law- 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Company Law- 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Company Law- 1 below.
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Test: Company Law- 1 - Question 1
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Which legal principle supports the idea that a company can own, enjoy, and dispose of property in its own name?

Detailed Solution for Test: Company Law- 1 - Question 1
The legal principle of "Separate Legal Entity" states that a company is a distinct legal person from its shareholders. This concept allows the company to hold property in its own name and manage its affairs independently, separate from the individual ownership of its members.
Test: Company Law- 1 - Question 2
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In a public company, how are shares typically characterized in terms of their transferability?

Detailed Solution for Test: Company Law- 1 - Question 2
In a public company, shares are generally freely transferable. Shareholders have the statutory right to transfer their shares to others. While there can be reasonable restrictions specified in the company's articles, the general rule is that shares in a public company are transferable without undue restrictions.
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Test: Company Law- 1 - Question 3
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What is the primary characteristic of a company's legal personality?

Detailed Solution for Test: Company Law- 1 - Question 3
One of the primary characteristics of a company's legal personality is its perpetual existence. This means that the company's life is not affected by the death, insolvency, or retirement of its shareholders or directors. Unlike natural persons, a company can continue to operate indefinitely, even as its membership changes over time.
Test: Company Law- 1 - Question 4
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What is the legal basis for a company's ability to enter into contracts, own property, and sue or be sued in its own name?
Detailed Solution for Test: Company Law- 1 - Question 4
The legal principle of "Separate Legal Entity" grants a company the ability to enter into contracts, own property, and engage in legal actions in its own name. This concept treats the company as a distinct legal person with rights and responsibilities separate from its members.
Test: Company Law- 1 - Question 5
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What is the main responsibility of directors in a company's management structure?
Detailed Solution for Test: Company Law- 1 - Question 5
Directors are responsible for deciding the general policy of the company and overseeing its day-to-day operations. They act as the elected representatives of the shareholders and play a vital role in the management and decision-making processes of the company.
Test: Company Law- 1 - Question 6
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Which case established the principle of separate legal entity for companies beyond doubt?
Detailed Solution for Test: Company Law- 1 - Question 6
The case of Saloman v Salomon & Co. Ltd. established the principle of separate legal entity for companies beyond doubt. It clarified that a registered company is an entity distinct from its members, even if one person holds all the shares in the company.
Test: Company Law- 1 - Question 7
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In a company limited by shares, what is the extent of liability of a member for unpaid shares?
Detailed Solution for Test: Company Law- 1 - Question 7
In a company limited by shares, a member's liability is limited to the unpaid value of the shares they hold. For instance, if a member has paid Rs. 7 per share out of a Rs. 10 face value share, their liability towards the company's debts is limited to Rs. 3 per share.
Test: Company Law- 1 - Question 8
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What is the essential characteristic of a company's artificial legal personality?
Detailed Solution for Test: Company Law- 1 - Question 8
The essential characteristic of a company's artificial legal personality is that it exists only in the eyes of the law. It doesn't have a physical existence like a natural person, but it possesses certain properties and rights as granted by its legal creation.
Test: Company Law- 1 - Question 9
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What is the minimum number of members required to form a public company in India?
Detailed Solution for Test: Company Law- 1 - Question 9
To form a public company in India, a minimum of seven members are required. These members will subscribe their names to the Memorandum of Association and fulfill other legal requirements for company registration.
Test: Company Law- 1 - Question 10
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What happens to a company's existence if all its members are killed in a catastrophic event?
Detailed Solution for Test: Company Law- 1 - Question 10
The concept of perpetual existence means that a company continues to exist regardless of changes in its membership, even if all its members are killed in a catastrophic event. The company's separate legal entity ensures that it can endure such events and continue its operations.
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