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B Com Exam  >  B Com Test  >  Company Law  >  Test: Share Capital- 1 - B Com MCQ

Share Capital- 1 - Free MCQ Practice Test with solutions, B Com Company


MCQ Practice Test & Solutions: Test: Share Capital- 1 (10 Questions)

You can prepare effectively for B Com Company Law with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Share Capital- 1". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Share Capital- 1 - Question 1
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What is the nature of a share in a company?

Detailed Solution: Question 1

A share in a company is considered as movable property. It represents a right to a specified amount of the company's share capital, carrying with it certain rights and liabilities while the company is operational and during its winding-up process.

Test: Share Capital- 1 - Question 2
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What is the purpose of book building in an IPO?

Detailed Solution: Question 2

Book building is a process used in IPOs to determine the price of shares. Instead of fixing an exact price, a price range is provided to investors, and they place bids within that range. This mechanism aids in discovering the most suitable price based on market demand.

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Test: Share Capital- 1 - Question 3
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In the book building process, what is the "cut-off price"?

Detailed Solution: Question 3

The cut-off price in the book building process is the final price at which the securities are offered for sale. It is determined based on the weighted average of all the bids received during the process.

Test: Share Capital- 1 - Question 4
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Under what conditions can the directors of a company reject the transfer of shares?

Detailed Solution: Question 4

Directors of a company can reject the transfer of shares in the interest of the company as a whole and the shareholders. The reasons for rejection must be just and equitable and in the general interest of the company.

Test: Share Capital- 1 - Question 5
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What is the main advantage of book building over the fixed price mechanism in IPOs?

Detailed Solution: Question 5

The main advantage of book building over the fixed price mechanism is that it provides flexibility in pricing shares. It allows companies to determine the price through a bidding process, leading to a more efficient and market-driven pricing mechanism.

Test: Share Capital- 1 - Question 6
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What is the difference between transfer and transmission of shares?

Detailed Solution: Question 6

Transfer of shares requires an instrument of transfer and involves a deliberate act by the holder. Transmission of shares results from death or bankruptcy and involves the vesting of shares in a legal representative or official assignee.

Test: Share Capital- 1 - Question 7
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What is the purpose of certification of transfer of shares?

Detailed Solution: Question 7

Certification of transfer of shares is done to indicate that the certificate of shares has been lodged with the company. It serves as a representation by the company that the document evidencing the transferor's title has been presented.

Test: Share Capital- 1 - Question 8
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In the case of listed securities, under what grounds can the directors refuse to register a transfer of shares?

Detailed Solution: Question 8

In the case of listed securities, directors can refuse to register a transfer of shares only on grounds provided by Section 22-A (3) of the Securities Contract (Regulation) Act, 1956. These grounds include contravention of any law or prohibition by any court, tribunal, or authority.

Test: Share Capital- 1 - Question 9
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What happens to a share that is transmitted due to the death of the shareholder?

Detailed Solution: Question 9

In case of transmission due to the death of a shareholder, the legal representative may choose to be registered as the holder of the shares. This requires presenting evidence such as probate of will or letters of administration.

Test: Share Capital- 1 - Question 10
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Why is book building considered an efficient method for pricing securities?

Detailed Solution: Question 10

Book building is efficient because it considers market demand and sets a price range for securities based on investor bids. This mechanism allows for more accurate pricing and reflects market sentiment.

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About this B Com Practice Test

This test contains 10 MCQs on Share Capital- 1 with detailed solutions for each question. It is part of the Company Law course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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If you found this Share Capital- 1 MCQ Test helpful, you can further enhance your B Com preparation with in-depth courses on EduRev, for all the subjects and topics available in Company Law course. The course offers:
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