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Distinction between private and public companies - class-XI

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A private company does not issue prospectus.
  1. True

  2. False


Correct Option: A
Explanation:
(i) Prospectus is a document which invites offers from public to purchase shares or debentures of a company. 
(ii) It gives all essential information about every aspect of the company. 
(iii) Prospectus of a company is a written request to the investors to purchase (subscribe) its shares and debentures of a public limited company by shares.
(iv) A copy of prospectus must be filed with the Registrar of Companies. 
(v) Prospectus must be issued to the public within 90 days from the date of filing it with Registrar of Company. 
(vi) The main purposes of a prospectus is to raise the requited capital for business of a compy
(vii) Prospectus is issued by 'Public Limited' company by shares only. 
(viii) 'Private Ltd' company cannot issue prospectus since it cannot invite general public to purchase its shares. 
(ix) In case, no prospectus is issued a statement-in-lieu of prospectus must be filed with Registrar of Companies. 
A private company can adopt Table 'A' in place of its Articles.
  1. True

  2. False


Correct Option: B
Explanation:
(i) A company is a private company, which by its articles 
    (a) limits the maximum membership to 50, excluding present and past employees. 
    (b) prohibits public (subscription) investment to its shares and debentures. 
    (c) restricts the transfer of its shares. 
(ii) The Articles of Association is a document regulating the right of members of the company among themselves and the manner in which the business of the company shall be conducted
(iii) Table 'A' is a model set of articles given by the Companies Act, 1956 in its schedule I.I. contains in all 99 articles. 
(iv) Normally, all private companies prepare their own articles and file the same with the Registrant 
(v) If a private company has prepared its own articles, there is no need for it to adopt Table 'A'. 
(vi) Generally, all these (99) articles are applicable to a public company. 
(vii) That is why, a public company may adopt Table 'A' fully or partially and in addition ma adopt its own articles. 
(viii) In case, no Articles of Association is filed at the time of incorporation by a public company limited by shares, Table 'A' automatically becomes applicable to such a company. 
(ix) Hence, a private company does not adopt Table `A' as it prepares its own Articles.

Rajeev is a member (a type of owner) of a marine supply business with many shareholders.
Rajeevs business is __________.

  1. a sole proprietorship.

  2. a limited liability partnership.

  3. a limited liability company.

  4. a general partnership.


Correct Option: C

Select out the feature which is NOT found in a private limited company?

  1. Raising capital for the business is easier

  2. Shares can be bought and sold on the Stock Exchange

  3. Subscribers of the business have limited liability

  4. The business continues after the death of shareholders


Correct Option: B

Which of the following statements about most public limited companies is true?

  1. They are owned and controlled by the employees

  2. They are owned by the directors but controlled by the shareholders

  3. The are owned by shareholders but controlled by directors

  4. They are owned and controlled by the promoters


Correct Option: B

Which of the following statements suits best to private limited company?

  1. It is owned by the government

  2. It is owned by shareholders who can sell their shares in the Stock Exchange

  3. It is formed for the benefit of society at large

  4. Its accounts can be kept private and it receives little coverage in the business


Correct Option: D

Out of these which statement is true?

  1. Both private and public companies need one director

  2. Private companies need two directors but public companies need 3

  3. Private companies need one directors but public companies need two

  4. Both private and public companies need two directors


Correct Option: A

By EXIM policy we mean _____________________.

  1. external and internal policy

  2. export-import policy

  3. extra import policy

  4. none of the above.


Correct Option: B

Strategy that is adopted when the company is performing poorly or when it no longer fits the company's strategic profile is known as ____________.

  1. divestment strategy

  2. liquidation strategy

  3. transformation strategy

  4. turnaround strategy


Correct Option: A

The method of advertising for vacancies internally by posting a notice of the opening on bulletin board, etc. is known as ___________.

  1. Job posting

  2. Job enlargement

  3. Job bank

  4. Job description


Correct Option: A

In the words of " _______ "a public Corporation is an organization that is clothed with the power  of the government, but is possessed with the flexibility and initiative of private enterprise."

  1. Roosevelt

  2. Schumpeter

  3. Prof. Robson

  4. Ronaldo


Correct Option: A

Who headed a team at the Hawthrone plant of the Western Electric Company?

  1. Henri Fayol

  2. Elton Mayo

  3. McGregor

  4. Mintzberg


Correct Option: B

Every listed public company shall have at least  __________ of the total number of directors as independent directors.

  1. One-fourth

  2. Two-third

  3. One-third

  4. Three-fourth


Correct Option: C

__________ has been founded to act as permanent watchdog on the International Trade.

  1. IBRD

  2. ADB

  3. WTO

  4. IMF


Correct Option: C
Explanation:

WTO or World Trade Organization has been founded to act as permanent watchdog on the International Trade. Its main function is to ensure global trade flows. The World Trade Organization is an intergovernmental organization. It is concerned with the regulation of international trade between nations.

The maximum number of members in a private limited company is ________________.

  1. $10$

  2. $25$

  3. $50$

  4. Unlimited


Correct Option: C
Explanation:

The maximum number of members in a private limited company is 50. According to the provisions of Companies Act 2013, Private limited company can be started with minimum 2 members and maximum 50 members.

Which of the following companies must appoint woman director ?
(I) Listed Company
(II) Every  public company having paid up share capital of Rs.100 Crores or more as on the last date of latest audited financial statements.
(III) Every public company having borrowing of Rs.500 Crores or more as on the last date of latest audited financial statements.
(IV) Every other public company having net capital employed of Rs.500 Crores or more as on the last date of latest audited financial statements.
(V) Every public company having turnover of Rs.300 crore or more as on the last date of latest audited financial statements.
Select the correct answer from the options given below -

  1. (I), (II), & (V) of the above

  2. (II), (III), & (IV) of the above

  3. (I) & (III) of the above

  4. (I), (II), (III) & (IV) of the above


Correct Option: A
A company which can start a business after getting the certificate of incorporation is a ____________.
  1. private company

  2. public company

  3. joint stock company

  4. none of these


Correct Option: A
Explanation:

After certificate of incorporation, a private company can start its business. Incorporation of a Joint stock company is compulsory. Without incorporation, all the contracts would be considered void in the eyes of law and operations of business cannot be carried out.

Private company need not hold the __________ .
  1. Statutory meeting

  2. Annual general meeting

  3. Extra-ordinary general meeting

  4. All of above


Correct Option: A
Explanation:

private limited company and a company limited by guarantee not having share capital need not hold a statutory meetingStatutory meeting must be held within a period of not less than one month and not more than six months after the date on which it is authorized to commence its business.

State the following statement is True or False:

The private company need not hold the statutory meeting.

  1. True

  2. False


Correct Option: A
Explanation:

private limited company and a company limited by guarantee not having share capital need not hold a statutory meetingStatutory meeting must be held within a period of not less than one month and not more than six months after the date on which it is authorized to commence its business.

Select the correct option given below:

The quorum for general meeting of a private company according to the Companies Act, 1956 is _______.

  1. 2

  2. 3

  3. 7

  4. 10


Correct Option: A

Write a word, term or a phrase which can substitute each of the following statements:
____________ quorum required for extra-ordinary general meeting of private company.

  1. Two members

  2. Three members

  3. Five Members

  4. Ten members


Correct Option: A
Explanation:
Section 103 of the Companies Act, 2013 specifies the criteria for Quorum of a meeting.
In case of a Public company,—
If No. of members as on the date of meeting, Quorum is:
  1. Not more than 1,000: 5 members personally present
  2. More than 1,000 but up to 5,000: 15 members personally present
  3. Exceeds 5,000: 30 members personally present

In the case of a Private company, —
 Quorum - 2 members personally present at the meeting.

Select out the feature which is NOT found in a private limited company?

  1. Raising capital for the business is easier.

  2. Shares can be bought and sold on the Stock Exchange.

  3. Subscribers of the business have limited liability

  4. The business continues after the death of shareholders


Correct Option: B
Explanation:

Private limited company is a type of company that offers limited liability, or legal protection to its share holders. It has the following features:

  1. Raising capital for the business is easier.
  2. Subscribers of the business have limited liability.
  3. The business continues after the death of shareholders.

Which of the following statements suits best to private limited company?

  1. It is owned by the government

  2. It is owned by shareholders who can sell their shares in the stock exchange

  3. It is formed for the benefit of society at large

  4. Its accounts can be kept private and it receives little coverage in the business


Correct Option: D
Explanation:

Private limited companies is a type of company which has limited liability and offers legal protection to its share holders. The accounts of this company are kept private between the members themselves and also it receives little coverage in the business.

Which of the following statement is true?

  1. Both private and public companies need one director

  2. Private companies need two directors but public companies need 3

  3. Private companies need one director but public companies need two

  4. Both private and public companies need two directors


Correct Option: B
Explanation:

Minimum number of three directors is required in case of public company while two are required in case of public company and one director in case of One person company.

What is the disadvantage of a public corporation?

  1. No legal entity

  2. Excessive accountability

  3. Lack of availability of managerial talent

  4. No financial autonomy


Correct Option: B

Private corporation are owned by _______.

  1. private firm

  2. individual owner

  3. government & local govt

  4. none of the above


Correct Option: C

Limited Liability Partnership form of business organization has been introduced in India by ________.

  1. Indian Companies Act, $1956$

  2. Limited Liability Partnership Act, $2008$

  3. Indian Contract Act

  4. Limited Liability Partnership Act, $2006$


Correct Option: B

Which amongst these is NOT A disadvantage of incorporating a company _____________.

  1. separate identify

  2. formation do expensive

  3. detailed winding up procedures

  4. co operate disclosures


Correct Option: A

For constituting a company meeting what will be true, ____________________.

  1. One person can never constitute a meeting.

  2. One person may constitute a meeting in exceptional circumstances

  3. Neither a nor b

  4. Both a and b.


Correct Option: B

A company, when registered with limited liability under the Companies act. 1956 shall be deemed to be a company ________.

  1. limited by shares

  2. limited by money

  3. limited by directors

  4. all of the above


Correct Option: A

The position of a company secretary is like that of a hub in a bicycle wheel this statements shows the ___________________.

  1. Importance of company secretary

  2. Rights of company secretary

  3. Duties of company secretary

  4. Liabilities of company secretary


Correct Option: A

A new company was formed. All the directors appointed in the new company were appointed by XYZ Ltd. Thus the new company is __________ of XYZ Ltd.

  1. Holding

  2. Subsidiary

  3. An independent company which has not established business in India.

  4. None of the above.


Correct Option: B

Which section of Companies Act describes public company_______.

  1. sec. 3(1) (iii)

  2. see. 3(1) (iv)

  3. sec. 3(1) (ii)

  4. none of the above.


Correct Option: B

Within _________ months the company formation should be done after the name approval has been received by the company.

  1. 3 months

  2. 3 days

  3. 3 years

  4. No limitation of time


Correct Option: A

Salomon v. Salomon and Company proved that ____________.

  1. Company, is independent person.

  2. A person can be a member as well as creditor.

  3. Shareholder is not liable for the debt of co.

  4. All of the above.


Correct Option: D

A co. was incorporated outside India before April 1, 1956 and is still having its business in India. It is a ______________________.

  1. foreign company

  2. indian company

  3. government Co

  4. none of the above


Correct Option: A

The companies which are formed under Companies Act. 1956 they will be called as _________________.

  1. Chartered companies

  2. Statutory companies

  3. Registered companies

  4. None of these


Correct Option: C
Explanation:

A Company which is formed and registered under the Companies Act, 2013, including the companies which are earlier registered under any of the previous companies act, are called as the Incorporated or Registered Company.

Can a company keep more than 21 days notice as the minimum requirements for calling AGM?

  1. Yes

  2. No

  3. It has to be legal

  4. Both a & c


Correct Option: A

For public company is should start business only after getting certificate of _______________.

  1. Incorporation

  2. Certificate of Commencement of business

  3. Both

  4. None of these


Correct Option: C
Explanation:

Certificate of incorporation is a legal document required at the time of company formation. It is said to be a license to form a company, issued by the state government or, in some jurisdictions, by non-governmental entity. A public limited company having share capital, can not start its business unless it obtains the certificate of commencement of business from the Registrar of Companies. So a public company required both the certificates to start it's business.

It is required that Public Ltd. Co. should hold the statutory meeting just after getting certificate of commencement.

  1. No, can hold after 6 months.

  2. Yes

  3. No, can hold within 6 months

  4. No


Correct Option: C
Explanation:

A statutory meeting is the first meeting of the shareholders of a public limited company which is held only once in the life-time of the company.  All the companies, those are required to hold Statutory Meeting shall hold its Statutory Meeting within a period of not less than 1 month nor more than 6 months from the date at which the company is entitled to commence business.

Private company can allot shares without receiving minimum subscription

  1. Yes

  2. No

  3. Unknown

  4. None of the above


Correct Option: A
Explanation:

A privately held company, private company, or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members.

A company limited by guarantee means_________________.

  1. To the extent of guarantee given

  2. Unpaid Value of shares

  3. Unlimited

  4. None of the above


Correct Option: A

A company is exempted to add Ltd or Pvt Ltd at the end of their name it is a ______________.

  1. Private Company

  2. Govt. Company

  3. Defunct Company

  4. None of the above


Correct Option: D
Explanation:

The name of the company is the indicator of its legal status. When you're starting a small business, deciding its legal structure is one of the first steps. Legal structure is usually determined by the business type, the number of owners or investors it has, and how tax and liability issues are best managed. You'll likely use an abbreviation, such as Inc., Ltd., Co., or LLC, after your business's name to indicate its structure. 

Company, which is registered under section 8 of the companies act,  2013 (earlier section 25 of the companies act, 1956), can take the exemption of omitting the word ‘limited’ or ‘private limited’ in their name.  
A Company which is listed in any stock exchange doesn’t have to additionally add any words in its name extra.

Minimum no of members to be present for a Public Ltd. company meeting is ___________.

  1. 5

  2. 2

  3. 7

  4. 3


Correct Option: A
Explanation:

In case of a public company five members should be personally present if the number of members as on the date of meeting is not more than one thousand. 

If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company, the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or the meeting, if called by requisitionists under section 100, shall stand cancelled. 

If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.

S Ltd. had 9,000 8% preference tires of Rs 100 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares. How much equity shares are required to be issued if new equity shares are to be issued at Rs 12 for a premium including Rs 2 ______________.

  1. 90,000

  2. 1,00,000

  3. 5,000

  4. 93,333


Correct Option: A

The term Public Ltd. Company is defined in section _________ of the Companies Act, $2013$.

  1. $2(71)$

  2. $3(1)(iv)$

  3. $3(2)$

  4. $4$


Correct Option: A
Explanation:

As per section 2(71) of the companies Act 2013 a public limited company is a company which is not a private company and has a minimum paid up share capital of Rs-5,00,000. The minimum number of members in a public limited company are seven and maximum are unlimited. 

The term private company is defined in section ________ of the New Companies Act, $2013$.

  1. $2(68)$

  2. $3(1)(iii)$

  3. $3(2)$

  4. $4$


Correct Option: A
Explanation:
As per Section 2(68) of the companies Act 2013, a Private company is a company which has a minimum 2 directors and minimum paid up share capital of rupees 1 lakh  or any higher amount as may be prescribed and which through its articles -
1) Restricts the right to transfer shares 
2) Limits the number of members to 200 (except in case of one person company).

State the following statement is True or False:
A public company can commence (start) its business only after obtaining the trading certificate.

  1. True

  2. False


Correct Option: A
Explanation:
A public company, has to goes through the capital subscription stage and then receives the certificate of commencement. Only after obtaining the trading certificate, a public company can commence its business.

State the following statement is True or False:
Underwriter purchase unsold shares of the company.

  1. True

  2. False


Correct Option: A
Explanation:

It is true. A company must have an underwriter, who helps the companies in introducing their securities to the market. An underwriter is required to sell securities and if he is not able to sell, then underwriter is liable to purchase the unsold shares of the company.

Legal controls, restrictions are more & strict on public companies ____________.

  1. True

  2. False

  3. Not relevant

  4. Nothing applicable


Correct Option: A

State the following statements is True or False.

Every public company must hold a statutory meeting.

  1. True

  2. False


Correct Option: A
Explanation:

Every public company that is a limited company and has a share capital shall, within a period of not less than one month and not more than three months after the date at which it is entitled to commence business, hold a general meeting of the members of the company to be called the "statutory meeting".

The statutory meeting is compulsory for a public company .
  1. True

  2. False


Correct Option: A
Explanation:

Every public company that is a limited company and has a share capital shall, within a period of not less than one month and not more than three months after the date at which it is entitled to commence business, hold a general meeting of the members of the company to be called the "statutory meeting"

Select the correct option given below:

The quorum for general meeting of a public company according to the Companies Act, 1956 is _______.

  1. 2

  2. 5

  3. 8

  4. 10


Correct Option: B
State the following statement is True or False:
Before the statutory meeting the secretary has to draft the statutory report.
  1. True

  2. False


Correct Option: A

State the following statements is True or False:

The first general meeting of a public company is the Statutory meeting.

  1. True

  2. False


Correct Option: A

Fill in the blanks:
A public company must publish ________ for raising capital.

  1. prospectus

  2. articles of association

  3. memorandum of association

  4. None of these


Correct Option: A
Explanation:
Sec. 2(36) of the Companies Act describes a prospectus as “any document issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any share in, or debentures of a body corporate.”

In other words, it is a document which invites deposits from the public or invites offers from the public for the subscription of shares in, or debentures of, a company. The words “inviting deposits from the public” were added by the Companies (Amendment) Act, 1974.
Thus a public company must publish prospectus for raising capital.
A company which has at least three Directors is a _______.
  1. private company

  2. public company

  3. government organisation

  4. None of these


Correct Option: B

Many private limited companies convert into public limited companies because _____.

  1. they do not want to change their business

  2. they want to gain the benefits of limited liability

  3. they want to get guarantee from its members

  4. they want to raise additional capital to expand the business


Correct Option: D
Explanation:

Private limited company is a type of company that offers limited liability, or legal protection to its share holders. Many private limited companies who want to expand their business convert themselves into public limited companies. As the public limited companies are widely spread they can expand the business easily.

What is the maximum number of partners involved in the non-banking organisation in India?

  1. 100

  2. 15

  3. 20

  4. 7


Correct Option: A
Explanation:

The maximum number of partners as per Companies Act, 2013 can be 100.

Which of the following statement about most public limited companies is true?

  1. They are owned and controlled by the employees

  2. They are owned by the directors but controlled by the shareholders

  3. They are owned by shareholders but controlled by directors

  4. They are owned and controlled by the promoters


Correct Option: B
Explanation:

Public limited companies are the companies which are owned by the state government. They work for the society at large. They are owned by the directors of the company. The directors appoints shareholders who manages all the operations of the company.

Minimum paid up share capital in case of a public company is _______.

  1. 1 Lakh

  2. 3 Lakhs

  3. 5 Lakhs

  4. 7 Lakhs


Correct Option: C
Explanation:

According to the provisions of the Indian Companies Act, 2013, minimum paid up share capital in case of a public company is Rs. 5 lakhs.

Maximum no. of members in case of public company is _________.

  1. 0

  2. Unlimited

  3. 50

  4. 100


Correct Option: B
Explanation:

According to the provisions of the Indian companies act, 2013, maximum no. of members in case of public company is unlimited.

The companies are governed by the Indian Companies Act _____________________.

  1. Indian Companies Act, $2013$

  2. Indian Companies Act, $1957$

  3. Indian Companies Act, $1958$

  4. Indian Companies Act, $1959$


Correct Option: A

Which option is NOT suitable for winding up of a company?

  1. Dissolving or winding up by agreement.

  2. Dissolving or winding up by law.

  3. Dissolving or winding up by creditors with the help of law.

  4. Dissolving or winding up by members with the help of law.


Correct Option: A

Which is NOT a feature of an incorporated company?

  1. Transferability of shares.

  2. Limited liability

  3. Common seal

  4. It is an agent


Correct Option: D

Which one of the following statements in respect of a public limited company is correct?

  1. There can be less than 7 members.

  2. The convent of directors and their contract to purchase qualificationshares, if any, required must be filed.

  3. Remuneration of directors is not controlled by any provision of companies Act

  4. None of the above


Correct Option: B

When the data is shared with the Company's suppliers in SCM than it is called ?

  1. Upstream

  2. Downstream

  3. Both a & b

  4. None of the above


Correct Option: A

Who all can call extra ordinary general meeting _______________.

  1. Company low board

  2. Creditors

  3. Company low Tribunal

  4. Both a & b


Correct Option: D

Company is defined under which section of the Companies Act?

  1. Sec $3$ ($1$)

  2. Sec $4$ ($2$)

  3. Sec $2$ ($4$)

  4. Sec $1$ ($3$)


Correct Option: A

According to N.N. Malaya, "________ are autonomous or semi - autonomous corporation and companies established, owned and controlled by the state and engaged in industrial and commercial undertakings."

  1. Private enterprises

  2. Public enterprises

  3. Semi private enterprises

  4. None of above


Correct Option: B
Explanation:

According to N.N. Malaya, "public enterprises" are autonomous or semi - autonomous corporation and companies established, owned and controlled by the state and engaged in industrial and commercial undertakings." Public enterprise can be defined as a business organization wholly or partly owned by the state and controlled through a public authority. 

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