Corporate Law MCQS

1. A corporation is a legal entity that is:

(A) Created by shareholders

(B) Not recognized by law

(C) Controlled only by government

(D) Separate from its owners

2. The main document that governs the internal affairs of a corporation is the:

(A) Partnership deed

(B) Articles of Association

(C) Memorandum of Understanding

(D) Negotiable instrument

3. The highest authority in a corporation is the:

(A) Chief Executive Officer

(B) Shareholders in general meeting

(C) Chief Accountant

(D) Government regulator

4. Limited liability means that shareholders are liable only up to:

(A) Their personal assets

(B) The value of their invested amount

(C) The entire company debt

(D) Future profits

5. A private company must have a minimum of:

(A) 3 members

(B) 1 member

(C) 2 members

(D) 7 members

6. The certificate of incorporation is issued by the:

(A) Board of Directors

(B) Court

(C) Company Registrar

(D) Chief Auditor

7. A company’s Memorandum of Association contains:

(A) Objects of the company

(B) Internal policies

(C) Company rules

(D) Director salaries

8. The board of directors is elected by the:

(A) Shareholders

(B) Managers

(C) General public

(D) Registrar

9. A company that raises capital from the public is called a:

(A) Private company

(B) Limited partnership

(C) Public company

(D) Charitable trust

10. The liability of directors arises when they:

(A) Follow the law

(B) Act within authority

(C) Breach fiduciary duties

(D) Attend board meetings

11. Corporate personality allows a company to:

(A) Act only through government

(B) Hold property for shareholders

(C) Avoid all liabilities

(D) Enter into contracts on its own

12. Ultra vires acts are those performed:

(A) Within the company’s powers

(B) Beyond the company’s powers

(C) Only by shareholders

(D) During liquidation

13. A company’s annual meeting of shareholders is called the:

(A) Management meeting

(B) General Board Meeting

(C) Extraordinary meeting

(D) Annual General Meeting (AGM)

14. A corporate veil protects shareholders from:

(A) Company profits

(B) Personal liability

(C) Tax benefits

(D) Voting rights

15. Lifting the corporate veil allows courts to:

(A) Remove directors

(B) Investigate company’s internal secrets

(C) Protect shareholders

(D) Hold individuals personally liable

16. Dividends are paid out of:

(A) Capital

(B) Profits

(C) Personal donations

(D) Borrowed money

17. A prospectus is issued by:

(A) Private companies

(B) NGOs

(C) Public companies inviting the public to invest

(D) Government agencies

18. The minimum number of directors in a public company is usually:

(A) 1

(B) 2

(C) 3

(D) 7

19. A resolution passed with at least 75% majority is a:

(A) Ordinary resolution

(B) Special resolution

(C) Simple resolution

(D) Statutory resolution

20. Winding up of a company means:

(A) Increasing share capital

(B) Changing directors

(C) Opening new branches

(D) Closing the company

21. Voluntary winding up is initiated by:

(A) Government

(B) Board of Directors or shareholders

(C) Court

(D) Creditors only

22. A company auditor is appointed to:

(A) Prepare share certificates

(B) Examine financial statements

(C) Market products

(D) Decide employee salaries

23. Share capital raised after formation is called:

(A) Reserve capital

(B) Additional paid-in capital

(C) Authorized capital

(D) Nominal capital

24. A joint stock company is owned by:

(A) Employees

(B) The state

(C) Shareholders

(D) Creditors

25. The doctrine of indoor management protects:

(A) Creditors only

(B) Directors from liability

(C) Outsiders dealing with the company

(D) Employees