Corporate Law MCQS

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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