Balbharti Maharashtra State Board Class 11 Secretarial Practice Important Questions Chapter 4 Documents Related to Formation of a Company Important Questions and Answers.
Maharashtra State Board 11th Secretarial Practice Important Questions Chapter 4 Documents Related to Formation of a Company
1A. Select the correct answer from the options given below and rewrite the statements.
Question 1.
The document that contains the constitution of the company is _____________
(a) Article of Association
(b) Prospectus
(c) Memorandum of Association
Answer:
(c) Memorandum of Association
Question 2.
A _____________ company must issue prospectus to the public for capital subscription.
(a) Statutory
(b) Private
(c) Public
Answer:
(c) Public
Question 3.
For alteration in the Articles _____________ resolution is required.
(a) Ordinary
(b) Special
(c) Circular
Answer:
(b) Special
Question 4.
The Domicile clause of the Memorandum of Association states about the _____________ of a company.
(a) capital
(b) liability
(c) registered address
Answer:
(c) registered address
Question 5.
The aims and objectives of a company are stated in the _____________ clause of the Memorandum of Association.
(a) Name
(b) Object
(c) Domicile
Answer:
(b) Object
Question 6.
The _____________ is almost an unalterable document.
(a) Memorandum
(b) Articles
(c) Prospectus
Answer:
(a) Memorandum
Question 7.
The _____________ is primary and supreme document of the company.
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
Answer:
(a) Memorandum of Association
1B. Match the pairs.
Question 1.
| Group ‘A’ | Group ‘B’ |
| (a) Memorandum of Association | (1) Letter issued to a selected group of investor |
| (b) Articles of Association | (2) Invitation to purchase Shares |
| (c) Prospectus | (3) Constitution of Company |
| (d) Civil liability | (4) Letter issued to all shareholder |
| (e) Offer letter | (5) Invitation for meeting |
| (f) Book Building Process | (6) Rules regarding Internal Management |
| (7) Pay compensation to Investor | |
| (8) Rules regarding external affairs of the company | |
| (9) Collecting bank deposits | |
| (10) Determining issue price of shares |
Answer:
| Group ‘A’ | Group ‘B’ |
| (a) Memorandum of Association | (3) Constitution of Company |
| (b) Articles of Association | (6) Rules regarding Internal Management |
| (c) Prospectus | (2) Invitation to purchase Shares |
| (d) Civil liability | (7) Pay compensation to Investor |
| (e) Offer letter | (1) Letter issued to a selected group of investor |
| (f) Book Building Process | (10) Determining issue price of shares |
1C. Write a word or a term or a phrase that can substitute each of the following statements.
Question 1.
A constitution or charter of the company.
Answer:
Memorandum of Association
Question 2.
An almost unalterable document of the joint-stock company.
Answer:
Memorandum of Association
Question 3.
The clause of the memorandum provides the name of the state in which the company’s registered office is situated.
Answer:
Domicile Clause
Question 4.
An invitation to the public to subscribe for shares or debentures of the company.
Answer:
Prospectus
1D. State whether the following statements are True or False.
Question 1.
The AOA is an alterable document.
Answer:
True
Question 2.
The company can be registered without MOA.
Answer:
False
Question 3.
Nobody is liable for mis-statements in the prospectus.
Answer:
False
1E. Complete the sentences.
Question 1.
The constitution of a joint-stock company is called _____________
Answer:
Memorandum of Association
Question 2.
The rules regarding internal management are given in the _____________
Answer:
Articles of Association
Question 3.
The document which is a charter or constitution of a company is the _____________
Answer:
Memorandum of Association
Question 4.
The primary basic document of a company is the _____________
Answer:
Memorandum of Association
Question 5.
The _____________ is sub-ordinate document to memorandum.
Answer:
Articles of Association
Question 6.
In the case of Public Company Limited by Shares or Guarantee, the last word should be _____________
Answer:
Limited
Question 7.
The last word in case of Private Company Limited by shares should be _____________
Answer:
Private Limited
Question 8.
Resolution which requires 3/4th majority of votes in favour of a proposal is called as _____________
Answer:
Special Resolution
Question 9.
Article which require 9/10th of majority in favour is called _____________
Answer:
Entrenched Article
1F. Select the correct option from the bracket.
Question 1.
| Group ‘A’ | Group ‘B’ |
| (1) Doctrine of Indoor Management | ……………………… |
| (2) …………………….. | Financial institution guiding companies |
| (3) Civil liability | ……………………… |
| (4) Act beyond the power of Memorandum | ……………………… |
| (5) ……………………. | Misleading information in the prospectus |
(Mis-statement in a prospectus, Assumption of company acting as per MOA and AOA, Mis-statement in a prospectus, Lead Merchant Bankers, Doctrine of Ultra-vires)
Answer:
| Group ‘A’ | Group ‘B’ |
| (1) Doctrine of Indoor Management | Assumption of the company acting as per MOA and AOA |
| (2) Lead Merchant Bankers | Financial institution guiding companies |
| (3) Civil liability | Mis-statement in a prospectus |
| (4) Act beyond the power of Memorandum | Doctrine of Ultra-vires |
| (5) Mis-statement in a prospectus | Misleading information in the prospectus |
1H. Answer in one sentence.
Question 1.
What do you mean by special resolution?
Answer:
Resolution which requires 3/4th or 75% majority of votes in favour of a proposal is called a special resolution.
Question 2.
What do you mean by injunction?
Answer:
The injunction is an order from the court to stop the company from doing any act which is Ultra-vires.
Question 3.
What is ordinary resolution?
Answer:
The resolution which requires a simple majority of votes cast in favour or against a proposal, (i.e. 51%)
Question 4.
What is a lien on shares?
Answer:
Lien on shares means a company has a right of possession of shares when the member does not pay off his debts or liabilities to the company.
Question 5.
Explain the term IPO and Book Building Process.
Answer:
IPO: Initial Public Offer is an offer made by the company for the first time to the public to buy the shares of the company.
Book Building Process: It is a process where a company determines the issue price of shares/securities based on demand from the public.
Question 6.
Who are lead merchant bankers?
Answer:
Lead Merchant Bankers are the financial institutions that guide the issuing companies in the matter relating to the issue of shares.
Question 7.
Who is Registrar to issue?
Answer:
Registrar to the issue is the agents who are appointed by the issuing company for collecting application forms and money, maintaining records of investors, etc.
1I. Correct the underlined word and rewrite the following sentences.
Question 1.
Articles of Association is an invitation to the public to buy the shares of a company.
Answer:
The prospectus is an invitation to the public to buy the shares of a company.
Question 2.
Capital Clause describes the liability of the members.
Answer:
The liability Clause describes the liability of the members.
Question 3.
The prospectus must be issued within 120 days from the date of incorporation.
Answer:
The prospectus must be issued within 90 days from the date of incorporation.
1J. Arrange in proper order.
Question 1.
(a) Liability clause
(b) Registered Office clause
(c) Subscription clause
Answer:
(a) Registered Office clause
(b) Liability clause
(c) Subscription clause
2. Answer in brief.
Question 1.
Explain the types of Prospectus.
Answer:
Types of Prospectus:
(i) Abridged Prospectus:
- It contains the main contents of a prospectus in brief.
- It is attached with the application form issued.
- It is issued only in case of a public offer.
(ii) Shelf Prospectus:
- It is an alternative option to print a fresh prospectus for every issue of shares.
- It can be used for all further issues made by the company for up to one year.
- However, for every subsequent issue, a company has to file an ‘Information Memorandum’ with ROC.
(iii) Red Herring Prospectus:
- It is a kind of incomplete prospectus.
- It does not include particulars like the number of shares offered and the issue price of the shares offered.
- It is generally issued at the time of Initial Public Offer (IPO) or under Book Building Process.
(iv) Letter of offer:
- It is issued while making the “Right Issue” to the existing shareholders.
- It contains the details of the offer.
(v) Offer letter:
It is issued to a selected group of investors while making a private placement.