NCERT Solutions for Class 11 Business Studies Chapter 7

Formation of a Company Class 11

Chapter 7 Formation of a Company Exercise Solutions

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Multiple choice questions : Solutions of Questions on Page Number : 178

Q1 :  

Minimum number of members to form a private company is

(a) 2

(b) 3

(c) 5

(d) 7


Answer :

As per the law, a minimum of two members are required to form a private company.

Hence, the correct answer is option (a).

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Q2 :  

Minimum number of members to form a public company is

(a) 5

(b) 7

(c) 12

(d) 21


Answer :

According to the law, a minimum of seven members are required to form a public company.

Hence, the correct answer is option (b).

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Q3 :  

Application of approval of name of a company is to be made to

(a) SEBI

(b) Registrar of Companies

(c) Government of India

(d) Government of the state in which company is to be registered.


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Q4 :  

A proposed name of Company is undesirable if

(a) It is identical with the name of an existing company

(b) It resembles closely with the name of an existing company.

(c) it is an emblem of Government

(d) in case of any of the above.


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Q5 :  

A prospectus is issued by

(a) A private company

(b) A public company seeking investment from public.

(c) A public enterprise

(d) A public company


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Q6 :  

Stages in the formation of a public company are in the following manner

(a) Promotion, Commencement of business, Incorporation, Capital Subscription

(b) Incorporation, Capital Subscription, Commencement of business, promotion

(c) Promotion, Incorporation, Capital Subscription, Commencement of Business

(d) Capital Subscription, Promotion, Incorporation, Commencement of Business


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Q7 :  

Preliminary Contracts are signed

(a) before the incorporation

(b) after incorporation but before capital subscription

(c) after incorporation but before commencement of business

(d) after commencement of business


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Short answersmultiple choice questionstrue or fals : Solutions of Questions on Page Number : 179

Q1 :  

Name the stages in the formation of a company.


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Q2 :  

It is necessary to get every company incorporated, whether private or public.


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Q3 :  

List the documents required for the incorporation of a company


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Q4 :  

Statement in lieu of prospectus can be filed by a public company going for a public issue.


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Q5 :  

What is a prospectus? Is it necessary for every company to file a prospectus?


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Q6 :  

A private company can commence business after incorporation.


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Q7 :  

Explain the term 'Minimum Subscription'.


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Q8 :  

Expert who help promoters in the promotion of a company are also called promoters.


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Q9 :  

Briefly explain the term 'Return of Allotment'.


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Q10 :  

A company can ratify preliminary contracts after incorporation.


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Q11 :  

At which stage in the formation of a company does it interact with SEBI?


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Q12 :  

If a company is registered on the basis of fictitious names, its incorporation is invalid.


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Q13 :  

Distinguish between 'preliminary contracts' and 'provisional contracts'.


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Q14 :  

'Articles of association' is the main document of a company.


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Q15 :  

Preliminary Contracts are

(a) binding the company

(b) binding on the company, if ratified after incorporation

(c) binding on the company after the incorporation

(d) not binding on the company


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Q16 :  

Every company must file Articles of Association


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Q17 :  

A provisional contract is signed by promoters before the incorporation of the company.


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Q18 :  

If a company suffers heavy losses and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.


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Long answers : Solutions of Questions on Page Number : 180

Q1 :  

What is meant by the term 'promotion'? Discuss the legal position of promoters with respect to a company promoted by them.


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Q2 :  

Explain the steps taken by promoters in the promotion of a company.


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Q3 :  

What is 'Memorandum of Association'? Briefly explain its clauses.


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Q4 :  

Distinguish between 'Memorandum of Association' and 'Articles of Association.'


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Q5 :  

What is the effect of conclusiveness of the 'Certificates of Incorporation' and 'Commencement of Business'?


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Q6 :  

Is it necessary for a public company to get its share listed on a stock exchange? What happens if a public company going for a public issue fails to apply for a stock exchange for permission to deal in its securities or fails to get such permission?


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<< Previous Chapter 6 : Social Responsibilities of Business and Business Ethics Next Chapter 8 : Sources of Business Finance >>

Business Studies : CBSE NCERT Exercise Solutions for Class 11th for Formation of a Company will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.

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