Introduction of Company Very Short Answer Type Questions

Question 1.
What is Company?
Answer:
Company means a voluntary association of persons for some common purpose. The purpose t includes carrying a business or charitable or Social activity.

Question 2.
Define company.
Answer:
According to see 3 (1) (i) of the company act 1956 company means “ a company formed and registered under this act or some earlier companies act after registration a company becomes, a body corporate or a corporation”.

Question 3.
What is sick industrial company?
Answer:
An industrial company which has –

The accumulated losses equal to 50 % or more of its average net worth during four financial years preceding current financial year.
Failed to repay its debts with I three consecutive quarters on demand made in writing for its repayment by a creditor. Creditors of such company.

Question 4.
What is an ultravires activity?
Answer:
Every company has to operate within the framework of its objects as defined in the Memorandum of Association. Any activity of the company which is outside the permitted range of activities will be dubbed as ultra vires, which means against the objects. Such acts are wholly null and void.

Question 5.
Give the meaning of holding companies?
Answer:
Holding company is a company controls the composition of the board of directors of another company or holds the majority of the equity shares of the other company.

Question 6.
Define small company?
Answer:
Small company is defined under sec 2(85) of the companies act 2013 as a company other than a public company.

The paid up share capital of which does not exceed 50 lakh or such higher amount as may be prescribed which shall not be more than 5 crore.
Total turn over per anam shall not be more than 2 crore rupees or such higher amount as may be prescribed which shall not more than 20 crore rupees.

Question 7.
What is Dormat company?
Answer:
According to company act 2013 Dormat company is formed and registered for future project or to hold on asset or intellectual property and has no significant accounting transaction.

Question 8.
Give the meaning of illegal association.
Answer:
Illegal association is an association of persons for some specific purpose. But the name of company is pot registered under company act 1956.

Question 9.
Define associate company?
Answer:
Under sec. 2(6) of Indian companies act 2013 Associate company is defined as a company in which that other company has significant influence but which is not a subsidiary company of the other company.

Question 10.
What is one-man company? Or corporation sole.
Answer:
It is the corporation constituting a single person at any given time who by performing a particular function enjoys corporate personality or status eig. President of India.

Question 11.
What is investment companies?
Answer:
Investment company means a company which acquires and holds shares and securities both for earning an income and for dealing in them for making profit.

Question 12.
State the kinds of company.
Answer:

Statutory company.
Registered company.
Company limited by shares.
Company limited by guarantee.
Unlimited company.

Question 13.
Give the meaning of GDRs.
Answer:
GDRs means Global Depository Receipts. It enables the company for issue of depository receipts in any foreign country subject to prescribed conditions.

Question 14.
What do you mean by corporate veil?
Answer:
Corporate veil refers to the partition between the company and its members.

Question 15.
What is meant by limited liability?
Answer:
It means in Joint Stock Company the liability of its members is limited to the nominal value of thee shares held by them.

Question 16.
What is FERA companies?
Answer:
FERA company means according to. The foreign Exchange regulation Act 1973 an Indian Company registered in India but having more than 40% non resident interest in their share capital.

Question 17.
Write a note on the company law board.
Answer:
In order to help in the implementation of the Companies Act, a Company Law Board was constituted in 1964. The board carries on such duties and functions entrusted by the Central Government.

Question 18.
What is subsidiary company?
Answer:
A company is said to be subsidiary another company in any of the following cases.

That the other company controls the composition of its board of directors.
That the other company controls the move than half of the total voting power of such company.

Question 19.
What is finance company?
Answer:
Finance company is defined as a non banking company or corporation or co-op society or firm which carries activities like financing. Marketable of securities, any class of insurance business, as is business.

Question 20.
Give the meaning of one person company?
Answer:
The company act 2013 introduced a new type of entity to the existing list. One person company means a company with only are person as its member.

Question 21.
What is audit committee?
Answer:
Audit committees are a measure of ensuring self discipline. Constituted with the object to strengthen the management in public companies and to ensure that the board of directors discharge their functions effectively.

Question 22.
Define listed company.
Answer:
U/s 2 (52) of companies act 2013 listed Company means a company shares and securities are listed in any recognized stock exchange.

Question 23.
Define foreign company.
Answer:
U/s 2 (42) of companies act 20/3, foreign company means that company which is not registered or incorporated in India.

Question 24.
Define One man company.
Answer:
Under section 2(62) of companies act 2013 One man company means a company which as are person as a member.

Question 25.
Define company secretary.
Answer:
According to section 2(45) of the companies Act 1956 secretary means “A company secretary who is a member of the institute of company secretaries of India and includes any other individual possessing the prescribed qualification appointed to perform the duties which may be preformed by a secretary under this act or any other ministerial and administrative duties”.

Question 26.
Define ‘public company’.
Answer:
Under section 2(71) a public company means a company which-1) Is not a private company, 2) Has a minimum share capital of five lakh rupees as such higher paid-up.capital as may be prescribed.

Question 27.
What is common seal?
Answer:
Company is an artificial person and has a seperate legal entity. Company cannot act its own. The seal with name and the address of the company is commonly used by the directors or secretary of the company for all activities of the company. This is called a common seal.

Question 28.
What is company limited by shares?
Answer:
The main attribute of limited companies which attracts the investors is limited liability of share-holders. In other words, liability of a member, in the event of company’s winding up, in respect of the shares held by him, is limited to the extent of the unpaid value of such shares. Thus, the liability does not fluctuate but remains limited to the unpaid amount of the share-holder, whether original or the transferee.

Question 29.
What is company limited by guarantee?
Answer:
A company limited by guarantee may also be called a Guarantee Company. It is a company wherein the liability Of its members extends to the amount undertaken to be contributed by each of them towards the assets of the company in the event of it’s being wound up as stated in the Memorandum of Association of the company. The liability would arise only in the event of the company being wound up and not otherwise.

Question 30.
What is private company?
Answer:
S.2(68) of the Companies Act, 2013 define a ‘private company’ means a company having a minimum paid-up share capital of 6’he lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles –

restricts the right to transfer its shares
except in case of One Person Company, limits the number of its members to two hundred

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the perposes hold one more shares in a company jointly, they shall, for the purposes of the clause, be treated as a single member.

Question 31.
What is unlimited companies?
Answer:
According to Sec. 2(92) “unlimited company” means a company not having any limit on the liability of its members; a company may be incorporated with the unlimited liability. A company having no limit on the liability of its members is termed an unlimited company. An unlimited company must have articles of association stating the number of members and the share capital, if any, with which it is proposed to be registered.

Question 32.
What is government company?
Answer:
According to S.(45) “Government company” means any company in which not less than fifty one per cent, of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

Question 33.
What is finance company?
Answer:
A ‘Finance Company’ means a non- banking company, which is a financial institution within the meaning of S.45( 1) (c) of the Reserve Bank of India Act, 1934. According to this section, a financial institution is a non-banking institution which carries on any of the following activities as its business or part of its business.

Question 34.
Define private company.
Answer:
Section 2 Sub section (68) defines the Private Company. The “private company” means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles,

restricts the right to transfer its shares
except in case of One Person Company, limits the number of its members to two hundred
prohibits any invitation to the public to subscribe for any securities of the company

Question 35.
What is incorporation of a company?
Answer:
The term incorporation refers to registration of a company.