Samacheer Kalvi 12th Commerce Guide Chapter 26 Companies Act, 2013

Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Commerce Guide Pdf Chapter 26 Companies Act, 2013 Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Commerce Solutions Chapter 26 Companies Act, 2013

12th Commerce Guide Companies Act, 2013 Text Book Back Questions and Answers

I. Choose the Correct Answers

Question 1.
The Company will have to issue the notice of situation of Registered Office to the Registrar of Companies within …………… days from the date of incorporation.
a) 14 days
b) 21 days
c) 30 Days
d) 60 Days
Answer:
c) 30 days

Question 2.
How does a person who envisages the idea to form a company called?
a) Director
b) Company Secretary
c) Registrar
d) Promoter
Answer:
d) Promoter

Question 3.
For which type of capital a company pays the prescribed fees at the time of registration?
a) Subscribed Capital
b) Authorised Capital
c) Paid-up Capital
d) Issued Capital
Answer:
b) Authorised Capital

Question 4.
Which of the following types of shares are issued by a company to raise capital from the existing shareholders?
a) Equity Shares
b) Rights Shares
c) Preference Shares
d) Bonus Shares
Answer:
b) Rights Shares

Question 5.
Specify the type of resolution to be passed to choose the location of Registered Office of the company within the town or village or city.
a) Ordinary
b) Special
c) Either Ordinary or Special
d) Board
Answer:
d) Board

Question 6.
Who can issue stock?
a) Public
b) Private
c) One Person
d) Small
Answer:
a) Public

Question 7.
Specify the document which comes under the Negotiable Instrument Act.
a) Share Certificate
b) Share
c) Share Warrant
d) Stock
Answer:
c) Share Warrant

Question 8.
The shares which are offered to the existing shareholder at free of cost is known as …………
a) Bonus Share
b) Equity Share
c) Right Share
d) Preference Share
Answer:
a) Bonus Share

Question 9.
The shares which are offered first to the existing shareholder at reduced price is known as ……………………..
a) Bonus Share
b) Equity Share
c) Right Share
d) Preference Share
Answer:
c) Right Share

Question 10.
The Companies Act 2013 Prohibits the issue of shares at to the public.
a) Premium
b) Par
c) Discount
d) Both at par and Premium
Answer:
c) Discount

II. Very Short Answer Questions

Question 1.
What are the four stages of the formation of a company?
Answer:

1. Promotion
2. Registration
3. Capital subscription
4. Commencement of business.

Question 2.
What is Share?
Answer:

• The term “Share” is viewed by a layman as a fraction or portion of total capital of the company which have equal denominations.
• The total capital of the company is shared by many persons and each share is having equal value.

Question 3.
What are Bonus Shares?
Answer:
Bonus share means to utilize the company’s reserves and surpluses. Issue of shares to existing shareholders without taking any consideration is known as Bonus Shares.

Question 4.
What are Right Shares?
Answer:
If Article permits the “Right Share” can be issued to the existing shareholders [further issue] on the pro-data basis to raise the subscribed capital.

Question 5.
What is Debentures?
Answer:
When a company needs funds for extension and development purposes without increasing its share capital, it can borrow from the general public by issuing certificates for a fixed period of time and at a fixed rate of interest. Such a loan certificate is called a debenture.

III. Short Answer Questions

Question 1.
What do you understand by Issue of Securities at Premium?
Answer:

• When Shares are issued at a price above the face or Nominal value, they are said to be issued at a “premium”.
• Face value ₹10 Issued at ₹12 here ₹2 is the premium.
• The premium can be utilized for:
• To write off preliminary expenses.
• To write off expenses of issue, commission, discount on issue of shares and debentures.

Question 2.
Explain different Kinds of Preference shares.
Answer:

• Cumulative
• Redeemable
• Convertible
• Participating

Cumulative Preference Shares: As the word indicates all dividends [Arrears] are carried forward until specified and paid out only at the end of the specified period.

Redeemable Preference Shares: Such preference shares can be claims [Redeemed] after a fixed period or after giving due notice.

Convertible Preference Shares: Preference shares can be converted into Equity shares after a time of period or as per the conditions laid down in the terms.

Participating Preference Shares: Such shares have the right to participate in any additional profits, after paying to the equity shareholders.

IV. Long Answer Questions

Question 1.
Write the difference between Debentures and Shares:
Answer:

Basis of difference	Debentures	Shares
1. Constitute	Debentures constitute a Loan.	Shares are part of the capital of a company.
2. Assets – Charge	Debentures have a charge [security] on the Assets of the company	Shares do not carry such a charge.
3. Rate of Interest	Gets Fixed Rate of interest	Gets Variable rate of dividend.
4. Level	Lower and Middle level	Top-level
5. Interest paid	Interest is a business expenditure allowable deduction from profit.	The dividend is not an allowable deduction as business expenditure.
6. Voting	Not having voting right	Having voting rights.
7. Even out of Capital	Interest is to be payable if there is no profit.	[To be paid from capital] Dividend can be paid only out of profits and not otherwise.

Question 2.
Brief different stages in Formation of a Company.
Answer:
Section 3 (1) of the Act states that a company may be formed for any lawful purpose by-

• seven or more persons, where the company to be formed is to be a public company;
• two or more persons, where the company to be formed is to be a private company;
• one person, where the company to be formed is to be One Person Company.

The process of formation of company consists of different stages:
1. Promotion: The promotion stage begins when the idea to form a company comes in the mind of a person.

2. Registration: The second stage in the formation of the company is the incorporation or – registration. In this stage, the promoter has to fix name of the company, prepare the necessary documents (Memorandum and Articles of Association), fix the registered office, and name of the directors. After this, a certificate of incorporation is issued.

3. Capital Subscription: A public limited company having its share capital has to pass through two stages. One of them is capital subscription. The steps for this is:

1. Formalities for raising capital
2. Issuing prospectus
3. Appointing official banker
4. Pass resolution to make allotment

4. Commencement of Business: As per section 11 of the Act, a company having share capital should file with the Registrar, declaration stating that

1. Every subscriber has paid the value of shares.
2. Paid up capital is not less than Rs.5 lakhs for a public limited company and Rs.1 lakh in case of a private limited company.
3. It has filed the Registrar, regarding the verification of registered office. After fulfilling these details, the Registrar will issue certificate of commencement of business.

Question 3.
What are the various kinds of Debentures?
Answer:
I. On the Basis of Registration:
a) Registered Debentures: It is issued in the name of a particular person, whose name appears on the Debenture certificate and in the Debenture holder register.

b) Bearer Debentures: It is issued to Bearer, whose name does not – appear in the certificate and Register and it is a negotiable instrument, transferable merely by delivery.

II. On the Basis of Security:
a) Secured Debentures [Mortgage]:
These instruments are secured by a charge [pledge] on the fixed assets of the issuer company.
If the issuer fails to pay the interest or principal amount, assets can be sold by the investors for collecting the debts.
b) Unsecured Debentures:
These instruments are unsecured, there is no security for the defaults of payment of interest or principal amount.

III. On the basis of Redemption:
a) Redeemable Debentures:
It refers to the Debentures which are issued with a condition that it will be redeemed at a fixed date or up on-demand or after notice or under a system of periodical drawings.
b) Irredeemable Debentures [Perpetual]:
A Debenture, in which no specific time is specified by the companies to pay back the money.

IV. On the basis of Convertibility:
a) Convertible Debenture: [fully] [FCD]

• These are fully convertible into Equity shares.
• The ratio of conversion is decided by the issuer.
• It may be partly convertible [PCD].
• The investor has the option [OCD] to convert the debentures.

b) Non-Convertible Debentures:
These are not convertible into Equity shares.

12th Commerce Guide Companies Act, 2013 Additional Important Questions and Answers

I. Choose the Correct Answers

Question 1.
According to New Companies Act 2013, the maximum number of members for private companies is ……………..
a) 200
b) 300
c) 400
d) No limit
Answer:
a) 200

Question 2.
A minimum number of members for a public limited company is …………
a) 2
b) 3
c) 5
d) 7
Answer:
d) 7

Question 3.
In accordance with whose advice, directions, or instructions the Board of Directors of the company is accustomed to act is a ………………
a) Director
b) Shareholder
c) Promoter
d) MD
Answer:
c) Promoter

Question 4.
A fraction or portion of the total capital of the company which has equal denomination is known as ………………..
a) stock
b) Share
c) Debenture
d) Warrant
Answer:
b) Share

Question 5.
Pick the odd one out:
a) Redeemable Shares
b) Redeemable Debentures
c) Ir-redeemable Shares
d) Converting Shares
Answer:
b) Redeemable Debentures

Question 6.
Pick the odd one out:
a) NCD
b) PCD
c) QCD
d) BCD
Answer:
d) BCD

Question 7.
Which one of the following is not correctly matched?
a) C.A. – Member of the Institute of Chartered Account
b) ICWA – Institute of Cost and works Accountant
c) CLB – Company Legislative Board
d) NCLT – National Company Law Tribunal.
Answer:
c) CLB – Company Legislative Board

II. Match the following.

Question 1.

List -I	List-II
i Bonus Shares	1. Subscribed to selected Group
ii Sweat Equity Shares	2. Existing Equity Shareholders
iii Right Shares	3. Issued to Employees
iv Private Placement	4. Capitalisation of profit

a) i-4, ii-3, iii-2, iv-1
b) i-3, ii-4, iii-1, iv-2
c) i-2, ii-1, iii-4, iv-3
d) i-1, ii-2, iii-3, iv-4
Answer:
a) i-4, ii-3, iii-2, iv-1

Question 2.

List-I	List-II
i. Issued at par	1. Through Prospectus Issued
ii. Issued at Premium	2. Below the face value
iii. Issued at Discount	3. Above the face value
iv. Public Issue	4. Face value

a) i-4, ii-3, iii-1, iv-2
b) i-4, ii-3, iii-2, iv-1
c) i-3, ii-4, iii-1, iv-2
d) i-2, ii-1, iii-4, iv-3
Answer:
b) i-4, ii-3, iii-2, iv-1

Question 3.

List-I	List-II
i. Shares	1. Negotiable Instrument
ii. Debentures	2. Capital
iii. Stock	3. Loan
iv.  Warrant	4. No nominal value

a) i-2, ii-3, iii-4, iv-1
b) i-4, ii-2, iii-1, iv-3
c) i-3, ii-4, iii-2, iv-1
d) i-2, ii-4, iii-1, iv-3
Answer:
a) i-2, ii-3, iii-4, iv-1

III. Assertion and Reason

Question 1.
Assertion (A) : Debentures constitutes a Loan
Reason (R) : Gets fixed rate of interest.
a) Both (A) and (R) are True
b) Both (A) and (R) are False,
c) (A) is True (R) is False.
d)(A) is False (R) is True
Answer:
a) Both (A) and (R) are True

IV. Very Short Answer Questions

Question 1.
What is Stock?
Answer:
If Articles Permits, bypassing an ordinary resolution, the fully paid-up shares can be converted in to “Stock” and vice versa.

Question 2.
What is Share Certificate?
Answer:

• A “Share Certificate” is an instrument in writing, that is legal proof of the ownership of the number of shares stated in it.
• It contains Name of the Company, Date of Issue, Details of the Shareholder, Shares held, Nominal value, Paid-up value, and – Definite number.

Question 3.
Mention the stages to form a Company.
Answer:

• Promotion
• Registration
• Capital Subscription
• Commencement of Business

Question 4.
What is a Memorandum of Association? [MOA]
Answer:

• It is the charter of a Company. [External Management]
• It defines the area within which the company can operate.
• It contains Name, Object, Situation, Capital, Liability and Subscription clauses.

Question 5.
What is Articles of Association? [AOA]
Answer:

• It is the second most important document. [Internal Management]
• It contains the Rules and Regulations for Internal Management.

Question 6.
What is issue of shares at Par or Face value?
Answer:

• When the shares are issued at its face value or Nominal value it is known as issue of shares at “Par”
• Face value ₹10, Issue at ₹10

Question 7.
What do you mean by Equity Share?
Answer:

• A share which do not have any preferential rights with regard to Dividend and Repayment of share capital at the time of Liquidation of a company is known as “Equity Share”.
• It is also called as “ordinary” Shares.

Question 8.
What do you understand by Preference Share?
Answer:
A share which has preferential rights with regard to Dividend [Fixed Rate] and Repayment of Share Capital at the time of Liquidation is known as “Preference Share”.

Question 9.
What is Sweat Equity Shares?
Answer:
“Sweat Equity share” means issue ot shares to Employees or Directors at a lower price [Discount] for i ash and other than cash, in lieu of providing know-how or making available rights in the nature of intellectual property rights or any value addition.

Question 10
What is Private placement?
Answer:
“Private Placement” means an offer of securities or invitation to subscribe securities to a selected – group of persons [Clients] through a private placement offer letter.

Question 11.
Define Share Warrant.
Answer:

• A “Share Warrant” is a Negotiable Instrument.
• It is issued by a public limited company only against fully paid-up share
• It is also termed as a “Document of Title” the holder of it is entitled to the number of shares

Question 12.
Who is called as Promoters?
Answer:

• The promotion stage begins when the idea to form a company comes in the mind of a person.
• The person who envisages the idea is called “Promoter”.

V. Short Answer Questions

Question 1.
What are the features of Debentures?
Answer:

• Debenture certificate issued by the company under common seal.
• It is a movable property.
• Creditors of the company.
• Carry a fixed rate of interest.
• Unsecured or secured.
• Redeemed after a fixed period of time.

Question 2.
What is a Memorandum of Association? What are its contents?
Answer:

• MOA is the charter of a company.
• It is a document that defines the area within which the company can operate. [External Management]

Contents:

• Name clause
• Object clause
• Liability clause
• Association clause
• Capital clause
• Situation clause

Question 3.
Distinguish between shares and stocks.
Answer:

Basis of difference	Shares	Stock
1. Paid up	Shares may be fully paid up or partly paid-up	Stock must be fully paid up.
2. Nominal Value	It has a nominal value.	It has no nominal value.
3. Number	It has definite numbers.	It has no definite numbers.

Question 4.
What is the issue of shares at discount? What conditions should be fulfilled?
Answer:

• When shares are issued at a price below the face or Nominal value, they are said to be issued at a Discount.
• Face value HO Issued at ₹9 here ₹1 is discount.
• The Companies Act 2013, prohibits the issue of shares at discount.

Conditions:

• Very first issue should not be at Discount.
• After one year it can issue at Discount.
• Discount should not exceed 10% on the nominal value.

VI. Long Answer Questions

Question 1.
What formalities need to be fulfilled for companies having share capital to commence business?
Answer:

• As per section 11 of the Act a company having share capital should file with the Registrar, Declaration stating that:
  • Every subscriber to the MOA has paid the value of shares agreed to be taken by him.
  • Paid-up capital is not less than ₹ 5 lakhs in the case of a public limited company and ₹ 1 lakh in the case of a private limited company.
  • It has filed the Registrar the verification of the Registered office.
• These restrictions in section 11 are applicable to companies – having a share capital.
• It can commence the business only after fulfilling all the formalities mentioned above and exercise borrowing powers immediately after incorporation.

Question 2.
Write the difference between Share Certificate and Share Warrant [TAMIL]
Answer:

Basis of difference	Share Certificate	Share Warrant
1. Transfer	It can be transferred by executing a valid transfer deed.	It can be transferred by mere hand delivery.
2. Amount paid	Issued against fully or partly paid-up shares.	Issued only against fully paid up shares.
3. Meaning	A legal document which indicates the possession of the shareholders on the specified number of shares.	A legal document which indicates the bearer is entitled to the specified number of shares.
4. Issued by	Public company or private company.	Only public company.
5. Limit (Time)	Within 3 months after the allotment of shares.	No time limit prescribed.