answer keys \

1. Roll No: 009 Session: Fulltime Name: Calpana
Lee
Objectives portion Marks 20/20 Total
Marks 40
01.A Private Company will Cease to be a Private Company when
Its Members
(a) Reduce then 50 (b) increases then 20 (c) increase then 50
(d) 50% become insolvent (e) none of these
02.The word Companies is derived from two Latin words one is com
Which means bread and other is penis which means together .this
Statement is (a) true (b) false
03. One of the Following is the Date of birth of Company
(A) Date of Issuance of Prospectus (B) Date of Sign of Memorandum
(C) Date of the Registration (D) Date of Commencement of Business
(E) None of these
04. According to Ordinance an Existing Company Means .a Company
Which is formed under any of The Following Acts?
(A) 1866, 1882, 1911 (B) 1890, 1807, 1913 (C) 1947, 1956, 1973
(D) 1866, 1882, 1913(E) None of these
05. A Private Company can start a Business
(A)Just after its incorporation (B) After the Approval of Registrar
(C) After Collection of Money (D) After Issuance of Prospectus
(E) None of these
06. One of the Following Regarding the Name of the Company is Incorrect.
(A) Sahara (Private) Ltd (B) Sahara (Public) Ltd
(C) Sahara (Guarantee) Ltd (D) Sahara (Private) Ltd by share
(E) Only B is incorrect (F) only D is incorrect
(G) A and C are incorrect (H) B and D are incorrect (I) none of these
07. Chartered Companies are those Companies which are formed by
(A) Chartered Accountant (B) Royal Charter (C) Act of parliament
(D) Ministry of finance
08. A Company is Natural Person so some Artificial Person is
Required to run the Affair of a Company .This Statement is.
(A) TRUE (B) FALSE
09. Association not for Profit can be registered as Unlimited
Company after Acquiring License from Commission
This Statement is true or false.
(A) TRUE (B) FALSE
10. Company is the modified form of partnership (A) true (B) false
11. SMC is basically a public company (A) true (B) false
Company Law
For
LL.B SECOND YEAR
Prepared by
Munir Hussain
Lecturer ULC Quetta.
1st
Test
39/40

2. 12. Partnership is a ____________
(A) Status (B) connection (C) agreement (D) Relation (E) none of these
13. The registration of partnership is mandatory (A) true (B) false
14. Company can sue but cannot be sued by its own name (A) true (B) false
15. Maximum number of member for the private company is
(A) 2 (B) 20 (C) 50 (D) 10 (E) none of these
16. Private company is bound to arrange statutory meeting (A) true (B) false
17. If a company purchase in other company more than controlling share
the former will be known as-------------company.
(A) Subsidiary (B) holding (C) prime (D) none of these (E) master
18.NGOs can also be registered under companies ord. 1984(A)true (B)false
19.There should be more than three directors for a listed company
(A)true (B)false
20.In company the word limited shows the ___________of its members.
(A) Duties (B) profit (C) Liability (D) Number (E) None of these
Subjective. (20 Marks)
Write a comprehensive note over the characteristics of a
Registered company.
------------------------------------------------------------------------------------------------
Characteristics of a Company
A company as an entity has many distinct features which together make it a unique
organization. The essential characteristics of a company are following:
1. Separate legal existence:
A company has a distinct legal entity independent of its members. It can own
property, make contracts and file suits in its own name. Shareholders are not
the joint owners of the company's property.
A shareholder cannot be held liable for the acts of the company. Similarly,
members of the company are not its agents.
There can be contracts between a company and its members. A creditor of the
company is not a creditor of its members.
The separate legal entity of a company was recognised in the famous case of
Salomon, v. Salomon and Co. Ltd. The facts of the case were as follows:
Salomon formed a company which acquired his own shoe business. He took all
the shares except six shares which he distributed among his wife, daughter and
four sons.Salomon also purchased some debentures of the company which
gave him a charge over its assets. At the time of winding up, the company's
assets were not sufficient enough to pay its debts.
19/20

3. The creditors of the company (other than Salomon) argued that their debts
should be cleared before paying Salomon for his debentures because Salomon
and the company was one and the same person.The Court decided that after
incorporation, Salomon and Co. had an identity separate from Salomon even
though he owned virtually all the shares in the company.
2. Perpetual succession:
Perpetual succession means continued existence. A company is a creation of
the law and only the law can bring an end to its existence. Its life does not
depend on the life of its members.
The death, insolvency or lunacy of members does not affect the life of a
company. It continues to exits even if all its members die. Members may come
and go but the company goes on until it is wound up.
3. Limited liability:
As a company has a separate legal entity, its members cannot be held liable for
the debts of the company. The liability of every member is limited to the
nominal value of the shares bought by him or to the amount of guarantee given
by him.
For instance, if a member has 50 shares of Rs. 10 each, his liability is limited to
Rs 500. Even if the assets of the company are insufficient to satisfy fully the
claims of the creditors, no member can be called to pay anything more than
what is due from him.
However, if the members of the company so desire, they may form a company
with unlimited liability.
4. Transferability of shares:
The capital of a company is divided into parts. Each part is called a share.
These shares are generally transferable.
A shareholder is free to withdraw his membership from the company by
transferring his shares. However, in actual practice some restrictions are
placed on the transfer of shares.
5. Common seal:
Being an artificial entity, a company cannot act and sign itself. Therefore, it
acts through human beings. All the acts of the company are authorised by its
common seal.
The name of the company is engraved on its common seal. The common seal is
affixed on all important documents as a token of the Company's approval.
The common seal is the official signature of the company. Any document
which does not bear the common seal of the company is not binding on the
company
6. Separation of ownership and control:

4. Members have no right to participate directly in the day-to-day management
of a company. They elect their representatives, called directors, who manage
the company's affairs on behalf of the members.
Thus, the ownership of a company is distributed among the shareholders while
management is vested in the board of directors. The management of a
company is delegated and centralised.
7. Voluntary association:
A joint stock company is a voluntary association of certain persons formed to
carry out a particular purpose in common. Members of a company can join it
and leave it at their own free will.
8. Artificial legal person:
A company is an artificial person created by law. It exists only in
contemplation of law. It is competent to enter into contracts and to own
property in its own name. But it does not take birth like a natural person and it
has no physical body of a natural human being.
9. Corporate finance:
The share capital of a company is generally divided into a large number of
shares of small value. These shares are purchased by a large number of people
from different walks of life.
10. Statutory regulation and control:
Government exercises control through company law over the management of
joint stock companies. A company is required to comply with several legal
formalities and to file several documents with the Registrar of Companies.
Conclusion. Thus from the above discussion it can be concluded that
company is a artificial person created by natural person and recognized by law
as a legal person .it is the modern form of business having some distinguished
characteristics like transferability of share with limited liability and can also
avail some the rights of a natural person .