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4. Practice Paper
BUSINESS
ENVIRONMENT & LAW

5. Business Environment & Law: Practice Paper
MULTIPLE CHOICE QUESTIONS
1. Environment is
a. Surrounding external objects b. Plants,trees,and animals around us
c. Includes business and society d. Includes risk, external and internal factors.
e. Organization, operation, marketing and legal factors.
2. Non-economic environment includes
a. Social, cultural, legal and technological factors
b. Price and income
c. Technical capabilities of the organization
d. Skill and dexterity of employee
e. Effective decision making capacity of the manager
3. SWOT analysis means
a. Opportunity, threat, strength and weakness
b. Opportunity, social, trade and weakness
c. Technology,strategy,organisation and weakness
d. Operation, structure,tax and weakness
e. Socio-cultural, organization, weakness and tax
4. Demographic environment include
a. Family size, education levels and economic stratification of the population
b. Density of the population in an given area
c. Size of the area
d. Size and knowledge of the people in a given area
e. Demand and supply of goods in a given area
5. Economic environment is the study of business at two levels
a. Micro and macro level b. Policy and regulatory level c. Ethical and competition
level d. Tax and profit level
e. Incentives and disincentives offered by the government
6. The word „strategia‟ in general sense means
a. The art and science of directing military forces
b. Planning for betterprofit making
c. Planning for bettermanufacturing
d. Planning for the fighting challenges in the business environment
e. Determining the human resources in the organization.

6. Multiple Choice Questions
7. Stratification helps in understanding
a. Consumer behaviour
c. Develop marketing strategies and
b. Consumption behaviourof the goods and services d.
Segment markets appropriately
e.All the above
8. Social classes are
a. Multidimensional
c. Homogeneous
b. Restrictive
d. Dynamic
e.All the above
9. Referrent poweris based on
a. Person,firm and product‟s attractiveness
c. Degree ofpersonalinvolvement
b. Feeling of belongingness d.
Organization
e.Influence ofa person
10. Role means
a. Learned behaviour
c. Achieved position
b. Part played by person in a drama d.
Recognized position
e. Behaviour of an individual in an organization
11. Family is
a. Social unit living together
b. Two or more personsrelated by blood,marriage oradoptionwho reside together
c. Group with an extension of parent – child relationship
d. Individuals unilaterally descended from a single common ancestor
e. Husband,wife and children.
12. Culture is
a. Total pattern of behaviour c.
Not transmitted by biology
b. Learned behaviour
d. Distinctive way of life of people
e.All the above
13. Elements of culture
a. Language
c. Religion
b. Aesthetics
d. Education
e. All the above
14. Functions of Family
a. Economic well being
b. Emotional support
c. Suitable family life style
d. Socialization of children and otherfamily members
e. All the above

7. Business Environment & Law: Practice Paper
15. Cultural analysis include howmany approaches
a. Three
c. Five
b. Two
d. One
e.Four
16. An allottee of shares is entitled to have
a. Prospectus
c. Share certificate
b. Memorandum of association
d. Resolution passedby the board
e.Statement ofaccounts
17. Ordinary Share Capital is also known as
a. Equity share capital
c. Deferred share capital
b. Preferential share capital
d. All the above
e.None of the above
18. -------------- The protection ofliterary,drama,musical, artistic and intellectualworks
a. Copy rights
c. Patents
b. Trade secrets
d. Geographical indication
e.None of the above
19. Tax levied by government onimports and exports is called
a. Tariffs
c. Sales tax
b. Anti-dumping
d. Gift tax
e.Excise duty
20. Company is a
a. Juristic person
c. Registered cooperative society
b. Citizen
d. Entity having no rights
e.Corporation
21. Corporate veil can be lifted by
a. Reduction of membership c.
Fraudulent conduct
b. Failure to refund application money d.
All of the above
e.None of the above
22. Private company should have at least
a. 2 persons
c. 4 persons
b. 3 persons
d. 5 persons
e. 6 persons

8. Multiple Choice Questions
23. Government Company
a. Has at least 51% of the paid-up share capital by Central or State Government
b. Has at least 49 % of the paid-up share capital by Central or State Government
c. Has 50 % of the paid-up share capital by Central or State Government
d. Has 75 % of the paid-up share capital by Central or State government
e. Has 80 % of the paid-up share capital by Central or State government
24. Ordinary Share Capital is also known as
a. Equity share capital b. Preferential share capital
c. Deferred share capital d. Participating preference share capital
e. All the above
25. The Monopolies and Restrictive Trade Practice Act was repealed by :
a. Competition Act
b. Consumer Protection Act
c. Foreign Trade (Development and Regulation) Act
d. Indian Contract Act
e. Liberalisation Policy of the Government.
26. The general meeting that can be held by the shareholders other than Annual General Meeting of the
company is
a. Statutory meeting b. General body meeting
c. Special meeting d. Annual General meeting
e.Extraordinary General meeting
27. Every company is required to call at least a meeting of its shareholders every year. And this meeting is
known as
a. Statutory meeting b. Annualgeneralmeeting
c. General body meeting d. Extraordinary meeting
e.None of the above
28. Dividends is to be paid in the form of
a. Cash b. Kind
c. Share d. Interest
e.All ofthe above
29. In which of the following case the independent corporate entity of the company was discussed
a. Salomon Vs. Salomon & Co. Ltd.
c. Jones Vs. Lipman
e. Gilford MotorCompany Vs.Horne.
b. Lee Vs. Lee Air Farming Ltd.
d. PNB Finanace Vs.Shital Pd. Jain

9. Business Environment & Law: Practice Paper
30. A public company cannot commence its business unless
a. The certificate of incorporation is obtained
b. The certificate of the commencement of business is obtained
c. The certificate of registration is obtained
d. The certificate of registration and commencement of business is obtained
e. Any of the above.
31. Memorandum of Association means
a. Memo issued to the company b. Document of the Association
c. Document required to incorporate a company d. Type of the company
e.List of documentsforforming the company
32. Articles of Association contains
a. Rules that govern the management c.
Byelaws
b. Rules for the conduct of the business d.
Powers of the officers
e.All ofthe above
33. MemorandumofAssociation contains
a. Name clause
c. Object clause
b. Registered office clause
d. Liability clause
e. All of the above
34. The activities that ultraviresthe memorandumofassociationofa company ______.
a. Cannot be ratified even by all the shareholders of the company
b. Can be ratified if approved by all the shareholders of the company
c. Results into Compulsory winding up of the company
d. Results in to Voluntary winding up of the company
e. Amounts to Oppression/mismanagement of the company
35. Doctrine of Indoor Management was discussed in
a. Royal British Bank Vs. Turquand
b. Pramatha Nath Sanyal Vs. Kali Kumar Dutt
c. New Brunswick and Canada Rly. Land & Co. Vs. Muggeridge
d. Free Wheel (India) Limited Vs. Dr. Veda Mitra
e. None of the above
36. Prospectus is an
a. Invitation for subscription of securities c.
Notice of issue of securities
b. Advertisement for subscription of debentures d.
Document inviting deposits
e. All of the above

10. Multiple Choice Questions
37. In terms of the Companies Act, 2013, the kinds of shares available are
a. One
c. Three
b. Two
d. Four
e.Five
38. For which of the following is given a right as IntellectualPropertyforinvention.
a. Patents
c. Trade mark
b. Copyrights
d. Geographical Indication
e.Property ofan intellectual
39. Director is
a. Trustee
c. Managing Partner
b. Agent
d. Officer in default
e. All of the above
40. Director of the company may be appointed by
a. Resolution passedby the companyin generalmeeting
b. Resolution passed by the board of directors
c. Memorandum / Articles of association
d. By the Central Government
e. All of the above
41. Kind of Meeting is
a. Board Meeting
c. Extraordinary generalmeeting
b. Annualgeneralmeeting
d. Class meeting
e.All ofthe above
42. State the nature of resolution to be passed for NCLT to voluntarily wind up a company
a. Special resolution
c. Board Resolution
b. Ordinary Resolution
d. Resolution requiring special notice
e.Resolution by circulation
43. The main aim ofthe Competition Act,2002 is to protect the fairinterests of
a. The multinational corporation c.
The consumers
b. The Indian companies
d. The market
e. All of the above
44. Quorumfor a generalmeeting ofa private limited company is
a. 5 members personally present in the meeting
b. 2 members personally present in the meeting
c. 3 members personally present in the meeting
d. 4 members personally present in the meeting
e. 1 member personally present in the meeting

11. Business Environment & Law: Practice Paper
45. Economies have been classified into
a. Capitalist, Socialist and Mixed c.
Under developed
b. Developed
d. Developing
e.All ofthe above
46. Agriculture sectorprovides employment to
a. 70% of the total workforce c.
25 % of the total workforce
b. 30% of the total workforce
d. 50% of the total workforce
e.18% ofthe totalworkforce
47. Service sector includes services of
a. Communication
c. Financialinstitution
b. Bank
d. Real estate
e.All ofthe above
48. Kinds of Insurance
a. Life insurance
c. Motor Vehicle Insurance
b. General insurance
d. Health Insurance
e.All ofthe above
49. New Economic Policy (NEP) was introduced in
a. June 1991
c. July 1996
b. December 1992
d. May 1997
e.November1992
50. In terms of the Companies Act, 2013, what is the full form of „OPC‟?
a. One Person Company
c. Anotherperson company
b. One Person Corporation
d. Open Platform Company
e.Open PlatformCommunication
51. A company overwhich controlis exercised is known as
a. Subsidiary company
c. Foreign company
b. Holding company
d. Joint stock company
e.None of the above
52. Debentures are generally
a. Redeemable
c. Perpetual
b. Irredeemable
d. Cumulative
e. Any ofthe above

12. Multiple Choice Questions
53. In terms of the Companies Act, 2013, „NCLT‟ stands for
a. National Company Law Tribunal c.
National Corporation Law Tribunal
b. National Company Law Tribune d.
National Corporation Tribune
e.NationalCompany Law Treaty
54. Which ofthe following is not included within the meaning ofIntellectualProperty
a. Patents
c. Trade mark
b. Copyrights
d. Property ofan intellectual
e.Geographical Indication
55. For the supply of necessaries the agreement with a minor is
a. Valid
c. Illegal
b. Void
d. Not enforceable by law
e.None of the above
56. A minor‟s agreement is void. This proposition is made in
a. Nihal Chand Vs. Jan Khan
c. MohariBeeviVs. Dharmodas Ghosh
b. Sreekrishnan Vs. Kurukshethra University d.
Nanjappa vs. Muthuswamy
e.Raman Bhai Vs. Ghasi Ram
57. Maslow‟s hierarchyof needs did not have one of human needs, that is
a. Self actualization
c. Social needs
b. Esteem
d. Financial needs
e. Physiological needs
58. Cultural adaptation refers to
a. Businessdecision making appropriate to theculturaltraits ofa society
b. Changing the culture
c. Accepting new culture
d. Adopting the native custom
e. None of the above
59. Which of the following constitute political system?
a. Parliamentary and absolutist forms of government
b. Multi party system
c. Single party system
d. Dominant party system
e. All of the above
60. Types of Economic systemare
a. Communism
c. Capitalism
b. Socialism
d. All of the above
e. None ofthe above

13. Business Environment & Law: Practice Paper
61. Different forms of intervention by government
a. Expropriation
c. Import restrictions
b. Domestication
d. Tax and price control
e.All ofthe above
62. Contract with a minor is
a. Valid
c. Void abinitio
b. Void
d. Voidable
e.Not enforceable
63. Remedies available for the breach ofthe contract
a. Suit for rescission
c. Suit for specific performance
b. Suit for injunction
d. Suit for damages
e.All the above
64. Section 14 says the consent is free when it is not causedby
a. Coercion
c. Fraud
b. Misrepresentation
d. Undue Influence
e.All ofthe above
65. What is not the essentialelement ofa valid contract?
a. Capacity to contract
c. Intention to createlegalrelationship
b. Consideration
d. Lawful object
e.Written agreement
66. Which ofthe following agreements is / are void?
a. Agreement with consideration
c. Agreement not opposedto public policy
b. Agreement with lawful object d.
Agreement in restraint of trade
e.None of the above
67. Customs duty is collected by
a. Central Government
c. Customs officials
b. State Government
d. Central excise
e.None of the above
68. Every company has to keep a record ofthe proceedingofits meetings. This record is also known as
a. Proxy
c. Statutory report
b. Minutes
d. Diary
e.All the above
69. Once a dividend is declared it becomes _____ forthe company
a. Loan
c. Recovery
b. Obligation to pay
d. All of the above
e. Any ofthe above

14. Multiple Choice Questions
70. The Indian Companies Act, 2013 was passed in the year
a. 2014 b. 1950
c. 1974 d. 2011
e.1920
71. Prior to its incorporation a company has
a. No status
c. No income
b. No existence
d. All of the above
e.None of the above
72. A company has a
a. Nationality
c. Residence
b. Domicile
d. All of the above
e.b and c only
73. A company may change its name
a. By passing a special resolution
c. With the approvalofthe company lawboard
b.
d.
With the approvalofcentralgovernment
With the approvalofthe registrar
e.Either a or, a and b
74. If a company wishes a business includedin the otherobjects,it shallhave to obtain theapproval of
a. Registrar of companies
c. Its shareholdersby a specialresolution
b. Its subscribers to the memorandum d.
The central government
e.Either of the above
75. In which of the following case,a company can issue shares at a discount?
a. Sweat Equity Shares
c. Bonus Issue
b. Initial Public Offering
d. Rights Issue
e.Global DepositoryReceipts
76. A Share in a Company is a
a. Unit of share capital
c. Unit ofa preference share capital
b. Unit of profit
d. Unit of a debenture
e.All ofthe above
77. Identify the key managerialperson ofa company fromthe given options.
a. Chief Executive Officer
c. Managing Director
b. Chief Financial Officer
d. Whole time Director
e. All of the above

15. Business Environment & Law: Practice Paper
78. Assets exempted from tax are:
a. Property held undertrust
c. Residentialbuilding ofa former ruler
b. Coparcenary interest in Hindu Undivided family d.
Jewellery of a former ruler
e.All ofthe above
79. Assetsdoes not include
a. Building and land
c. Jewellery
b. Motor cars
d. Furniture and
e.Dividend
80. The rule ofIndoorManagement hasno applicationwhere there is
a. Knowledge of irregularity c.
Forgery
b. Suspicion of irregularity
d. Representationthrough articles
e.All ofthe above
81. No application for shares of a public company can be invited for subscription unless it is accompanied by
a. Property draft
c. Statement in lieu of prospectus
b. Prospectus
d. Balance sheet
e. All of the above
Prospectus is an invitation but not an appeal. It is in relation to securities where debenture is not a security but a
secured debt.
82. Identify the „Charter of the Company‟ from the following:
a. Prospectus
c. Articles
b. Memorandum
d. Statement in lieu of prospectus
e.None of the above
83. Prospectus is defined underSection ______ of Companies Act , 2013
a. Sec 2 (70) b. Sec 2 (45)
c. Sec 2 (22) d. Sec 2 (32)
e.Sec 2 ( 28)
84. ______is a person who bringsabout theincorporation andorganisationofa company
a. Subscriber
c. Shareholder
b. Director
d. Promoter
e.Debenture holder
85. Allotment ofShares must be
a. Absolute
c. Conditional
b. Flexible
d. Need not be absolute
e. a and b

16. Multiple Choice Questions
86. In the case of transfer, the share-certificate has to be delivered within _____ months
a. 3 months
c. 4 months
b. 1 month
d. 5 months
e. 6 months
2 months is forsharesallotted forcasesotherthan transferortransmission.
87. Shares are _____
a. Moveable property
c. Tangible property
b. Immoveable property
d. Intangible property
e.None of the above
88. If the stockexchange denies permission to a company,an allotment ofshares by thecompany becomes
a. Valid
c. Voidable
b. Void
d. Irregular
e.Regular
89. The secondclause ofMemorandummust specify
a. The name of the company c.
The object of the company
b. The registered office of the company d.
The capital of the company
e.All the above
90. The object clause of the memorandum must be divided into _____ sub clauses.
a. 3 b. 4
c. 2 d. 5
e.6
91. A contract that ultra vires the memorandum of the company is
a. Valid
c. void
b. Valid by reason of ratification
d. Void abinitio
e. Voidable
Any act ultra vires the memorandum is void ab intio. In case the same is ultra vires the articles but intra vires the
memorandum then the same can be ratified by the shareholders of the company.
92. For alteration of the memorandum of association,the approval of ____________ is the prerequisite.
a. Share holders
c. Subscribers
b. Registrar
d. Directors
e. Central government
Initially, the memorandum gets vetted in terms of promoters choice but subsequently they can be altered in terms
of shareholders approval.
93. The capital clause of the memorandum of association must state the
a. Nominal capital
c. Value of the share
b. Number ofshares
d. All the above
e. None ofthe above

17. Business Environment & Law: Practice Paper
94. Into howmany ways a company can limit its liability?
a. Two
c. Four
b. Three
d. Five
e.Six
95. The first Indian case on the principle that companyis independent fromits members is
a. Kandoli Tea Co.Ltd., Re
c. Bacha F. Guzdar Vs CIT, Bombay
b. Dinshaw Maneckjee Petit, Re
d. CIR Vs. MeenakshiMills Pvt.Ltd.
e.All the above
96. In order to drop the word “Limited” from its name a company has to obtain permission from the
a. Company law board
c. Central government
b. Registrar
d. State government
e.Shareholders
97. Which ofthe following Company must have Articles ofAssociation?
a. Unlimited Companies
c. Private companies limited by shares
b. Companies limited by guarantee d.
All the above
e.a and c only
98. „Corporate Social ResponsibilityCommittee of the Board‟ is dealt under section_____________ofthe
Companies Act, 2013.
a. Section 13
c. Section 111
b. Section 14
d. Section 130
e.Section 135
99. The last clause ofthe memorandummust state the --------- of the company.
a. Objects
c. Liability
b. Capital
d. Subscription
e.Registered office
100. Criminal liability for mis-representationin Prospectus is dealt in section
a. 58–A b. 61–C
c. 34 d. 62
e. 60

18. Multiple Choice – Answers and Explanations
MULTIPLE CHOICE – ANSWERS AND EXPLANATIONS
1. (a) : Surrounding external objects
Environment is read in relation to the surrounding external objects related to the business.
2. (a) : Social, cultural, legal and technological factors
Non-economic environment include other environment in which the business is undertaken.
3. (a) : Opportunity, threat, strength and weakness
SWOT analysis is done to understand opportunity,threat,strength and weakness of the company.
4. (a) : Family size,education levels and economic stratificationof the population
Demographic environmentis taken into consideration before doingthe business.
5. (a) : Micro and macro level
To understand the economic environment it has to be studied at two levels.
6. (a) : The art and science of directing military forces
Initially the word strategy meant the art and science of directing military forces.
7. (e) : All the above
Stratification is the study of various levels of hierarchy. The stratification helps in understanding the
various aspects ofbusiness and the risk involved.
8. (e) : All the above
Social classes contains the features such as it is multidimensional, restrictive, homogeneous and
dynamic.
9. (a) : Person, firm and product’s attractiveness
Referrent powers are used to promote the product and encourage consumers, which in turn flows the
feelings of belongingness.
10. (a) : Learned behaviour
Role actually means the part played by the person in an given situation hence it is considered as a
learned behaviour.
11. (a) : Social unit living together
Family is considered as the social unit and an institution where people live togetherdue to birth or
marriage.
12. (e) : All the above
Culture is the learned behaviour, it is also considered as a socialisation process into any group by
following a particular pattern of that group.
13. (e) : All the above
Culture includes all the learned behaviour in a given situation.It is considered to begin from birth and
end only by death of a person.
14. (e) : All the above
Family contains many functions and few have been listed in this question.
15. (a) : Three
Cultural analysis includes three approaches and they are: ethnocentrism, assimilation and primacy of
host country approach.

19. Business Environment & Law: Practice Paper
16. (c) : Share certificate
Share Certificate entitles the allottee to become the member and get his name registered in the register
of members of the company.
17. (a) : Equity share capital
Ordinary share capital is also called equity share capital.
18. (a) : Copy rights
Copy rights is provided for the protection of the intellectual property related to literary, drama etc.
19. (a) : Tariffs
Term for tax levied by government on imports and exports.
20. (a) : Juristic person
Company is an artificial person created by law.
21. (d) : All of the above
Corporate veil will be lifted in case any mischief is conducted by the directors of the company in the
name of the company. Company, being an artificial and separate legal entity can sue and be sued on its
own.
22. (a) : 2 persons
This is the prerequisite condition laid under the Companies Act, 2013.
23. (a) : Has at least 51% of the paid-up share capital by Central or State Government
This is in terms of Section 45 of the Companies Act, 2013. This is to empower the government
company to take important decisions on behalf of the company.
The government company can have a say in the meeting for passing any major decision. (For deletion)
24. (a) : Equity share capital
Anothername for ordinary share capital.
25. (a) : Competition Act
The replacement took place thereby establishing the Competition Commission of India for prevention
of practices having adverse effect on competition.
Competition Act was replaced by MRTP Act as there was change in the world in the form of
globalisation, liberalisation and privatisation. (For deletion) : :
26. (e) : Extraordinary General meeting
In terms of the Companies Act, 2013, any general meeting otherthan annual general meeting is called
as „Extra Ordinary General Meeting‟.
27. (b) : Annual general meeting
According to the requirement of the situation of the company, various types of meetings are prescribed.
(For Deletion)
Section 96 of the Companies Act, 2013 laid down the same.
28. (a) : Cash
Dividends have to be paid only by cash and not in any otherform, a legal requirement.
29. (a) : Salomon Vs. Salomon & Co. Ltd.
This is the landmark case.Accordingly, a company becomes an artificial person having separate legal
entity once it got incorporated under the Companies Act.
For the first time the company as an independent corporate entity of the company was discussed. (For
deletion)

20. Multiple Choice – Answers and Explanations
30. (b) : The certificate of the commencement of business is obtained
A public company can commence its business afterit has obtained the certificate of commencement of
business.
31. (c) : Document required to incorporate a company
Memorandum of Association is one of the documents necessary for incorporation of a company, it is a
public document.
32. (e) : All of the above
Articles of Association contains bye-laws, means rules and regulation for the smooth functioning of the
company.
33. (e) : All of the above
The memorandum of association is a charter of the company. It contains five clauses, the fifth clause is
the capital clause.
These clauses are contained before registration to help the registrar to have details and after the
incorporation it will help the shareholders and any investors. (for deletion)
34. (a) : Cannot be ratified even by all the shareholders of the company
In terms of the Companies Act, 2013, any act that ultravires the memorandum of association of the
company cannot be ratified even with the approval of all the shareholders of the company.
35. (a) : Royal British Bank Vs. Turquand
This is the landmark case pertaining to the „Doctrine of Indoor Management‟.
36. (a) : Invitation for subscription of securities
In terms of the Companies Act, 2013, Prospectus is a document inviting public for purchase or
subscribe the securities of the company.
37. (b) : Two
The Companies Act, 2013 provides two types of shares – Equity shares and Preference shares.
38. (a) : Patents
In terms of the Patent Act, 1970,Patentis a legallyobtained righton one‟s innovation or invention.
39. (e) : All of the above
Director is considered as a trustee, agent and managing partner as the company runs on the fiduciary
relation.The concept of qualification shares for a director is no more applicable, in terms of the
Companies Act, 2013.
40. (e) : All of the above
The appointment shall be done in accordance with the procedures laid underthe respective sections of
the Companies Act, 2013.
41. (e) : All of the above
The given are the different kinds of meetings that are specified under the Companies Act, 2013.
42. (a) : Special resolution
In terms of Section 271 of the Companies Act, 2013, a company through its special resolution can
resolve itself for winding up by NCLT.
43. (e) : All of the above
The Competition Act, 2002 main objective is to protect the consumers from unfair trade practises of the
business class and to ensure freedom of trade for all participants in the market.

21. Business Environment & Law: Practice Paper
44. (b) : 2 members personally present in the meeting
Section 103 of the Companies Act, 2013 specifies that quorum for a general meeting of a private
limited company shall be two members personally present at the meeting.
45. (e) : All of the above
These are the various types of economies that are explained by different economists in the world.
46. (a) : 70% of the total workforce
As agriculture is the main occupation of our country men, they provide employment to 70% of our total
work force.
47. (e) : All of the above
The Chapter V of the Finance Act, 1994 is the dealing section for this.
48. (e) : All of the above
The given are the various products of the insurance companies that are meant for sale on the basis of
buyer requisites.
49. (a) : June 1991
Introduced by the then Finance Minister of India, Dr.Manmohan Singh, to bring trade liberalization
thereby economic growth in the country.
50. (a) : One Person Company
This type of company is newly introduced in the Companies Act, 2013.
51. (a) : Subsidiary company
Subsidiary company is one which is underthe control of its holding company.
52. (d) : Cumulative
In terms of section 2(71) of the Companies Act, 2013, the minimum paid up capital for the company is
five lakhs or such higher paid up capital as prescribed.
53. (a) : National Company Law Tribunal
NCLT got replaced to CLB (Company Law Board).
As these are the requirements according to the Companies Act, 1956 (For deletion)
54. (d) : Property of an intellectual
Property of the intellects cannot be included in the intellectual property. As the intellectual property
means anything produced out of the intellect.
55. (a) : Valid
It is a quasicontract valid in terms of the Contract Act, 1872.
56. (c) : Mohari Beevi Vs. Dharmodas Ghosh
This is a landmark case with respect to minor‟s contract.
57. (d) : Financial needs
Maslow only speaks about the basic needs of human being and not about the financial needs of the
human being.
58. (a) : Business decision making appropriate to the cultural traits of a society
The business must adapt to the cultural requirement of the area so that they make good profit and
sustain in the business.
59. (e) : All of the above

22. Multiple Choice – Answers and Explanations
60. (d) : All of the above
These are the types of economic systemin the world.
61. (e) : All of the above
Government intervenes as and when it becomes necessary to do so.
62. (c) : Void abinitio
Because minor is not a person competent to contract.
63. (e) : All the above
For the breach of the contract, all the above remedies are available.
64. (e) : All of the above
Free consent is when it is not marred by coercion, misrepresentation, fraud and undue influence.
65. (e) : Written agreement
Written agreement is not a necessity but only an option.
66. (d) : Agreement in restraint of trade
As no one can be restrained from taking up any legal trade.
67. (a) : Central Government
Being Customs Act, 1962 is a Central Enactment, the Central Government is empowered to levy and
collect the customs duty.
As it falls under the category where only central government is allowed to collect (For deletion).
68. (b) : Minutes
In terms of Companies Act, 2013, every company need to record its proceedings of its meeting called
minutes.
69. (b) : Obligation to pay
In terms of the Companies Act, 2013, once dividend is declared and approved by the shareholders in
their annual general meeting, then it is an obligation on the part of the company to pay the same. Thus,
it becomes a debt for the company.
70. (a) : 2014
The Companies Act, 2013 was passed in the year 2014.
71. (d) : All of the above
As according to law it does not come into existence
72. (d) : All of the above
On incorporation, the company becomes an artificial person having separate legal entity in all respects.
73. (e) : Either a or, a and b
In terms of the Companies Act, 2013, this is a prerequisite for change of name of the company.
74. (c) : Its shareholders by a special resolution
For alteration of Memorandum of Association,the company needs to obtain the approval of its
shareholders in their duly held general meeting.
75. (a) : Sweat Equity Shares
In terms of the Companies Act, 2013, sweat equity shares can be issued at a discount.

23. Business Environment & Law: Practice Paper
76. (a) : Unit of share capital
In terms of the Companies Act, 2013, the share capital is divided into number of units meant for
subscription by the people. Each such unit is called a share.
77. (e) : All of the above
Section 2(51) of the Companies Act, 2013 specifies the persons who are called as key managerial
persons for a company.
78. (e) : All of the above
As they are exempted underthe Income Tax Act, 1961.
79. (e) : Dividend
In terms of the Income Tax Act, 1961, dividend is an income from other source but not an asset.
80. (e) : All of the above
In terms of the Companies Act, 2013, these are the exceptions to the Doctrine of Indoor Management.
81. (b) : Prospectus
In terms of the Companies Act, 2013, prospectus is an initiation to the public for subscription of
securities of the company.
82. (b) : Memorandum
In terms of the Companies Act, 2013, Memorandum of Association of the company is termed as a
charter of the company beyond which the company is not allowed to carry on its activities.
83. (a) : Sec 2 (70)
Section 2 of the Companies Act, 2013 provides definitions.
84. (d) : Promoter
He is the person who works even before the company is incorporated.
85. (a) : Absolute
In terms of the Companies Act, 2013, allotment of shares shall be in absolute manner.
86. (b) : 1 month
This is a statutory requirement under Section 56 of the Companies Act,2013.
Mandatory Requirement of the law.
87. (a) : Moveable property
Share is a moveable property easily gets transferable, in terms of section 44 of the Companies Act,
2013.
88. (a) : Valid
The persons to whom shares are allotted are called as shareholders.
89. (b) : The registeredoffice of the company
As the order is first name clause, then registered clause, third being object and fourth being capital and
then subscription clause
90. (c) : 2
According to the Companies Act, 2013, the objects clause of the Memorandum shall contain the main
object and objects incidental to its main objects.
91. (d) : Void abinitio
Because it cannot be ratified even by all the shareholders of the company.

24. Multiple Choice – Answers and Explanations
92. (a) : Share holders
This is a prerequisite laid under the Companies Act, 2013.
93. (d) : All the above
This is a mandatory requirement in terms of the Companies Act, 2013.
94. (b) : Three
A company can limit its liability either by shares or by guarantee.
95. (a) : Kandoli Tea Co.Ltd., Re
It is a landmark case noted for a company to be independent from its members.
96. (c) : Central government
The Registrar of Companies, Central Government, is the appropriate authority to sanction the name
for a company.
97. (d) : All the above
As the articles of association provide the bye laws for the smooth functioning of the company
98. (e) : Section 135
This is the new concept introduced in the Companies Act, 2013.
99. (d) : Subscription
In terms of the Companies Act, 2013, the last clause in the memorandum of association of a
company shall be the subscription clause.
100. (c) : 34
Section 34 of the Companies Act, 2013 is the dealing section for misrepresentation in the prospectus.
The liability levied is criminal liability.
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