Formation of a Company Class 11 Important Questions

1 Mark Questions

Q1: What is the first step in the formation of a company?

Ans: The first step in the formation of a company is Promotion.

Q2: What is the minimum number of members required to form a private company?

Ans: A minimum of 2 members is required to form a private company.

Q3: Name the document that contains rules and regulations for the internal management of a company.

Ans: Articles of Association (AoA).

Q4: Which document is known as the “Charter of the Company”?

Ans: The Memorandum of Association (MoA) is known as the “Charter of the Company.”

3-4 Marks Questions

Q5: Explain the stages in the formation of a company.

Ans: The formation of a company involves the following stages:

1. Promotion: The idea of the company is conceived, and the business plan is prepared.
2. Incorporation: The company is legally registered under the Companies Act.
3. Subscription of Capital (for Public Company): The company raises funds by issuing shares to the public.
4. Commencement of Business (for Public Company): The company starts operations after receiving the Certificate of Commencement.

Q6: Differentiate between a Memorandum of Association and an Articles of Association.

Ans:

Q7: What are the different types of companies based on liability?

Ans:

1. Companies Limited by Shares: Liability of members is limited to the unpaid value of shares.
2. Companies Limited by Guarantee: Members’ liability is limited to a pre-decided amount.
3. Unlimited Companies: Members have unlimited liability.

5-6 Marks Questions

Q8: Explain the contents of the Memorandum of Association.

Ans: The Memorandum of Association includes:

1. Name Clause: States the registered name of the company.
2. Registered Office Clause: Specifies the company’s official address.
3. Object Clause: Defines the main objectives of the company.
4. Liability Clause: Specifies the liability of members.
5. Capital Clause: States the company’s authorized capital.
6. Association Clause: Declares the willingness of promoters to form the company.

Q9: Discuss the documents required for the incorporation of a company.

Ans: The following documents are required:

1. Memorandum of Association (MoA).
2. Articles of Association (AoA).
3. Declaration by professionals stating compliance with rules.
4. Consent of Directors.
5. Address proof of the registered office.
6. Statutory fees and application form.

Q10: What is the difference between a Private and a Public Company?

Ans:

Conclusion

The formation of a company is a structured process involving legal procedures. Understanding key documents and legal formalities is essential for forming a company successfully. These questions cover all important aspects to help students prepare effectively for exams!