All Free Introduction to Business MCQs with Answers

• A. Certificate of commencement
• B. Certificate of incorporation
• C. Statement of capital
• D. Annual return

Explanation: The certificate of incorporation is issued by the registrar and confirms that the company legally exists.

• A. Operate without appointing directors
• B. Avoid filing statutory documents
• C. Continue despite changes in its members
• D. Distribute profits without approval

Explanation: Perpetual succession means the company continues to exist even when members die, transfer shares or leave the company.

• A. State Bank of Pakistan
• B. Competition Commission of Pakistan
• C. Federal Board of Revenue
• D. Securities and Exchange Commission of Pakistan

Explanation: The Securities and Exchange Commission of Pakistan, or SECP, administers company law and regulates Pakistan's corporate and securities…

• A. To report updated corporate information
• B. To obtain a bank loan
• C. To appoint the external auditor
• D. To replace the company constitution

Explanation: An annual return provides the registrar with current information about matters such as members, directors and share capital.

• A. Class meeting
• B. Annual general meeting
• C. Creditors’ meeting
• D. Board committee meeting

Explanation: An annual general meeting, commonly called an AGM, deals with recurring matters such as financial statements, reports and the appointment…

• A. Approval by the registrar
• B. Unanimous approval of all members
• C. Two-thirds of issued shares
• D. Simple majority of votes cast

Explanation: An ordinary resolution normally passes when votes in favour exceed votes against among the votes validly cast.

• A. Special resolution
• B. Routine board decision
• C. Proxy appointment
• D. Director’s notice

Explanation: A special resolution requires a statutory supermajority, commonly at least three-fourths of the votes cast, subject to the applicable…

• A. To manage the company’s daily operations
• B. To express an opinion on financial statements
• C. To approve every shareholder transfer
• D. To set the company’s selling prices

Explanation: An external auditor independently examines the financial statements and reports whether they present a true and fair view under the…

• A. The company’s solvency for all debts
• B. The holder’s title to specified shares
• C. A guaranteed dividend payment
• D. A loan secured by company assets

Explanation: A share certificate is evidence of the shareholder’s title to the number and class of shares stated in it.

• A. Its shares become government securities
• B. Its directors automatically become creditors
• C. Its assets are collected and used to settle liabilities
• D. Its annual filing duties disappear immediately

Explanation: Liquidation involves collecting and realising company assets, paying liabilities according to legal priorities, and distributing any…

• A. A person who manages the company after liquidation
• B. A person who audits the company accounts
• C. A person who lends money to the company
• D. A person who forms and organizes a company

Explanation: A promoter takes the preliminary steps to form and establish a company, such as preparing documents and arranging capital.

• A. To record the personal assets of directors
• B. To receive official communications and notices
• C. To approve every contract made by managers
• D. To determine the market price of shares

Explanation: The registered office is the official address where statutory notices and communications may be served.

• A. Transfer applies only to directors, while transmission applies to auditors
• B. Transfer occurs by law, while transmission is always voluntary
• C. Transfer is voluntary, while transmission occurs by law
• D. Transfer changes debt into equity, while transmission changes equity into debt

Explanation: A transfer is a voluntary act by which one person conveys shares to another.

• A. The nominal value printed on each share
• B. The company’s authorised share capital
• C. The unpaid personal income of directors
• D. Distributable profits available for that purpose

Explanation: Dividends are generally paid out of profits lawfully available for distribution, subject to applicable company law requirements.

• A. The minimum attendance required for valid proceedings
• B. The total number of shares issued by the company
• C. The number of votes needed for a special resolution
• D. The written notice sent before a company meeting

Explanation: Quorum is the minimum number of members or persons required to be present for a meeting to conduct valid business.

• A. To audit the company’s financial statements
• B. To attend and vote on behalf of a member
• C. To register a company with the regulator
• D. To replace the company secretary permanently

Explanation: A proxy is appointed by a member to attend and vote for that member at a meeting, subject to the applicable rules.

• A. The director receives an official meeting notice
• B. The director reads the company’s published annual report
• C. The director attends a properly convened board meeting
• D. The director has a personal interest in a company contract

Explanation: A conflict may arise when a director’s personal interest could influence judgment about a company transaction.

• A. To give public notice of security over company assets
• B. To convert all company shares into preference shares
• C. To cancel the company’s outstanding loans immediately
• D. To transfer management powers from directors to creditors

Explanation: Registration of a charge places information about security over company property on the public record and helps establish priority against…

• A. A company that has no shareholders of its own
• B. A company that controls another company
• C. A company formed only to audit another company
• D. A company that must always be owned by its subsidiary

Explanation: A holding company controls another company, commonly through control of voting power or the composition of its board.

• A. The director must guarantee every company debt personally
• B. The director may use company property for private benefit
• C. The director must act honestly in the company’s interests
• D. The director may ignore the company’s constitution when convenient

Explanation: A fiduciary duty requires a director to act in good faith for the benefit of the company and to avoid improper personal advantage.