JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-14

19/03/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-14

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Under Section 2(20) of the Companies Act, 2013, how is a company defined?
A. A business entity registered under the Partnership Act, 1932
B. A company incorporated under this Act, or under any previous company law
C. An organization recognized under the Banking Regulation Act, 1949
D. Any legal entity engaged in trade or commerce

Q.2 Which of the following is NOT a characteristic feature of a Joint Stock Company?
A. It is an incorporated association and must be registered under the Companies Act, 2013.
B. It is an artificial person created by law, capable of entering into contracts.
C. It ceases to exist upon the death or insolvency of any shareholder.
D. It has a common seal, which acts as the company’s official signature.

Q 3 What is the minimum and maximum number of members required for a private limited company as per the Companies Act, 2013?
A. Minimum 2, Maximum 200
B. Minimum 7, Maximum 500
C. Minimum 2, No maximum limit
D. Minimum 7, No maximum limit

Q.4 As per the amendment to the Companies Act, 2013 (effective from 2015), what is the minimum paid-up capital requirement for a private or public limited company in India?
A. ₹1 lakh for a private company and ₹5 lakh for a public company
B. ₹50,000 for a private company and ₹2 lakh for a public company
C. No mandatory minimum paid-up capital requirement
D. ₹2 lakh for a private company and ₹10 lakh for a public company

Q.5 Which of the following statements is correct regarding the classification of companies based on incorporation?
A. A chartered company is established under a special Act passed by the Legislature.
B. A statutory company is created by a special charter issued by the Head of State.
C. Life Insurance Corporation of India (LIC) is an example of a statutory company.
D. Chartered companies are commonly found in India.

Q.6 Which of the following is NOT a characteristic of a private company under the Companies Act, 2013?
A. It limits the number of its members to 200 (except in the case of a One Person Company).
B. It allows free transfer of shares among the public.
C. It prohibits any invitation to the public to subscribe to its securities.
D. It restricts the right to transfer its shares.

Q.7 As per the Companies Act, 2013, an Associate Company is a company in which another company has:
A. More than 50% ownership and full control over its operations
B. A significant influence, but it is not a subsidiary of the other company
C. No ownership interest but is involved in a joint venture
D. Complete control over management and decision-making

Q.8 As per Section 2(87) of the Companies Act, 2013, a subsidiary company is one in which the holding company:
A. Controls the composition of the Board of Directors
B. Exercises or controls more than 50% of the total share capital
C. Either (A) or (B)
D. Holds at least 10% of the voting power

Q.9 Which of the following statements is correct regarding companies classified on the basis of liability?
A. In a company limited by shares, members are personally liable for all debts of the company.
B. A company limited by guarantee is usually formed for non-profit purposes like education, sports, or fine arts.
C. In a company with unlimited liability, members’ liability is restricted to the amount unpaid on their shares.
D. Companies limited by guarantee must have share capital.

Q.10 Which of the following is NOT a correct distinction between a Partnership and a Limited Liability Company?
A. A partnership firm can be formed with a maximum of 10 members in banking and 20 in other businesses, whereas a private company can have up to 200 members.
B. Liability of partners in a partnership firm is limited, whereas liability of shareholders in a company is unlimited.
C. A company has perpetual existence, whereas a partnership firm does not.
D. Government control is stricter for joint stock companies compared to partnership firms

Q.11 If a company issues cumulative preference shares, what happens to the unpaid dividend when the company makes no profit or inadequate profit in a financial year?
A. The dividend lapses and cannot be claimed in the future.
B. The unpaid dividend is carried forward and paid in subsequent profitable years before paying equity shareholders.
C. The company must pay the dividend from its capital even if there is no profit.
D. The unpaid dividend is distributed equally among equity and preference shareholders in the next year

Q.12 According to Section 55 of the Companies Act, 2013, which of the following statements is correct regarding preference shares?
A. All preference shares must be redeemable, and the issue of irredeemable preference shares is prohibited.
B. Companies can issue irredeemable preference shares under special circumstances.
C. A company can only redeem preference shares after 20 years of issuance.
D. Preference shares can be redeemed from only the company’s profits and not from any other source.

Q.13 According to the Companies Act, 2013, a company limited by shares can issue redeemable preference shares for a maximum period of:
A. 10 years
B. 20 years
C. 30 years for all types of companies
D. 30 years for infrastructure projects with at least 10% redemption per year from the 21st year onwards

Q.14 Which of the following is true about Participating Preference Shares?
A. They receive only a fixed dividend and do not participate in surplus profits.
B. They have the right to participate in the surplus assets after equity shareholders are paid in case of winding up.
C. All preference shares are automatically participating unless stated otherwise.
D. Preference shares can never be cumulative and participating at the same time.

Q.15 Which of the following statements is correct regarding the classification of share capital?
A. Authorised capital is the maximum capital a company can issue, and it can never be increased.
B. Issued capital is always equal to authorised capital.
C. Paid-up capital is the portion of called-up capital that has actually been paid by shareholders.
D. Subscribed capital is always greater than issued capital.

Q.16 When a company issues shares at a price higher than their face value, the excess amount is called share premium. According to the Companies Act and SEBI guidelines, which of the following is NOT a permitted use of the share premium amount?
A. Buyback of shares
B. Distribution of dividends to shareholders
C. Issue of fully paid bonus shares
D. Paying premium on redemption of preference shares or debentures

Q.17 Under Section 54 of the Companies Act, 2013, which of the following is NOT a condition for the issuance of sweat equity shares?
A. The issue must be authorized by a special resolution passed by the company.
B. Sweat equity shares can be issued to any person, including external consultants and vendors.
C. The resolution must specify the number of shares, market price, and consideration for the issue.
D. If the company is listed, the issue must comply with SEBI regulations; if unlisted, it must follow prescribed rules.

Q.18 Which of the following statements is true regarding the Employees Stock Option Scheme (ESOS)?
A. ESOS gives employees the obligation to buy shares of the company at a pre-determined price.
B. Employees can exercise their stock option at any time without restrictions.
C. ESOS grants employees the right, but not the obligation, to apply for shares at a pre-determined price.
D. The Securities and Exchange Board of India (SEBI) has no guidelines for ESOS in listed companies.

Q.19 Which of the following statements is true regarding the issuance of bonus shares as per Section 63 of the Companies Act, 2013?
A. Bonus shares can be issued by capitalizing revaluation reserves of the company.
B. A company can issue bonus shares even if it defaults on statutory employee dues such as provident fund and gratuity.
C. Bonus shares can be issued from free reserves, securities premium account, or capital redemption reserve account.
D. Bonus shares can be issued in lieu of dividends to compensate shareholders

Q.20 Under Section 53 of the Companies Act, 2013, which of the following statements is correct regarding the issue of shares at a discount?
A. Companies are freely allowed to issue shares at a discount if approved by shareholders.
B. Shares cannot be issued at a discount, except under Section 54 for sweat equity shares.
C. If a company issues shares at a discount, it only has to pay a penalty and does not have to refund money to investors.
D. There is no penalty for issuing shares at a discount under the Companies Act, 2013.