CAF-4 · Chapter 17
Memorandum and articles MCQs with Answers
12 multiple-choice questions on Memorandum and articles for CAF-4 Business Law Dynamics. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Under the Companies Act, 2017, in which specific document is the 'principal line of business clause' required to be stated?
- A) The Articles of Association
- B) The Memorandum of Association
- C) The Prospectus
- D) The Statutory Declaration
Show answer & explanation
Answer: B) The Memorandum of Association
The principal line of business clause is a mandatory part and parcel of the Memorandum of Association.
Question 2
If the registrar refuses a person's application for the reservation of a company name, what is the remedy available to the aggrieved person?
- A) File an appeal to the High Court within 60 days.
- B) File a new application with a different registrar immediately.
- C) Prefer an appeal to the Commission within 30 days of the order of refusal.
- D) The refusal is final and cannot be appealed.
Show answer & explanation
Answer: C) Prefer an appeal to the Commission within 30 days of the order of refusal.
If an application for name reservation is refused by the registrar, the aggrieved person may prefer an appeal to the Commission within 30 days of the order of refusal.
Question 3
Which clause of the memorandum of association CANNOT be altered during the lifetime of the company?
- A) The registered office clause
- B) The principal line of business clause
- C) The authorized capital clause
- D) The subscription clause
Show answer & explanation
Answer: D) The subscription clause
The subscription clause of the memorandum of association of the company cannot be altered in the lifetime of the company.
Question 4
When a company changes the situation of its registered office, what is the required time frame to notify the registrar?
- A) Within 7 days
- B) Within 15 days
- C) Within 30 days
- D) Prior approval must be taken before moving
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Answer: B) Within 15 days
A company must give notice of a change in the situation of its registered office to the registrar within a period of fifteen days.
Question 5
If a member requests a copy of the memorandum and articles of the company and pays the prescribed fee, within what time period must the company supply it?
- A) 7 days
- B) 14 days
- C) 21 days
- D) 30 days
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Answer: B) 14 days
Every company shall supply within a period of 14 days, a copy of the memorandum and articles of the company, upon the request and payment of a prescribed amount, to its member.
Question 6
Whenever an alteration is made to the memorandum or articles of a company, what must the company ensure regarding future copies issued?
- A) They must be signed by all directors again.
- B) They must be printed on official stamp paper.
- C) Every copy issued after the date must conform to the altered memorandum or articles.
- D) The alterations must be highlighted in red ink.
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Answer: C) Every copy issued after the date must conform to the altered memorandum or articles.
Where an alteration is made, every copy of the memorandum or articles issued after the date of the alteration shall conform to the memorandum or articles as so altered, or else the company faces a penalty.
Question 7
The promoters of Zenith Traders submitted an application to the registrar for the reservation of their proposed company name. The registrar refused the application. What is the immediate legal remedy available to the promoters?
- A) They must select a new name and wait 60 days to reapply.
- B) They can appeal to the High Court within 15 days.
- C) They can prefer an appeal to the Commission within 30 days of the order of refusal.
- D) They can appeal directly to the Prime Minister's office.
Show answer & explanation
Answer: C) They can prefer an appeal to the Commission within 30 days of the order of refusal.
If the registrar refuses to reserve a name, the aggrieved person may prefer an appeal to the Commission (SECP) within 30 days. The Commission's order on this matter is final.
Question 8
Which of the following clauses in a company's Memorandum of Association CANNOT be altered during the entire lifetime of the company?
- A) The Authorized Capital Clause
- B) The Registered Office Clause
- C) The Principal Line of Business Clause
- D) The Subscription Clause
Show answer & explanation
Answer: D) The Subscription Clause
While capital, registered office, and business clauses can be altered by following proper legal procedures (special resolutions), the subscription clause cannot be altered during the lifetime of the company.
Question 9
BlueBird Limited wants to shift its registered office from Lahore (Punjab) to Peshawar (KPK). Which of the following sets of approvals is mandatory for this move?
- A) An ordinary resolution and approval from the local mayor.
- B) A special resolution and confirmation from the Commission (SECP).
- C) A special resolution and approval from the High Court.
- D) Only a board resolution is required.
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Answer: B) A special resolution and confirmation from the Commission (SECP).
Shifting a registered office from one province to another requires the passing of a special resolution by the members, followed by formal confirmation from the Commission on a petition.
Question 10
Upon incorporation, three founding members of a private limited company signed the Memorandum of Association, undertaking to purchase 10,000 shares each at Rs. 10. What is the legal status of this undertaking?
- A) It is merely a declaration of intent with no financial binding.
- B) The amount of Rs. 100,000 each becomes a debt due from them to the company, payable in the time/manner notified by the Commission.
- C) They can cancel this undertaking within 30 days of incorporation.
- D) The debt is payable only when the company makes a profit.
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Answer: B) The amount of Rs. 100,000 each becomes a debt due from them to the company, payable in the time/manner notified by the Commission.
The money payable by subscribers of the memorandum for their shares becomes a legal debt due from them to the company, payable according to the Commission's notifications.
Question 11
A member of a company sends a written request accompanied by the prescribed fee to the company secretary, asking for a copy of the Articles of Association. What is the maximum time limit for the company to supply this copy?
- A) 7 days
- B) 14 days
- C) 21 days
- D) 30 days
Show answer & explanation
Answer: B) 14 days
Under the Companies Act, a company must supply a copy of the memorandum and articles to a member within 14 days of receiving the request and the prescribed fee.
Question 12
Tariq wishes to verify the internal regulations of Horizon Limited before investing. He asks the company for a copy of its Articles of Association but is not a member. Is the company bound to provide it to him?
- A) Yes, because it is a public document.
- B) Yes, if he pays double the prescribed fee.
- C) No, the company is only legally bound to forward a copy to its existing members upon request.
- D) No, the Articles of Association are confidential and never shared.
Show answer & explanation
Answer: C) No, the company is only legally bound to forward a copy to its existing members upon request.
The right to demand and receive a copy of the memorandum and articles of association directly from the company upon payment of a fee is specifically granted to the members of the company, not unconcerned outsiders.