Aoa MCQ

1. What are the Articles of Association?
A) The provisions for internal regulations of the company

B) The area beyond which the company's conduct cannot go
C) The rules, regulations, and bye-laws for the internal management of
the company
D) The fundamental conditions upon which the company is incorporated
2. What term has been used to describe the Articles of Association?

A) A contract between the members and the company
B) The parameters for the articles to function
C) A rule book of the company's working
D) The provisions for clarity of the public and the shareholders
3. What contract is established by the Articles of Association?

A) A contract between the management and the shareholders
B) A contract between the members and between the members and the
company
C) A contract between the company and its members
D) A contract solely governing the rights and obligations of the members
4. What is the distinction between the Memorandum and Articles of
Association?
A) Memorandum are meant for the benefit of the public while articles
regulate the relationship between the company and its members
B) Memorandum can only be altered under specific circumstances while
articles can be altered more easily
C) Memorandum lays down the parameters for the rules to function
while articles prescribe the details within those parameters
D) Memorandum contains fundamental conditions while articles
establish regulations within those conditions
5. Under what circumstances can the Articles of Association be altered?

A) By obtaining majority approval from the shareholders
B) By passing a special resolution
C) By obtaining permission from the Central Government
D) By following the provisions of the Companies Act, 2013
6. What happens if the company commits a breach of the Articles of
Association?
A) Members can restrain the company through legal action
B) Members can vote to remove the board of directors
C) Members can propose amendments to the Articles
D) Members can demand compensation from the company
7. Which statement about the Binding Effect of Articles of Association is

true?
A) Outsiders are bound to the provisions of the Articles when trading
with the company
B) The company is bound to all provisions of the Articles unless
overridden by the memorandum
C) Members are bound to the provisions of the Articles as if they have
signed and contracted to conform to them
D) The Articles constitute a binding contract between the company and
its members
8. What is the effect of the company's breach of the Articles of
Association on its members?
A) Members can file a criminal complaint against the company
B) Members can request a penalty to be imposed on the company
C) Members can sue the company for the enforcement of their own
personal rights provided under the Articles
D) Members can amend the Articles to rectify the breach
9. In the given example, how were the directors restrained from acting
on the passed resolution?
A) The company's auditor refused to approve the resolution
B) The court ruled that 'payment' referred to payment in cash
C) The government requested the directors to reconsider the resolution
D) The shareholders voted against the resolution
10. In the given example, why was B's trustee bound by the company's
articles?
A) The company's directors forced the trustee to abide by the articles
B) The articles apply to all members, regardless of bankruptcy status
C) The shares were bought as per the provisions of the articles
D) The trustee had signed a separate contract agreeing to the articles
11. What is the legal consequence of an act done beyond the
memorandum?
A) The shareholders can ratify acts done beyond the memorandum
under certain conditions
B) The act is deemed valid, but the company may be subject to
sanctions
C) The government can intervene to determine the legal consequences
of an act done beyond the memorandum
D) Acts done beyond the memorandum are ultra vires and cannot be
ratified even by the shareholders
12. Can acts done beyond the Articles of Association be ratified by the
shareholders?
A) No, acts done beyond the Articles are always considered invalid
B) Yes, acts done beyond the Articles can always be ratified by the
shareholders
C) Yes, as long as the act is not beyond the memorandum
D) It depends on the specific provisions outlined in the memorandum
13. What is the binding effect of the Articles of Association on members
with respect to their personal debts to the company?
A) Only debts specifically mentioned in the Articles are considered due
B) All money payable by a member to the company shall be considered
as a debt due
C) Debt matters are governed by separate agreements and not the
Articles
D) Members are not legally required to pay debts owed to the company
14. In the given example, why was B's trustee bound by the company's
purchase price for the shares?
A) The purchase was made according to the company's articles
B) The trustee was legally obliged to honor the stated purchase price
C) The trustee had previously agreed to the purchase price in a
separate contract
D) The company's shareholders approved the trustee's request to sell
the shares
15. Between the company and outsiders, what is the binding effect of
the memorandum and articles?
A) The memorandum and articles equally bind the company and any
third party
B) There is no binding contract between the company and any third
party
C) Any third party is bound by the provisions of the memorandum but
not the articles
D) The company is bound by the Articles, but not the memorandum
when dealing with outsiders
16. In the given example, why was X unable to enforce the articles
against the company?
A) Being an outsider, X could not enforce articles against the company
as there was no contract between them
B) X did not meet the qualifications specified in the articles to enforce
his rights
C) X failed to provide sufficient evidence to support his claim under the
articles
D) X was only entitled to enforce the articles if they explicitly mentioned
his name
17. What action can an outsider take based on the company's articles?
A) An outsider can demand compensation from the company for
violation of the articles
B) An outsider can file a lawsuit against the company for breach of the
articles
C) An outsider may not make any claims against the company based on
the articles
D) An outsider can request special privileges from the company based
on the articles
18. What is the aim of the articles of association?

A) To regulate the relationship between the company's auditors and
directors
B) To prescribe the rules and regulations for internal management and
business conduct of the company
C) To define the fundamental conditions for the company's incorporation
D) To establish a contract between the company and its creditors
19. How are the articles of association related to the management and
powers of the company?
A) They regulate the management and powers of the company and its
officers
B) They establish the qualifications of directors and employees of the
company
C) They prescribe the procedures for shareholder meetings and voting
D) They determine the classification of shares and shareholding rights
20. What are some specific details prescribed in the articles of

association?
A) The manner of making calls, directors/employees qualifications,
powers and duties of auditors
B) The requirements for financial reporting, external auditing standards,
and taxation policies
C) The conditions for transferring shares, procedures for issuing new
shares, rights of shareholders
D) The composition and responsibilities of the board of directors,
procedures for appointing new directors
21. In what way are the articles of association similar to a contract?
A) They establish a contract between the members and between the
members and the company
B) They create legal obligations only between the management and the
shareholders
C) They form a contract exclusively to govern the business conduct of
the company
D) They impose contractual obligations on the auditors and the
government authorities
22. What do the Articles of Association of a company establish between

members and the company?
A) A contract ensuring members have opportunities for involvement in
company decision-making
B) A binding contract outlining exclusive rights of members within the
company
C) An ordinary contract containing rights and obligations incidental to
having membership
D) A contractual agreement explicitly specifying the financial obligations
of the members
23. What is the primary purpose of the memorandum of association?
A) To provide clarity to the public, creditors, and shareholders about the
company's operations
B) To regulate the internal management and working rules of the
company
C) To define the fundamental conditions upon which the company is
incorporated
D) To establish specific guiding principles for the board of directors and
management
24. How can the Articles of Association be altered?

A) By obtaining majority approval from the shareholders
B) By passing a special resolution
C) By obtaining permission from the Central Government
D) By following the provisions of the Companies Act, 2013
25. What are the legal consequences of committing a breach of the

articles of association?
A) Members can legally restrain the company, seeking an injunction
B) The auditors are responsible for overseeing a resolution to the
breach
C) The company is dissolved and liquidated upon committing a breach
D) The shareholders have the authority to assign new directors
26. In the given example, why were the directors restrained from giving
debenture bonds instead of cash dividends?
A) The word 'payment' referred to payment in cash
B) The shareholders disagreed with the resolution
C) The auditors deemed debenture bonds as invalid for paying
dividends
D) The government imposed restrictions on distributing debenture bonds
Answer Sheet
1. C
2. C
3. B
4. D
5. B
6. A
7. C
8. C
9. B
10. C
11. D
12. C
13. B
14. A
15. B
16. A
17. C
18. B
19. A
20. A
21. A
22. C
23. C
24. B
25. A
26. A

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1. What are the Articles of Association?

A) The provisions for internal regulations of the company

2. What term has been used to describe the Articles of Association?

3. What contract is established by the Articles of Association?

5. Under what circumstances can the Articles of Association be altered?

7. Which statement about the Binding Effect of Articles of Association is

18. What is the aim of the articles of association?

20. What are some specific details prescribed in the articles of

22. What do the Articles of Association of a company establish between

24. How can the Articles of Association be altered?

25. What are the legal consequences of committing a breach of the

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