100+ Free CS Executive: Setting Up of Business Practice Questions

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2026 Statistics

Key Facts: CS Executive: Setting Up of Business Exam

100

Marks in Paper 3

ICSI Executive Programme New Syllabus 2022

20% / 80%

Objective / Descriptive Split

ICSI Exam Pattern

3 hours

Exam Duration

ICSI Exam Pattern

40% / 50%

Paper / Module Pass

ICSI Passing Norms

21 Nov 2025

Labour Codes In Force

Government of India Notification

CS Executive Paper 3 (Setting Up of Business, Industrial & Labour Laws) is a 100-mark, 3-hour offline ICSI paper under the New Syllabus 2022, split roughly 20% case-based objective/MCQ and 80% descriptive. Part A (business setup) and Part B (industrial & labour laws) are the two halves. A major current-affairs point: India's four labour codes (Wages 2019; Industrial Relations, Social Security, and OSH 2020) came into force on 21 November 2025, raising thresholds such as 300 workers for retrenchment/standing orders and recognising gig and platform workers. Passing requires 40% in the paper and 50% aggregate in the module.

Sample CS Executive: Setting Up of Business Practice Questions

Try these sample questions to test your CS Executive: Setting Up of Business exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the Companies Act, 2013, what is the minimum number of members required to incorporate a One Person Company (OPC)?

A.One

B.Two

C.Three

D.Seven

Explanation: An OPC is incorporated with a single member, who is the sole shareholder. The concept was introduced by the Companies Act, 2013 to allow a single entrepreneur to enjoy limited liability and a corporate identity. A nominee must be appointed, but the nominee is not a member.

2Which form of business organisation has UNLIMITED liability for its proprietor and no separate legal existence distinct from the owner?

A.Limited Liability Partnership

B.Private limited company

C.Sole proprietorship

D.One Person Company

Explanation: A sole proprietorship is not a separate legal entity; the proprietor and the business are legally the same person, so the proprietor bears unlimited personal liability for business debts. This contrasts with LLPs and companies, which provide limited liability and separate legal personality.

3A Limited Liability Partnership (LLP) in India is governed primarily by which statute?

A.The Indian Partnership Act, 1932

B.The Societies Registration Act, 1860

C.The Companies Act, 2013

D.The Limited Liability Partnership Act, 2008

Explanation: LLPs are governed by the Limited Liability Partnership Act, 2008, which created a hybrid structure combining the flexibility of a partnership with the limited liability of a company. The LLP is a separate legal entity that can sue and be sued in its own name.

4What is the minimum number of members required to form a public limited company under the Companies Act, 2013?

A.Two

B.Three

C.Seven

D.Fifty

Explanation: Section 3 of the Companies Act, 2013 requires a minimum of seven members to form a public company. A private company requires a minimum of two, and an OPC requires one. There is no upper limit on members for a public company.

5Under the Companies Act, 2013, the maximum number of members a private company can have (excluding present/former employee-members) is:

A.50

B.100

C.200

D.Unlimited

Explanation: Section 2(68) of the Companies Act, 2013 caps private company membership at 200, an increase from the 50-member limit under the Companies Act, 1956. Present and former employees who are members are excluded from this count, and joint holders are treated as a single member.

6A Hindu Undivided Family (HUF) business is managed by which person, who has the authority to act on behalf of the family?

A.Coparcener

B.Promoter

C.Trustee

D.Karta

Explanation: The Karta, typically the senior-most male (or female, post-2016 judicial recognition) member, manages an HUF business and represents the family in dealings. Other family members are coparceners with a share in the ancestral property but do not ordinarily manage the business.

7Which of the following is a key ADVANTAGE of choosing a company form over a partnership firm?

A.Lower compliance burden

B.Exemption from income tax

C.No requirement to maintain books of account

D.Perpetual succession independent of members

Explanation: A company enjoys perpetual succession, meaning its existence continues despite the death, insolvency, or exit of any member, because it is a separate legal entity. A partnership firm, by contrast, may be dissolved on a partner's death or retirement unless otherwise agreed.

8A company limited by guarantee is one in which the liability of members is limited to:

A.The amount unpaid on their shares

B.An unlimited amount

C.The market value of company assets

D.The amount they undertake to contribute to assets in the event of winding up

Explanation: In a company limited by guarantee, members agree to contribute a fixed amount towards the company's assets only in the event of winding up. Such companies, often non-profit or Section 8 entities, may or may not have share capital. The guarantee is the limit of member liability.

9Which form of organisation is MOST suitable for a not-for-profit objective seeking corporate status with charitable purposes under the Companies Act, 2013?

A.One Person Company

B.Sole proprietorship

C.Limited Liability Partnership

D.Section 8 company

Explanation: A Section 8 company is formed for promoting commerce, art, science, charity, or similar objects, applying its profits to those objects and prohibiting dividends to members. It enjoys corporate status and certain exemptions, making it the standard not-for-profit corporate vehicle.

10Under the Indian Partnership Act, 1932, registration of a partnership firm is:

A.Mandatory before commencing business

B.Prohibited by law

C.Mandatory only for firms with more than 20 partners

D.Optional, but an unregistered firm cannot sue to enforce contractual rights against third parties

Explanation: Registration of a firm under the Indian Partnership Act, 1932 is optional, but Section 69 disables an unregistered firm from filing suit to enforce a contractual right against third parties or partners. This practical disability strongly incentivises registration despite it not being compulsory.

About the CS Executive: Setting Up of Business Exam

CS Executive Paper 3, Setting Up of Business, Industrial & Labour Laws, is a Group 1 paper of the ICSI Executive Programme (New Syllabus 2022). Part A covers business formation, startups, MSME/Udyam, foreign company and LLP setup, conversions, and closure; Part B covers the Factories Act, industrial disputes, the new labour codes, EPF, ESI, gratuity, bonus, contract labour, POSH, and trade unions.

Assessment

Question count not published by the exam provider

Time Limit

3 hours

Passing Score

Minimum 40% in the paper and 50% aggregate in the module

Exam Fee

Included in ICSI Executive Programme fees; exact module/exam fees follow the current ICSI fee structure (Institute of Company Secretaries of India (ICSI))

CS Executive: Setting Up of Business Exam Content Outline

45%

Part A: Setting Up of Business

Choice of business organisation, startups and registrations, MSME/Udyam, foreign company/branch/liaison/project office and LLP, conversions and closure, and identifying laws applicable to a business.

55%

Part B: Industrial & Labour Laws

Factories Act 1948; industrial disputes; the four new labour codes; EPF; ESI; payment of gratuity and bonus; contract labour; POSH Act; and trade unions, with emphasis on thresholds and definitions.

How to Pass the CS Executive: Setting Up of Business Exam

What You Need to Know

Passing score: Minimum 40% in the paper and 50% aggregate in the module
Assessment: Question count not published by the exam provider
Time limit: 3 hours
Exam fee: Included in ICSI Executive Programme fees; exact module/exam fees follow the current ICSI fee structure

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

CS Executive: Setting Up of Business Study Tips from Top Performers

1Memorise the employee-count thresholds (10 for ESI/POSH, 20 for EPF/Contract Labour, 300 for retrenchment/standing orders) because most objective questions test them.

2Track how each new labour code maps to the older Acts it subsumes so you can answer both descriptive and case-based questions.

3Practise business-form comparison (OPC vs LLP vs private company) for the choice-of-organisation case studies.

4Revise registration procedures (SPICe+, Udyam, FSSAI, GST, IEC) as these recur in setup-based questions.

5Use short statutory-provision notes (section numbers and limits) for last-mile revision before the exam.

Frequently Asked Questions

What is CS Executive Paper 3 about?

Paper 3 of the ICSI CS Executive Programme (New Syllabus 2022), titled Setting Up of Business, Industrial & Labour Laws, covers how to choose and form a business entity, obtain registrations such as MSME/Udyam and GST, and apply industrial and labour laws including the Factories Act and the new labour codes.

What is the exam pattern for CS Executive Paper 3?

It is a 100-mark, 3-hour offline pen-and-paper exam, with approximately 20% case-based objective/MCQ questions and 80% descriptive questions. ICSI applies negative marking only to the objective portion at 0.25 marks per wrong answer.

What is the passing requirement for CS Executive Paper 3?

A candidate must score at least 40% in the paper and 50% aggregate across the module to pass, in line with standard ICSI Executive Programme norms.

Are the new labour codes part of the CS Executive syllabus?

Yes. The Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and OSH Code 2020, brought into force on 21 November 2025, are examined alongside the underlying Acts they consolidate.

How many MCQs does this practice bank contain?

This free OpenExamPrep bank provides 100 MCQ-style questions spanning both Part A (business setup) and Part B (industrial & labour laws) to support objective and conceptual preparation for the paper.