Commercial Applications
Which of the following statements is correct?
- The death of members affect the life of a company
- Members may come and go but the company goes on until it is wound up.
- The members of a company can be held liable for the debts of the company.
- Shareholders are the joint owners of the company's property.
Joint Stock Company
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Answer
Members may come and go but the company goes on until it is wound up.
Reason — Because of the principle of perpetual succession, a joint stock company enjoys uninterrupted existence over a long period of time. The death, insolvency or lunacy of members does not affect the life of the company. It continues to exist even if all its members die. Only the law can bring an end to its existence through winding up.
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Related Questions
Which of the following statements is wrong?
- A company has a distinct legal entity independent of its members.
- Shareholders are the joint owners of the company's property.
- A company can own property, make contracts and file suits in its own name.
- There can be contracts between a company and its members but a creditor of the company is not a creditor of its members.
Statement I : A company is a creation of the law and only the law can bring an end to its existence.
Statement II : The life of a company does depend on the life of its members.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
The features of a joint stock company are :
- Separate legal existence
- Limited liability
- Perpetual succession
- All of these
Statement I : A shareholder can't withdraw his membership from the company by transferring his shares.
Statement II : In actual practice some restrictions are placed on the transfer of shares.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong