Commercial Applications
A public company cannot begin its operations until it has obtained a certificate of incorporation and a certificate to commence business.
- True
- False
Answer
True
Reason — A public company cannot commence its business until it has obtained two certificates — the Certificate of Incorporation (which brings the company into legal existence) and the Certificate of Commencement of Business. Only after receiving both certificates can a public company start its business operations. This is one of the points of distinction from a private company, which can commence its business immediately after getting the Certificate of Incorporation.
Related Questions
A joint stock company faces criticism for holding back crucial financial information from its minority shareholders while making key decisions. What principle of corporate governance is being violated?
- Transparency and accountability
- Perpetual succession
- Limited liability
- Profit-sharing among shareholders
The Reserve Bank of India operates under a special law enacted by the Parliament. Under which category does this organization fall?
- Chartered Company
- Statutory Company
- Registered Company
- Unlimited Company
What advantage of a joint stock company is highlighted in this image showing a boardroom meeting of directors?
- Limited Liability
- Efficient Management
- Legal Formalities
- Lack of Motivation
What do you understand by separate legal existence of a company?