Commercial Applications
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
Answer
Only II is correct
Reason — Statement I is wrong because a shareholder is free to withdraw his membership from the company by transferring his shares. The shares of a company are generally transferable. Statement II is correct because in actual practice, some restrictions are placed on the transfer of shares, particularly in the case of private companies which must restrict the right of their members to transfer shares.
Related Questions
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.
The features of a joint stock company are :
- Separate legal existence
- Limited liability
- Perpetual succession
- All of these
A joint stock company is a …………… association of certain persons formed to carry out a particular purpose in common.
- voluntary
- corporate
- legal
- liable
Assertion (A): Transferability of shares makes public companies more attractive to investors.
Reasoning (R): Public companies allow shareholders to transfer shares without restrictions, providing liquidity to their investments.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.