The following are the features of a Company: (A) Separate Legal Entit…

The following are the features of a Company:

(A) Separate Legal Entity
(B) Unlimited Liability
(C) Perpetual Succession
(D) Common Seal

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A), (C) and (D) only

A company is an artificial person created by law. Its main features follow from that: it exists apart from its members, it does not end when members change, it signs through its seal, and its members’ liability is limited.

(A) Separate Legal Entity Correct. The company is distinct from its shareholders; it owns property and makes contracts in its own name.

(B) Unlimited Liability Incorrect. A member’s liability is limited to the unpaid amount on his shares; unlimited liability belongs to partners and sole proprietors.

(C) Perpetual Succession Correct. Death, insanity or insolvency of members does not affect it; the company continues to exist until ended by law.

(D) Common Seal Correct. Being artificial, the company cannot sign, so its common seal acts as its official signature.

NCERT (2026-27 edition):
Features of a Company – “… Separate Legal Entity: A company has a separate legal entity which is distinct and separate from its members.”

NCERT (2026-27 edition):
Features of a Company – “… Limited Liability: The liability of the members of the company is limited to the extent of unpaid amount of the shares held by them.”

NCERT (2026-27 edition):
Features of a Company – “… Perpetual Succession: The company being an artificial person created by law continues to exist irrespective of the changes in its membership.”

NCERT (2026-27 edition):
Features of a Company – “… Common Seal: The company being an artificial person, cannot sign its name by itself. Therefore, every company is required to have its own seal which acts as official signatures of the company.”