Choose the wrong statements about company-
(A) A company is an artificial person.
(B) The company's shares are generally transferable.
(C) Shareholders of a company are liable for the acts of the company
(D) Every member of a company is entitled to take part in its management.
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (C) and (D) only
A company is a person in the eyes of the law, separate from the people who own its shares. Its shareholders own it, but they neither answer for its acts nor run it themselves.
(A) A company is an artificial person. Correct. It is created by law and has a legal existence of its own.
(B) The company's shares are generally transferable. Correct. The shares of a public company are freely transferable; the Articles only lay down the manner of transfer.
(C) Shareholders of a company are liable for the acts of the company Incorrect. Because the company is a separate legal entity, it answers for its own acts; a shareholder's liability is limited to the unpaid amount on his shares.
(D) Every member of a company is entitled to take part in its management. Incorrect. Shareholders are too many to manage the business; it is run by the Board of Directors they elect.
NCERT (2026-27 edition):
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