Accountancy Part AAccounting for Shares

A Company has the following features: A. Perpetual SuccessionB. Unlim…

A Company has the following features:

A. Perpetual Succession
B. Unlimited Liability
C. Separate Legal Entity
D. Limited Members
E. Transferability of shares

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → A, C and E only

A. Perpetual Succession — True. The company goes on existing whatever happens to its members.
B. Unlimited Liability — False. The liability of members is limited to the unpaid amount on their shares.
C. Separate Legal Entity — True. The company is a legal person distinct from its members.
D. Limited Members — False. Only a private company limits its members (to 200); a public company has no such limit, so it is not a feature of every company.
E. Transferability of shares — True. Shares of a public company are freely transferable.

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

NCERT (2026-27 edition):
Kinds of Companies

Extract from the NCERT textbook

NCERT (2026-27 edition):
Transferability of Shares – “… The shares of a public limited company are freely transferable.”