Which of the following statements are true with reference to a compan…

Which of the following statements are true with reference to a company?

(A) The directors of the company are the owners of the company.

(B) A company is an artificial person.

(D) The liability of the members of the company is limited to the extent of shares held by them.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (B), (C) and (D) only

A company is an artificial person created by law, separate from its members. Its capital comes from shareholders, who are its owners, while a Board of Directors elected by them manages it.

(A) The directors of the company are the owners of the company. Incorrect. The shareholders are the real owners; the directors are their elected representatives who manage the affairs of the company.

(B) A company is an artificial person. Correct. It exists only in the eyes of law, yet it can own property, make contracts and sue in its own name.

(C) A company has its common seal. Correct. Being artificial, it cannot sign by itself, so its common seal acts as its signature.

(D) The liability of the members of the company is limited to the extent of shares held by them Correct. A member is liable only up to the unpaid amount on his shares.

NCERT (2026-27 edition):
Accounting for Share Capital

Extract from the NCERT textbook

NCERT (2026-27 edition):
Features of a Company – “A company may be viewed as an association of person who contribute money or money’s worth to a common inventory and use it for a common purpose. It is an artificial person having corporate legal entity distinct from its members (shareholders) and has a common seal used for its signature.”

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.”