Match List-I with List-II.
|
List – I (Characteristics) |
List - II (Concept) |
|
(a) Artificial person |
(i) Independent status |
|
(b) Common seal |
(ii) Binding on the company |
|
(c) Separate legal entity |
(iii) Created by law |
|
(d) Transferability of shares |
(iv) Restrictions in private companies |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
|
List – I (Characteristics) |
List - II (Concept) |
|
(a) Artificial person |
(i) Created by law |
|
(b) Common seal |
(ii) Binding on the company |
|
(c) Separate legal entity |
(iii) Independent status |
|
(d) Transferability of shares |
(iv) Restrictions in private companies |
Artificial person: A company is created by law. Though, it has no body and no conscience, it still exists as a person, having a distinct personality of its own.
Separate legal entity: A company has an independent status, different from its members. This implies that a company cannot be held liable for the actions of its members and vice-versa. Company has a distinct entity separate from its members.
Common seal : Being an artificial person, company cannot sign the documents. Hence, it uses a common seal on which its name is engraved. Putting the common seal on papers, is equivalent to that of signatures of a human being, making them binding on the company.
Transferability of shares: No shareholder is forever wedded to the company. Subject to certain conditions, the shares are freely transferable. The private companies do impose some restrictions on the transfer of shares.