Which of the following is not a feature of a company?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Unlimited Liability
A company is a separate legal person created by law, and it has certain special features that set it apart from a sole proprietorship or a partnership.
Option (1) Perpetual Succession — A feature of a company. Its life does not depend on its members; shareholders may come and go, die or become insolvent, and the company continues.
Option (3) Artificial Person — A feature of a company. It exists only in the eyes of law, yet it can own property, make contracts, sue and be sued in its own name.
Option (4) Body Corporate — A feature of a company. It is formed and registered under the company law.
The liability of a company’s members is limited to the unpaid amount on the shares they hold. Unlimited liability, where private assets can be taken to pay the business’s debts, is a feature of a sole proprietor or a partner, not of a company.
NCERT (2026-27 edition): |