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Questions and Answers
What distinguishes a company as an artificial person from a natural person?
What distinguishes a company as an artificial person from a natural person?
- It can maintain perpetual succession even after member changes. (correct)
- It is subject to the same liabilities as its members.
- It can perform legal acts but lacks independent existence.
- It cannot acquire property in its own name.
What is the principle of limited liability in the context of a company?
What is the principle of limited liability in the context of a company?
- Shareholders are only responsible for what they have contracted to pay. (correct)
- Shareholders can be held liable for the company's debts without limit.
- Members of the company have joint liability for company affairs.
- Liabilities of the company depend solely on the number of shareholders.
What role does the common seal play for a company?
What role does the common seal play for a company?
- It can be used by any member without restrictions.
- It serves as a physical representation of the shareholders' ownership.
- It is required for the transfer of shares between members.
- It must authenticate all the acts of the company. (correct)
How does the capacity to sue and be sued apply to a company?
How does the capacity to sue and be sued apply to a company?
What does perpetual succession mean for a company?
What does perpetual succession mean for a company?
What is true about the property rights of a company?
What is true about the property rights of a company?
What does the transferability of shares imply?
What does the transferability of shares imply?
What is one limitation of an artificial person compared to a natural person?
What is one limitation of an artificial person compared to a natural person?
What significant concept was introduced in the English Company Act of 1856?
What significant concept was introduced in the English Company Act of 1856?
Which Companies Act in India was based on the British Companies Act of 1908?
Which Companies Act in India was based on the British Companies Act of 1908?
Which principle defines a company as a separate legal entity distinct from its members?
Which principle defines a company as a separate legal entity distinct from its members?
Which document signifies the first company enactment presented in India?
Which document signifies the first company enactment presented in India?
What characterizes legal persons as defined in company law?
What characterizes legal persons as defined in company law?
Which Companies Act is currently in effect in India as of August 2013?
Which Companies Act is currently in effect in India as of August 2013?
What type of personality does a company represent according to common law?
What type of personality does a company represent according to common law?
Which aspect was recognized after India's independence regarding the Companies Act?
Which aspect was recognized after India's independence regarding the Companies Act?
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Study Notes
Evolution of Company Law in India
- Company law in India was influenced by English law, with the first enactment occurring in 1850 for joint company registration.
- The concept of limited liability was introduced in the English Company Act of 1856 and was adopted in India in 1857.
- The Companies Act underwent several amendments between 1850 and 1852, with the 1852 Act repealing prior laws and remaining until 1912.
- The Indian Companies Act of 1913 was based on the British Companies Act of 1908 and saw various amendments.
- Post-independence, the Companies Act was reformed to align with Indian conditions, resulting in the Companies Act of 1956.
- The current Companies Act, enacted in 2013, received presidential assent on 29 August 2013.
Meaning and Definition of a Company
- Commonly, a "company" refers to a voluntary association of individuals formed for shared social or economic goals.
- Legally, the term "company" lacks strict definition, representing a juristic personality separate from its members, existing within the law's framework.
- A company is recognized as an artificial legal person, created for diverse purposes including charity, research, and commerce, possessing rights and obligations similar to a natural person.
Characteristics of a Company
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Legal Personality:
- Company as a distinct legal person, separate from its members; can engage in activities similar to natural persons, but lacks physical presence.
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Limited Liability:
- Shareholders are only liable to pay the unpaid value of their shares, protecting them from financial exposure beyond this limit.
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Perpetual Succession:
- A company does not cease to exist with the death of its members; it retains its rights and assets indefinitely.
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Right to Property:
- A company can acquire, possess, and dispose of property in its name, which is not regarded as joint property of its members.
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Common Seal:
- The common seal functions as the official signature of the company, required to authenticate documents; controlled by the company secretary under Board of Directors' directives.
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Transferability of Shares:
- Shares represent the company’s capital, designed for easy transferability; shares are classified as movable property allowing shareholders to transfer ownership.
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Capacity to Sue and be Sued:
- A company can initiate legal proceedings in its corporate name and be sued by others, but cannot be imprisoned for criminal offenses.
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