Multiple choice

Which of the following characteristics of a company is not true?

  1. Liability of the shareholders is to the extent of a nominal value of the shares held by them.

  2. A company is a group of shareholders and is not different from them.

  3. Company is created through a legal process called incorporation which is completed by issue of Certificate of Incorporation by RoC.

  4. A company, being legal person, has all the rights and obligation to sue or to be sued.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A company has a distinct legal entity independent of its mem­bers. It can own property, make contracts and file suits in its own name. Shareholders are not the joint owners of the company's property. A shareholder cannot be held liable for the acts of the company. Similarly, members of the company are not its agents.

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