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CSEET · Business Laws and Management · Elements of Company Law

Consider these statements about a company's characteristics: I. A shareholder is the agent of the company by virtue of holding shares. II. A company, being an artificial person, acts through its directors and other authorised persons. III. Shares of a company are generally transferable, subject to the law and its articles. Which statements are correct?

Only statements II and III are correct. A company is an artificial person that acts through directors and authorised persons, and its shares are transferable subject to law and articles. A shareholder is not automatically the company's agent, so statement I is wrong.

  1. AI and II only
  2. BI and III only
  3. CII and III onlyCorrect
  4. DI, II and III

Explanation

Statement I is wrong: a member is not an agent of the company merely by holding shares, because the company is a separate person. Statements II and III are correct: an artificial person acts through natural persons, and shares are transferable subject to law and articles.

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