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CS Executive · Company Law and Practice · Introduction to Company Law

Meera, a shareholder of Deccan Pharma Ltd, a public company, sells her shares to Arjun through the stock exchange without asking any other member. Which characteristic of a company does this illustrate?

This illustrates transferability of shares. In a public company, members can freely sell their shares, here through the stock exchange, without needing other members' consent. This lets investors enter and exit easily while the company continues unaffected.

  1. APerpetual succession of the company
  2. BCommon seal as the company's signature
  3. CSeparate legal entity of the company from its directors
  4. DTransferability of shares, which in a public company is freely allowedCorrect

Explanation

A characteristic of a company is that its shares are movable property and are transferable, subject to the articles. In a public company, shares are freely transferable and a member may exit by selling. Perpetual succession concerns continued existence, and the other options are unrelated to share sales.

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