CA Foundation · Business Laws · The Companies Act, 2013
Neha buys shares of Orion Ltd, a listed company, from Pooja. Neha wants to know whether the shares are freely transferable and whether the company continues if Pooja dies. Which feature of a company explains both points?
Perpetual succession and transferability of shares explain both points. Shares in a company can be transferred, subject to the articles and law, and the company continues to exist regardless of the death, insolvency or retirement of any member.
- ACommon seal and limited liability
- BPerpetual succession and transferability of sharesCorrect
- CSeparate property and agency of members
- DStatutory audit and board control
Explanation
Transferability of shares lets members sell their interest, subject to the articles and law. Perpetual succession means the company's existence is unaffected by the death, insolvency or exit of any member. Together they answer both of Neha's concerns.
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