CSEET · Business Laws and Management · Elements of Company Law
Which of the following is a characteristic that distinguishes a company registered under the Companies Act, 2013 from a sole proprietorship?
A company has a separate legal personality distinct from its members. It can own property, enter contracts and sue or be sued in its own name, and it continues despite changes in membership. The other options describe features of a sole proprietorship or are incorrect.
- AIt has a legal personality separate from its membersCorrect
- BIts owner has unlimited personal liability for its debts
- CIt cannot own property in its own name
- DIt ceases to exist when a member dies
Explanation
A company is an artificial juridical person with a legal identity distinct from its members. It can own property and sue or be sued in its own name. Death of a member does not end its existence, and limited liability is the norm, so the other options describe a sole proprietorship or are simply wrong.
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