ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality
Which of the following is a direct consequence of a company's incorporation?
The company continues to exist despite the death of a shareholder. Perpetual succession is a consequence of separate legal personality: membership may change, but the company itself endures until properly wound up or dissolved.
- AIts existence continues despite the death of a shareholder (perpetual succession)Correct
- BIts shareholders are jointly liable for all of its debts
- CIts directors automatically own the company's assets
Explanation
Incorporation creates a legal person with perpetual succession, so changes in membership, including death, do not end the company (Re Noel Tedman Holdings). Members are not liable for company debts beyond unpaid shares, and company assets belong to the company, not directors.
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