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ACCA Applied Skills · Corporate and Business Law (Global) · The formation and constitution of a company

Which statement about a company's incorporation is correct?

A company becomes a separate legal person when it is incorporated, shown by the certificate of incorporation issued by the registrar. The certificate is conclusive evidence that the registration requirements were complied with. Signing documents, starting trade or appointing directors does not itself create the company.

  1. AA company becomes a legal person in its own right once the registrar issues the certificate of incorporation, which is conclusive evidence that registration requirements were metCorrect
  2. BA company becomes a legal person when the promoters sign the memorandum of association
  3. CA company becomes a legal person when it first starts trading
  4. DA company becomes a legal person when the first directors are appointed

Explanation

Legal personality begins on incorporation, which is evidenced by the certificate of incorporation. The certificate is conclusive evidence that the registration requirements have been complied with. Signing documents, trading or appointing directors do not create the company.

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