Question

A company is limited by_____.

• A. shares
• B. guarantee
• C. both of above
• D. none of the above

Answer 1

Answer: (C)

both of above

A company can be limited by shares as well as by guarantee.

• "Limited by shares" means that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company.
• Section 2(21) of Companies Act 2013 defines companies limited by guarantee as ‘’a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up.’’

Hence, (C)