Question

Statement A:
A company dies with the death of its shareholders.

Statement B:

In the case of a private company, every member owing fully paid-up shares can freely transfer shares held by him.

Select the coned the answer from the options given below-

• A. Statement A is correct but Statement B is incorrect
• B. Statement B is correct but Statement A is Incorrect
• C. Statement A is correct and Statement B is correct explanation of Statement A.
• D. Statement A & Statement B both are incorrect

Answer 1

The correct option is D Statement A & Statement B both are incorrect

In company law, perpetual succession is the continuation of a corporation's or other organization's existence despite the death, bankruptcy, insanity, change in membership or an exit from the business of any owner or member, or any transfer of stock,etc. Therefore, the company does not die with its shareholders.

A private limited company must mandatorily include restrictions on the transfer of shares in its Articles of Association as a result of which certain common types of restrictions are imposed by different companies so as to meet the requirements of the definition of a private limited company.