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Appendix
CS Executive Programme Module-II
(Solution upto June - 2012 & Questions of Dec - 2012 Included)
Paper - 4: Company Law Chapter - 1: Introduction 2012 - June [1] {C} (ii) A company is an artificial person. It is formed and registered under the Companies Act. It has distinct legal entity. Its personality is separate and distinct from its members. In some cases company is treated as a natural person. (a) It can make contract. (b) Open a bank account. (c) Can sue and be sued by others. (d) It can also own property by its own name. The companys money and property belong to the company and not the property of members. Similarly, the members personal property can not be held liable to pay the creditors of the company. LEADING CASE in this point is-Saloman Vs. Saloman company Ltd. has clearly a established the principle that once a company has been validly constituted under the Companies Act, 1956, it becomes a legal person distinct from its members and for this perpose it is immaterial whether any member has a large or small proportion of the share, and whether he holds those shares beneficially or as a mere trustee. Hence, shareholders can not be held liable for the acts of the company. 2012 - June [5] (d) Section 11 provides that no company association or partnership consisting of more than 10 persons in case of banking business or more than 20 persons in case of any other business which has its objects the acquisition of gain can be legally formed unless it is registered under the Companies Act or is formed in pursuance of some other Indian law if they are not so registered they would be considered an illegal association.
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