question_answer

Explain the following terms in brief:

(i) Perpetual succession

(ii) Common seal

(iii) Karta

(iv) Artificial person

Answer:

Ans.     (i) Perpetual Succession: Perpetual succession refers to the continuous succession of a corporation. Perpetual succession is one of the remarkable features of a corporation. The very objective of a corporation is to have a perpetual succession, for there cannot be a succession forever without incorporation. The company has perpetual succession. The death or insolvency of a shareholder does not affect its existence. A company comes into end only when it is liquidated according to the provision of the Companies Act.

(ii) Common Seal: The expression 'Common Seal' is not defined in the Companies Act, 1956. General practice is to adopt the Common Seal, at the first Board Meeting of the company. It must be kept under the safe custody of authorized director/officer. The Articles of Association, may set out how and when the common seal has to be affixed.

(iii) Karta: Karta is the head of Joint Hindu Family Business. He has unlimited liability and final decision-making power.

(iv) Artificial Person: A person in the eyes of the law is called an artificial person. An entity which has a separate legal entity in the eyes of the law is called artificial person. A joint stock company and a cooperative society are artificial persons.