Source: 1)b)7m,Sept20257 Marks
Back to Law List

Question Scenario

Do you agree that a company is an artificial person ? Elucidate. Also explain how the authorization by M/S Beeta Limited, a company incorporated under the Companies Act, 2013 can be made in case it does not have a common seal.

Estimated Writing Time: 12 mins Try in Practice Mode

Suggested Answer

Yes, I agree that a company is an Artificial Person.\nA Company incorporated under the provisions of the Companies Act, 2013 is an artificial person as it is created by a process other than natural birth. It is legal or judicial as it is created by law.\nFurther, the Company being a separate legal entity can own property, have banking account, raise loans, incur liabilities and enter into contracts. Even members can contract with company, acquire right against it or incur liability to it. It can sue and be sued in its own name. It can do everything which any natural person can do except be sent to jail, take an oath, marry or practice a learned profession. Hence, it is a legal person in its own sense.\nAs the Company is an artificial person, it can act only through some human agency, viz., directors. The directors can control affairs of the company but they are not the "agents" of the members of the company. The directors can either on their own or through the common seal, if any, (of the company) can authenticate its formal acts.\nFurther, the Company being an artificial person has perpetual succession and it continues to exist until it is legally dissolved. The members of a company may come and go but the company will go on forever.\nHowever, the Company being an artificial person cannot have citizenship, lack of physical action and corporate veil can be lifted.\nThus, a company is an artificial legal person.\nAuthorization by a Company not having a Common Seal:\nIn case a company does not have a common seal, the authorization shall be made by two directors or by a director and the Company Secretary, wherever the Company has appointed a Company Secretary.\nHence, M/s Beeta Limited can do the authorization as mentioned in the above manner.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

Ready to Practice More Law Cases?

Test your knowledge under timed conditions in our dedicated Writing Practice Mode. Get a feel for the real exam pressure.

Enter Writing Practice