Incorporation Of A Company Quizzes

The statement is true because a company is a separate legal entity from its owners or shareholders. This means that it has the ability to enter into contracts, own property, and sue or be sued in its own name. This legal concept is known as corporate personhood, which allows the company to have its own rights and responsibilities independent of its owners. As a result, the company can take legal action or be subject to legal action without involving the personal assets or liabilities of its shareholders.

Pre-incorporation contracts are indeed contracts that are entered into on behalf of a company by its promoter before the company is officially incorporated. These contracts are made in anticipation of the company's formation and are binding on the company once it is incorporated. This allows the company to start its operations smoothly and ensures that the rights and obligations of the parties involved are protected. Therefore, the statement is true.

Under the principle of separate legal entity, the members of a company are not personally liable for the debts and liabilities of the company. This means that if the company incurs any financial obligations or legal issues, the members' personal assets and finances are protected and cannot be used to satisfy the company's debts. This principle is a fundamental aspect of corporate law and provides a level of protection to shareholders and owners of a company. Therefore, the statement that the members of the company will not be liable for the liabilities of the company is true.

The statement is incorrect. A grocery store is not a business entity formed with the aim of gaining a profit. Instead, a grocery store is a type of retail establishment that sells food and other household items to customers. While a grocery store is indeed a business, its primary purpose is to provide goods and services to consumers rather than solely focusing on profit generation.

The case of Re Neol Tedman Holdings Pty Ltd (1967) is not an example of "may sue and be sued." The phrase "may sue and be sued" refers to the legal capacity of a company to bring a lawsuit or be sued in a court of law. However, the case mentioned does not pertain to this concept. Therefore, the correct answer is False.

After a company is incorporated, the members do not have the power to hold property individually. Instead, the company becomes a separate legal entity and is able to own and hold property in its own name. The members of the company do not have direct ownership of the company's property, but rather have rights and interests in the company as a whole. Therefore, the statement is false.