Question

Which of the following statements is wrong?

विकल्प

• A company has a distinct legal entity independent of its members.

• Shareholders are the joint owners of the company’s property.

• A company can own property, make contracts and file suits in its own name.

• There can be contracts between a company and its members but a creditor of the company is not a creditor of its members.

Answer 1

Shareholders are the joint owners of the company’s property.

Explanation:

Shareholders are not joint owners of the company’s property. The property belongs to the firm, which is a separate legal entity. Shareholders only own shares, which grant them certain rights such as dividends and voting power, but not ownership of the company’s assets.