Question

Refer to the given text carefully:

Hemant, Zoya and Radhika are the founding directors of Wintech Pvt. Ltd., a Bhopal-based business enterprise that manufactures and sells commercial lifts for the past 20 years. Today the company has 45 members. Hemant was handling the finance department of the business since the inception of the company. The banks who have lent money to the company have filed a case against Hemant for fraud and he will soon be arrested. Jaydeep, one of the members, has raised this issue in the board meeting. His argument is that since the case involves founding members, the company will be held liable for their actions and hence he wants legal protection from any action against the company.

On the basis of the given text, identify which of the following characteristics of a joint stock company helps us to arrive at the conclusion that the argument made by Jaydeep is inaccurate.

पर्याय

• Artificial person

• Separate legal entity

• Voluntary association

• Common seal

Answer 1

Separate legal entity

Explanation:

A joint stock company has a separate legal entity, meaning it is distinct from its members and directors. The company is responsible for its own debts and actions, not the personal acts of its members. Hence, even if Hemant (a director) committed fraud, the company itself will not be held liable for his personal wrongdoing. Therefore, Jaydeep’s argument is incorrect, and the characteristic that explains this is separate legal entity.