Question

Statement I: A shareholder can’t withdraw his membership from the company by transferring his shares.

Statement II: In actual practice some restrictions are placed on the transfer of shares.

Options

• Only I is correct.

• Only II is correct.

• Both I and II are correct.

• Both I and II are wrong.

Answer 1

Only II is correct.

Explanation:

Statement I is incorrect because a shareholder can withdraw from the company by transferring their shares to another person. While not as simple as “quitting”, transferring shares allows a stakeholder to leave the company.

Statement II is correct because restrictions on the transfer of shares are often placed, particularly in private companies or privately held corporations. To maintain control over ownership, the company’s articles of association may restrict share transactions.