Characteristics of a Company

A company is a form of business organization that has distinct features. Let's examine each option:

Option 1: Separate Legal Entity ✓

A company has a separate legal identity from its members/shareholders. It can own property, enter into contracts, and sue or be sued in its own name.

Option 2: Common Seal ✓

The common seal acts as the official signature of the company. It is affixed on important documents to authenticate them (though this has become optional in recent amendments).

Option 3: Unlimited Liability ✗

This is NOT a characteristic of a company.

Companies typically have limited liability, which means:

• Shareholders are liable only up to their share capital contribution
• Their personal assets are protected from company's debts
• Maximum loss is limited to the amount invested in shares

Unlimited liability is a characteristic of sole proprietorship and partnership firms, not companies.

Option 4: Perpetual Succession ✓

"Members may come and members may go, but the company goes on forever." The company continues to exist irrespective of changes in membership due to death, insolvency, or retirement of members.

Answer: Option 3 - Unlimited liability

Limited liability is one of the major advantages that distinguishes a company from other forms of business organizations.