State which of the following combination of statements are true about the Company-

(A) A company is an artificial person.

(B) Capital reserves are created from capital profits.

(C) Shareholders of a company are liable for the acts of the company.

(D) A company's shares are generally transferable.

Choose the correct answer from the options given below:

Analyzing each statement about a company:

(A) A company is an artificial person - True

A company is an artificial juridical person created by law. It has a separate legal entity distinct from its members/shareholders. Though invisible and intangible, it exists in the eyes of law.

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(B) Capital reserves are created from capital profits - True

Capital reserves arise from capital profits such as:

• Profit on sale of fixed assets
• Profit prior to incorporation
• Securities premium (premium on issue of shares/debentures)
• Profit on redemption of debentures

These are not available for distribution as dividend.

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(C) Shareholders of a company are liable for the acts of the company - False

This is incorrect. The company, being a separate legal entity, is itself liable for its own acts. Shareholders have limited liability - their liability is limited only to the unpaid amount on shares held by them. They are not personally liable for the company's debts or actions. This principle of limited liability is a fundamental feature of a company.

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(D) A company's shares are generally transferable - True

Shares of a company are freely transferable (particularly in public companies). Members can transfer their shares without the consent of other members, subject to provisions in the Articles of Association. This transferability provides liquidity to shareholders.

The true statements are (A), (B) and (D) only.

Answer: Option 1