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Answer in brief. State the importance of Certificate of Incorporation. - Secretarial Practice

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Question

Answer in brief.

State the importance of a Certificate of Incorporation.

Short Note

Solution

The importance of Certificate of Incorporation:-

(1) Birth Certificate of a Company: The Certificate of incorporation is similar to the birth certificate of the company. This is because the company comes into existence from the date of issuance of this certificate.
(2) Legal Person: After the incorporation and issue of a certificate of incorporation, a company becomes a legal or artificial person having a distinct personality from its members. Although it has no body, soul, and physical existence, still the company is recognised as a person in the eyes of law.
(3) Perpetual Succession: After the incorporation, a company becomes a body corporate having perpetual succession. It is created by the process of law and dissolved only by the process of law. Its existence and continuation are not affected by death, retirement, insanity or insolvency of its member or members. It has a long, stable and everlasting existence.
(4) Status: The company can sue other business entity or person for recovery of claims and can be sued upon by others in its own name.

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Stages in the Formation of a Company - Incorporation of a Company
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Chapter 3: Formation of a company - Exercise Q.4 [Page 47]

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Balbharati Secretarial Practice [English] 11 Standard Maharashtra State Board
Chapter 3 Formation of a company
Exercise Q.4 | Q 2 | Page 47
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