NOTES

Perpetual Succession

A company has a continued existence and it can be wound up only as per law. A company being a separate legal entity is not affected by the death, insolvency, lunacy etc. of any or all of its members. In case of the death or insolvency of a member, the shares held by him shall be transmitted to his

nominee/legal representative or official assignee/official receiver. Even if all the members of a company die, the company survives. Thus, “Members may come and go, but the company goes on forever.”

Common Seal

A company being an artificial person cannot sign a document as a natural person can do. The common seal is a seal used by a company as a substitute for a signature. In legal terms the common seal is the official signature of the company. As per Companies Amendment Act, 2015, the provision of a common seal has been made optional for a company. It is a metal seal on which the name of the company is engraved. [Section 12(3)(b)]

In case a company does not have a common seal, the authorization is made as per the articles. Table F of the articles states that “such authorization shall be by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary.”

The Companies (Amendment) Act, 2015 has made the common seal optional by omitting the words "and a common seal" from Section 9 so as to provide an alternative mode of authorization for companies who opt not to have a common seal. Rational for this amendment is that common seal is seen as a relic of medieval times. Even in the U.K., common seal has been made optional since 2006. This amendment provides that the documents which need to be authenticated by a common seal will be required to be so done, only if the company opts to have a common seal.