Q.Briefly explain the following terms in brief.

• (a) Perpetual succession: A company's continued existence unaffected by the death, retirement, insolvency or insanity of its members. "Members may come and members may go, but the company continues to exist." It can be ended only by law, through winding up.
• (b) Common seal: The official signature of the company. As an artificial person a company cannot sign itself, so a common seal is used to authenticate documents on its behalf.
• (c) Karta: The eldest member of a Joint Hindu Family who controls and manages the family business; his decisions are binding on the members, and he alone has unlimited liability. …

(a) Perpetual succession

• A company is a creation of law, so it can be brought to an end only by law, through the legal process of winding up.
• Its existence is not affected by the death, retirement, insolvency or insanity of its members — and it continues even if all its members change over time.
• This is captured in the saying: "Members may come and members may go, but the company continues to exist." This continuity is called perpetual succession.

(b) Common seal

• A company is an artificial person and cannot sign documents itself the way a human being can.
• The common seal acts as the official signature of the company. It is affixed to documents to show that the company has approved them, so that acts done under the common seal are binding on the company.

(c) Karta

• In a Joint Hindu Family business, the business is controlled and managed by the eldest member of the family, who is called the karta.
• The karta takes all the decisions and manages the business, and his decisions are binding on the other members.
• He carries the greatest responsibility: unlike the other members (who have limited liability), the karta alone has unlimited liability. (Under the Hindu Succession (Amendment) Act, 2005, the eldest member — male or female — can be the karta.)

(d) Artificial person

• A company is a creation of law and is therefore called an artificial person. …