150 persons were members of a public limited company engaged in the production of explosive materials. One day, all them attended the Company’s Annual General Meeting in the Registered Office premises. All of a sudden, the building caught fire and all of materials were reduced to ashes. All the 150 members also died in the fire accident. State whether the company continues to exist or not. Give reasons.
As a natural consequence of incorporation and the transferability of shares, the company has perpetual succession. This means that the company, being an entity – separate and distinct from its shareholders, the life of a company is not measured by the life of any member; it is independent of the lives of its members. It enjoys a kind of legal immortality. It continues to exist without regard to the death of individuals involved in its corporate affairs or the transfer by them of their interests in the company; even the death of all its members do not end the company.
Prof.Gowar in his ‘Modern Company Law’ gives an instance on Page 76 thus: During the War, all the members of a private company, while in general meeting, were killed by a bomb. But the company survived; not even a hydrogen bomb could have destroyed it.
Thus, members may come and members may go, but the company can go on for ever (until dissolved).