Issuance of certificate of incorporation has ______effectQuestion 10Answera.prima facieb.legal personalityc.liabilityd.limited
Question
Issuance of certificate of incorporation has ______effect
Question 10
Answer
a. prima facieb
legal personality
c. liability
d. limited
Solution
The issuance of a certificate of incorporation has legal personality effect.
This means that once a company is incorporated and receives its certificate, it becomes a separate legal entity, distinct from its owners. This legal personality allows the company to enter into contracts, sue and be sued in its own name, and hold property independently of its members or shareholders.
Incorporation provides several other benefits as well, including limited liability for shareholders, meaning they are not personally liable for the company’s debts beyond their investment in shares.
In summary, the correct answer is b. legal personality. This encapsulates the significant transformation a business undergoes upon incorporation, granting it a unique legal status.
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