Unlike a Partnership Firm and a Proprietorship concern, a Company is not dependent on its members. A company will not come to an end with the death of its members. A Partnership Firm usually dissolves with the death of one of its partners. So is the case with a Proprietorship firm which ceases to exist with the death of its sole proprietor. However, the Company can survive for ages and does not depend upon the financial stability, liabilities, survival and death of its members.
It is totally independent from that of its members. All the assets that are owned by the Company remain to be in the name of the Company irrespective of whether its shares are sold or whether its shareholders die. The membership of the company might change altogether, but that in no circumstance does not bring the company to an end. Only formal liquidation under the laws can bring a Company to an end. No other event apart from Liquidation can bring a Company to end and accordingly the Company will live forever.
There are various Companies that have been in existence for centuries, their members have changed, their promoters have died, but the Company still is in existence.
Therefore, the death and insolvency of its independent members may in no way affect the corporate existence of the Company. Gower has said, “Members may come and go but the Company can go on forever.” He has further cited an example in his book “Principles of Modern Company Law (3rd Edition 1969):
“During the war all the members of one private company, while in a general meeting, were killed by a Bomb. But the company survived; not even a Hydrogen Bomb could have destroyed it.”
In the case of Gopalpur Tea Co. Ltd. v. Peshok Tea Co. Ltd. (1982) 52 Comp Cas 239, the whole Company was taken over by an Act which purportedly ceased the right to take action against the Company, the Court held that neither the company was extinguished, nor was anyone’s right to take action against it.
Therefore, until and unless a Company is liquidated legally, a Company will have perpetual succession and its existence will not be affected by the financial status and lives of its shareholders.
