Perpetual Succession in a Company
Perpetual succession refers to the continuous existence of a company regardless of changes in ownership, management, or members. It allows the company to continue its operations, enter into contracts, and undertake legal actions for an indefinite period of time.
In company law, perpetual succession is the continuation of a corporation’s existence despite the death, bankruptcy, insanity, change in membership or an exit from the business of any owner or member, or any transfer of stock.
Benefits of Perpetual Succession
Perpetual succession allows a company to continue existing despite changes in ownership or management. This provides stability and continuity for the company’s operations and contracts. Private limited companies also have perpetual succession, meaning they continue existing even if all members die or the company becomes insolvent.
The Common Seal
The common seal is the official signature of a company. It binds the company to any obligations when affixed to a legal document. Perpetual succession gives companies permanent existence, which is an essential feature providing numerous benefits to businesses and stakeholders. However, it also has drawbacks to consider when establishing a joint stock company.