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Perpetual Succession — A Detailed Study


This paper is a  study of one of the main topics related to Company Law Perpetual Succession. In this article one of the most important principles of company law has been discussed which is Perpetual Succession and its detailed analysis with case references.  The term Perpetual means eternal or everlasting thus Perpetual Succession in its general form depicts the eternal or everlasting existence of any Company that is recognized by the Company Act of 2013.  Perpetual Succession is defined as the capacity of a Corporation or Company to have long-lasting enjoyment of its property so long as it is legally in existence and the perpetual existence of a Corporation or Company.


In the words of Prof. L.C.B Gower, “Members may come and go but the Corporate can last  forever.” He has also made an example in his book “Principles of Modern Company Law (3rd Edition 1969): “During the war all the members of a private company, while during a  general meeting, were killed by a Bomb. But the corporate survived; not even a fusion Bomb could have destroyed it.”

There are various Companies that are living for hundreds of years, their members have changed, and their promoters have died, but the Company still existed. The death and insolvency of the independent members of a Corporate may in no way affect the corporate existence of the Company. In order to understand the point more clearly, we may assume A, B, and C are the only members of a company, holding all its shares. Their shares may be transferred to or inherited by E, F, or G who may, therefore, become the new members and members of the company as they are now the shareholders of the company. Although the company will remain the same juristic entity, with the same previous name, rights, immunities, property, and assets.         

Thus a Company is an artificial juristic entity created by the process of law and can only be dissolved by the process of law, it also enjoys an everlasting and stable life unless it is wound up by the legal process. The term Perpetual means eternal or everlasting thus Perpetual Succession in its general form depicts the eternal or everlasting existence of any Company that is recognized by the Company Act of 2013.   

According to Marriam Webster, Perpetual Succession is defined as A: the capacity of a Corporation or Company to have long-lasting enjoyment of its property so long as it is legally in existence. B: the perpetual existence of a Corporation or Company.

Perpetual Succession helps in creating a difference between a Company and a Firm

In case a  company is not passionate about its members it will not come to an end with the death of its members. Whereas  Partnership Firm usually dissolves with the death of any one of its partners only. Therefore a Proprietorship firm ceases to exist with the death of its sole proprietor. However, the Corporate can survive for ages and doesn’t rely on the financial stability, liabilities, survival, and death of its members.

We can find it within the case of  Gopalpur Tea Co. Ltd. v. Peshok Tea Co. Ltd.[1], the entire Company was confiscated by an Act which purportedly ceased the proper to require action against the Corporate Court held that neither the corporate was ended, nor was anyone’s right to require action against it.

Therefore a Company is wholly independent of that of its members and all the assets that are owned by it remain to be within the name of the Corporate no matter whether its shares are sold or whether its shareholders die. The membership of the corporate might change altogether, but that in no way does not bring the company to an end. Only formal liquidation under the laws can bring an organization to an end. No other event aside from Liquidation can bring a Company to finish and accordingly the Corporate will live forever.

Perpetual Existence and Perpetual Succession

Companies are said to have “perpetual existence”. They do go out of business or are otherwise terminated, and at that point, they no longer remain in the eyes of the law. A Company typically “lives” separately from its founder or founders, shareholders, and employees. Not considering the fact that individuals involved in the business quit, retire, or by their death. the Company will still survive. Shares of stock in a Company can always be passed on to a person’s heirs or beneficiaries as it is defined in a will.

The most basic privilege of perpetual existence is often termed as “perpetual succession,” for a company is that the shareholders and investors are well aware that the company will not just disappear due to unforeseen circumstances. This makes them more comfortable investing their money, which the company often depends on to accelerate its growth.

As it is mentioned in the case of Punjab National Bank v Lakshmi Industrial & Trading co ltd[2]  of the Allahabad High Court Perpetual Succession means that the membership of a company may continuously change from time to time, but that does not put any impact on the companies continuity. A company has a perpetual existence which means it has no soul to be saved or body to be kicked and as a company has no physical being, it has to act through its agents and all such contracts entered into by its agents should be under the seal of the Company.

Exceptions of Perpetual Existence

It may be considered that a perpetual existence is in general a default character of new Companies,  but it is not always such.

It’s value noting that sole proprietorship businesses which do not have a formal entity surrounding them typically tend to exist in case the proprietor passes away. This is one of many potential disadvantages of a sole proprietorship.

Companies also stipulate terms in their Certificate of Incorporation also known as  Corporate Charter about when the entity will stop operations. An example can be provided as the Company may be formed to coordinate a certain happening planned for five years later, after which its existence is no longer needed.

In certain circumstances, Companies may use stipulations in their Certificate of Incorporation or bylaws to specify other ways of limiting the life of the Corporation, like an expiration or liquidation date on the equity as decided by some or all shareholders.


   In the conclusion, we may state that any adjustment in participation of a company doesn’t influence the status of the company, death, insolvency, insanity so forth of any member of a corporate does not affect the progression of the company. As mentioned in Hahlo’s Cashbook on Company Law ( 2nd Edn) 42, Hahlo and Trebilcock state that “Like any juristic person, a company is legally and entity apart from its members, capable of rights and duties of its own, and endowed with the potential of perpetual succession”. Thus, the lifetime of the company does not depend upon the member directors. It may move on forever, independently continuing without its members or directors notwithstanding the case of closing or liquidation of a company.

[1] (1982) 52 Comp Cas 239

[2] AIR 2001

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