What is one consequence of a corporation being a separate legal personality?

• A. It dies with the shareholders
• B. It has no property ownership
• C. It has limited liability
• D. It cannot be distinct from shareholders

Answer: (C)

A corporation being recognized as a separate legal personality inherently grants it the characteristic of limited liability. This means that the corporation is responsible for its own debts and obligations, and the personal assets of its shareholders are protected from claims against the corporation. In essence, if the corporation encounters financial difficulties or faces lawsuits, shareholders are only liable to the extent of their investment in the corporation and are not personally accountable for the corporation's debts.

This principle of limited liability encourages investment and entrepreneurship, as it reduces the risk for individual shareholders. They can participate in business ventures without risking their personal financial security beyond their investment in the corporation.

In contrast, a corporation does not "die with the shareholders" because it exists independently of its shareholders; it can continue to operate and exist even if shareholders change. Additionally, a corporation can own property, unlike the suggestion that it has "no property ownership." Lastly, a corporation is distinctly separate from its shareholders, rather than being unable to distinguish itself, reinforcing the idea of it being a separate legal entity.