Which concept best describes the continued existence of a corporation despite changes in ownership or management?

• A. Limited liability
• B. Separate entity theory
• C. Corporate veil
• D. Right of succession or continuity of existence

Answer: (D)

Continuity of existence, or perpetual succession, is the idea that a corporation remains a legal entity even as ownership or management changes. This means the company can keep existing contracts, own property, sue and be sued, and continue operations despite stock transfers, death of shareholders, or changes in directors. That enduring personality is what gives long-term stability and makes it possible to raise capital and plan for the future, independent of who currently owns or runs the business.

Limited liability describes protection from personal liability for owners’ debts, which is a separate benefit. The separate entity theory emphasizes that the corporation is a distinct legal person from its owners. The corporate veil refers to keeping the owners’ personal assets separate from the corporation. While all are important, they address different aspects of corporate law; none capture the idea of the business continuing to exist regardless of changes in ownership or management—the essence of continuity of existence.