Definition of Company
Company is an incorporated or registered association, an artificial legal person having separate legal entity, perpetual succession, common seal, limited liability and transferability of shares.
Features or Characteristic of a Company
1) Incorporated or Registered Association
a)Every company whether public or private must be compulsorily registered under the companies act 2013 or any previous ACT.
b) After registration every company gets Certificate of Incorporation (COI).
c) Certificate of Incorporation is no more final and conclusive and it can be challenged in the court of law.
d)Any association or partnership firm having more than 50 members and it is carry on business for profit, has to be compulsorily registered under Companies Act 2013 or any other law of the land otherwise it will be called as an illegal association under Companies Act 2013.
e)After getting Certificate of Incorporation the company is born and acquired separate legal existence.
2) Artificial Legal Person
a)A company is created by a process other than natural birth.It has no body, no soul, no conscience and physical existence like natural human being.
b)It is invisible, intangible, cannot sent to jail, cannot take oath, cannot marry, etc.
c) It is a legal person because it is created by law and ended by law only.
d)It cannot sign contracts like natural human being that is why every company have a common seal.
e)But still a company is a person because like normal human beings, a company can enter into contracts.it can purchase and sell property.
3) Separate Legal Entity
a) Separate Legal Entity is the entire bedrock of the Companies Act
b)It can sue and be sure in the court of law.
c)The asset and the property of the company belong to the company and nobody is the owner of the asset or property of the company.
d) The creditors of the are creditors of the company alone and they cannot proceed directly against the members or directors.
e)No one has any insurable interest in the property of the company.
4) Perpetual Succession
a) Company is a stable form of business organisation.
b)It existence is not affected by death, retirement or luancy of any member or directors
c) In the case of "Meat Supplier Ltd" all members were killed in a hydrogen bomb while they were in the general meeting of the company but still the company continues to exist.
d) Company can be compared to a flowing river whose water keeps on changing but the identity of the river remain same.
e)The provision of transfer and transmission of shares has helped in keeping up the feature of perpetual succession.
5) Common Seal
a) Company is an artificial person,so it can sign contracts like natural human beings.
b)Every company has a separate common seal with the name of the company engraved on it.
c)Any document which bears the seal of the company and signed by atleast two director make that document as a liability of the company.
6) Limited Liability
a) Company Limited By Shares-In this type of company the liability of the member is limited to the amount unpaid on the held by them. This type of liability arise at anytime.
b) Company Limited By Guarantee-In this type of company the liability of the member is limited to the amount of guarantee given by them. This type of liability arise only at the time of winding up.
c) Unlimited Liability-These type of company is very rare in which liability of the member is unlimited.
7) Transferability Of Shares
a)In public company shares are freely transferable.
b)In private company shares are transferable with some restrictions.
Company is an incorporated or registered association, an artificial legal person having separate legal entity, perpetual succession, common seal, limited liability and transferability of shares.
Features or Characteristic of a Company
1) Incorporated or Registered Association
a)Every company whether public or private must be compulsorily registered under the companies act 2013 or any previous ACT.
b) After registration every company gets Certificate of Incorporation (COI).
c) Certificate of Incorporation is no more final and conclusive and it can be challenged in the court of law.
d)Any association or partnership firm having more than 50 members and it is carry on business for profit, has to be compulsorily registered under Companies Act 2013 or any other law of the land otherwise it will be called as an illegal association under Companies Act 2013.
e)After getting Certificate of Incorporation the company is born and acquired separate legal existence.
2) Artificial Legal Person
a)A company is created by a process other than natural birth.It has no body, no soul, no conscience and physical existence like natural human being.
b)It is invisible, intangible, cannot sent to jail, cannot take oath, cannot marry, etc.
c) It is a legal person because it is created by law and ended by law only.
d)It cannot sign contracts like natural human being that is why every company have a common seal.
e)But still a company is a person because like normal human beings, a company can enter into contracts.it can purchase and sell property.
3) Separate Legal Entity
a) Separate Legal Entity is the entire bedrock of the Companies Act
b)It can sue and be sure in the court of law.
c)The asset and the property of the company belong to the company and nobody is the owner of the asset or property of the company.
d) The creditors of the are creditors of the company alone and they cannot proceed directly against the members or directors.
e)No one has any insurable interest in the property of the company.
4) Perpetual Succession
a) Company is a stable form of business organisation.
b)It existence is not affected by death, retirement or luancy of any member or directors
c) In the case of "Meat Supplier Ltd" all members were killed in a hydrogen bomb while they were in the general meeting of the company but still the company continues to exist.
d) Company can be compared to a flowing river whose water keeps on changing but the identity of the river remain same.
e)The provision of transfer and transmission of shares has helped in keeping up the feature of perpetual succession.
5) Common Seal
a) Company is an artificial person,so it can sign contracts like natural human beings.
b)Every company has a separate common seal with the name of the company engraved on it.
c)Any document which bears the seal of the company and signed by atleast two director make that document as a liability of the company.
6) Limited Liability
a) Company Limited By Shares-In this type of company the liability of the member is limited to the amount unpaid on the held by them. This type of liability arise at anytime.
b) Company Limited By Guarantee-In this type of company the liability of the member is limited to the amount of guarantee given by them. This type of liability arise only at the time of winding up.
c) Unlimited Liability-These type of company is very rare in which liability of the member is unlimited.
7) Transferability Of Shares
a)In public company shares are freely transferable.
b)In private company shares are transferable with some restrictions.
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