Skip to content

COMMERCEIETS

STUDY TO ENLIGHTEN YOURSELF

  • BCOM GNDU NOTES – SCORE BEST IN YOUR EXAMS!!!
  • MANAGEMENT ACCOUNTING NOTES
  • BUSINESS ORGANISATION
  • DIRECT TAX LAWS
  • INTERNATIONAL BUSINESS
  • INDUSTRIAL AND LABOUR LAWS
  • OPERATIONS RESEARCH
  • RISK MANAGEMENT AND INSURANCE
  • BUSINESS STATISTICS
  • PARTNERSHIP ACCOUNTS
  • CORPORATE ACCOUNTING
  • COMMERCIAL LAW
  • MANAGERIAL ECONOMICS
  • BUSINESS MANAGEMENT
  • 11 ACCOUNTANCY
  • GOODS AND SERVICE TAX
  • MICRO ECONOMICS
  • 12 ACCOUNTANCY
  • KEY DIFFERENCES
  • COST ACCOUNTING
  • FINANCIAL ACCOUNTING
  • FINANCIAL MANAGEMENT
  • CONSUMER BEHAVIOR
  • PARTNERSHIP ACCOUNTS
  • FINANCIAL MARKET OPERATIONS
  • CORPORATE OR COMPANY LAW
  • LANGUAGE ACROSS CURRICULUM
  • INSURANCE SERVICE MANAGEMENT
  • Toggle search form
.

WHAT IS COMPANY

Posted on July 29, 2019 By commerceiets 1 Comment on WHAT IS COMPANY

Table of Contents

Toggle
  • WHAT IS COMPANY
    • FEATURES OF COMPANY
        • ASSOCIATION OF PERSONS
        • ARTIFICIAL PERSON
        • SEPARATE LEGAL ENTITY
        • PERPETUAL SUCCESSION
        • TRANSFERABILITY OF SHARES
        • LIMITED LIABILITY
        • COMMON SEAL
        • SEPARATION OF OWNERSHIP AND MANAGEMENT
        • GOVERNING ACT
        • REGISTRATION
        • PUBLICATION OF ACCOUNTS

WHAT IS COMPANY

WHAT IS COMPANY
WHAT IS COMPANY

Joint Stock Company is an artificial person created by the law for some common purpose where the capital is  divisible into parts known as shares with perpetual succession and common seal.

ACCORDING TO PROF. HANEY

“A company is an artificial person created by law, having separate entity with the perpetual succession and common seal.”

ACCORDING TO LORD JUSTICE LINDLEY

“It is an association of persons who contribute money or money’s worth to a common stock and employ it for some common purpose.”

ACCORDING TO SECTION 2(20) OF COMPANIES ACT, 2013

“A company incorporated under this act or under any previous company law.”

Thus, the company refers to that form of business which has its separate legal entity from the owners and has the perpetual succession with the common seal.

FEATURES OF COMPANY

FEATURES OF COMPANY
WHAT IS COMPANY

ASSOCIATION OF PERSONS

It is an association of persons that is formed for some common purpose. The private company can be formed with minimum of 2 persons. The public company can be formed with the minimum of 7 persons. In the case of one person company, only one member is required.

WHAT IS COMPANY

ARTIFICIAL PERSON

It is an artificial person in the eyes of the law which is created through the process provided in the Companies Act 2013 or any other previous Act. It is not considered as natural like human being.

SEPARATE LEGAL ENTITY

WHAT IS COMPANY
WHAT IS COMPANY

The joint stock company has its separate legal entity from its members. It has its own existence in the eyes of the law. As a separate entity it can

  • Enter into contracts with other parties in its own name.
  • Sue others and be sued by others.
  • Sell or purchase property in its own name.

The company work independently of its members. It is not bound by the acts of its members.

PERPETUAL SUCCESSION

The company is a separate legal entity. Thus it enjoys the perpetual succession which means it remains unaffected by the death, insolvency and lunacy of the stakeholders. The company comes into the existence only by the act of law and may end only by law. It is rightly said:

“MEMBERS MAY COME, MEMBERS MAY GO

THE COMPANY GOES ON FOREVER”

WHAT IS COMPANY
WHAT IS COMPANY

TRANSFERABILITY OF SHARES

The members of the companies enjoy the distinct feature of Transferability of shares. Any member is free to transfer their share of interest without any permission. However, by mentioning in the Articles of Association, the companies can put some restrictions or conditions but transfer of shares cannot be stopped at all.

LIMITED LIABILITY

In case of companies, the liability of the members is limited upto the amount of unpaid value of shares. The companies may be:

  • Limited by guarantee
  • Limited by the shares

In case of companies limited by guarantee, the shareholders have to pay only that amount which is guaranteed by them in the Memorandum of Association.

In case of companies limited by shares, the liability of shareholders is only upto the amount of unpaid value of shares.

There is also a kind of Unlimited Companies, but these are not prevalent in India.   

COMMON SEAL

A company is an artificial person. It cannot be considered as natural like human being. But the company has the right and the power to enter into the contracts. The companies can do so by having its common seal. The common seal is a stamp with the name of the company engraved on it. The seal of the company is affixed on the documents which require the approval. The two directors must witness the affixation of the seal.

According to the Companies (Amendment) Act, 2015, the use of the common seal is made optional.

SEPARATION OF OWNERSHIP AND MANAGEMENT

WHAT IS COMPANY

The ownership and management of the companies are in different hands. The shareholders are the owners of the companies. But they are scattered worldwide, that is why they appoint their representatives to manage the work of the companies. These elected representatives are known as the Board of Directors.

GOVERNING ACT

The company form of business is governed under the Companies Act 2013 or under any previous Act.

REGISTRATION

The registration is compulsory in all the cases under the Companies Act 2013. The companies must get the Certificate of Incorporation and Certificate of Commencement to start its business.    

PUBLICATION OF ACCOUNTS

The publication of accounts for the companies is compulsory. The company has to file its annual statements with the Registrar of Companies at the end of the financial year. The annual statements are to be inspected by the Registrar.

WHAT IS COMPANY
WHAT IS COMPANY
ALSO STUDY:ALSO STUDY:ALSO STUDY:ALSO STUDY:
ManagementObjectives of managementFunctions of managementProcess of management
Management as an artManagement as a scienceManagement as a professionCompany
Incentive plans14 principles of management by Henry FayolPrinciples of scientific managementScientific management
Work studyTime studyMotion studyMethod study
PlanningImportance of planning in managementAdvantages of planning in businessProcess of planning
Types of planning in businessSetting objectives in managementObjectivesSMART test
Management by objectivesPolicies in BusinessManagement and business administrationFunctional areas of management
Limited Liability partnershipLLP Vs companyLLP vs Partnership
CONNECT ON LINKEDIN
WHAT IS COMPANY
WHAT IS COMPANY
12 ACCOUNTANCY, BUSINESS MANAGEMENT, CORPORATE ACCOUNTING

Post navigation

Previous Post: ACCOUNTING EQUATION
Next Post: GOLDEN RULES OF ACCOUNTING

Comment (1) on “WHAT IS COMPANY”

  1. Shivani says:
    July 31, 2019 at 1:13 pm

    Very helpful

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Copyright © 2025 COMMERCEIETS.

Powered by PressBook WordPress theme