A company may be contemplated as an association of people who contribute money or money’s worth to a common fund and use it for a purpose. It is an artificial person which has a corporate legal entity different from its core members or shareholders and has a common authentication utilised for its signature. Hence, it has a few definite characteristic features which categorize it from the other types of an organisation.
Characteristic features of a Company :
- Corporate Body: An enterprise is established according to the provisions of Law enforced frequently. In India, the enterprises are registered and established under the Companies Law excluding the Insurance and Banking enterprises for which a definite law is furnished for.
- Separate Legal Entity: A company has a definite legal entity which is different and independent from its members. It can hold and deal with any sort of property. It can get into contracts and open a bank a/c in its own name.
- Limited Liability: The liability of the shareholders of the firm is restricted to the magnitude of the due amount of the shares that are held by them. In the case of the firms constrained by guarantee, the liability of its shareholders is restricted to the range of the assurance furnished by them in the affair of the firm being closed.
- Continual Succession: The company is an artificial person that is established by law perpetuates to exist regardless of the differences in its membership. A company can be adjourned only via law. The insanity or death or bankruptcy of any shareholder of the firm in no way influences the presence of the firm. Shareholders may come and go but the company perpetuates.
- Common Seal: The firm is an artificial entity or a person, cannot sign its name by itself. Hence, every company is enforced to possess its own authentication or a seal which moves as official signatures of the firm. Any document which does not carry the common authentication of the firm is not necessary on the firm.
- Transferability of Shares: The shares of a public limited company (PLC) are transferable. The authorisation of the firm or the concession of any member of the firm is not required for the transfer of shares. However, the Articles of the firm can define the way in which the transfer of shares will be done.
- May Sue or be Sued: A company is a legal person can get into contracts and can implement the permissible authorities against others. It can accuse and be accused in its name if there is a breach of contract by the firm.
The above mentioned is the concept that is explained in detail about the Features of a Company for the class 12 Commerce students. To know more, stay tuned to BYJU’S.