State the features of a company.
State the features of a company.
1. Artificial person : A company is an artificial person created by law. It is a person in the sense that it can buy and sell properties, enter contracts, lend and borrow money, sue and can be sued in its own name, but like natural persons it cannot run, walk, breathe, etc.
2. Separate legal entity : Company takes birth on the date of its incorporation whereby it becomes a separate legal entity distinct from its members. Business assets and liabilities are separate from those of its members.
3. Formation : As per the Indian Companies Act, 1956, the registration of a company is compulsory. The formation of a company involves preparation and submission of several documents with the registration of companies and fulfillment of many legal formalities. It is a very expensive, time consuming and complicated process.
4. Perpetual succession : The existence of a company is not affected by the coming and going of the members. The company is created by law and only the law can bring it to an end, when the entire legal procedure of winding up is completed.
5. Control : Although the shareholders are the owners of the company, yet in true sense, they don't have the right to be involved in the day-to-day affairs of the company. In real sense, the entire management and control of the business lies in the hands of the board of directors.
6. Liability : The liability of the shareholders is limited to the extent of their capital contributed by them. In case of losses, the members are held liable only to the extent of the unpaid amount of shares held by them.
1. Artificial person : A company is an artificial person created by law. It is a person in the sense that it can buy and sell properties, enter contracts, lend and borrow money, sue and can be sued in its own name, but like natural persons it cannot run, walk, breathe, etc.
2. Separate legal entity : Company takes birth on the date of its incorporation whereby it becomes a separate legal entity distinct from its members. Business assets and liabilities are separate from those of its members.
3. Formation : As per the Indian Companies Act, 1956, the registration of a company is compulsory. The formation of a company involves preparation and submission of several documents with the registration of companies and fulfillment of many legal formalities. It is a very expensive, time consuming and complicated process.
4. Perpetual succession : The existence of a company is not affected by the coming and going of the members. The company is created by law and only the law can bring it to an end, when the entire legal procedure of winding up is completed.
5. Control : Although the shareholders are the owners of the company, yet in true sense, they don't have the right to be involved in the day-to-day affairs of the company. In real sense, the entire management and control of the business lies in the hands of the board of directors.
6. Liability : The liability of the shareholders is limited to the extent of their capital contributed by them. In case of losses, the members are held liable only to the extent of the unpaid amount of shares held by them.
