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Concept of Company & Various Essential Features

A company is defined differently based on country but generally refers to a business entity that acts as an artificial legal person. Key features of a company include being an incorporated association formed according to legal requirements, having a separate legal identity from its members, and having perpetual existence regardless of member changes. A company also has a common seal, limited liability for its members, and can enter into contracts in its own name.

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Tania Majumder
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34 views

Concept of Company & Various Essential Features

A company is defined differently based on country but generally refers to a business entity that acts as an artificial legal person. Key features of a company include being an incorporated association formed according to legal requirements, having a separate legal identity from its members, and having perpetual existence regardless of member changes. A company also has a common seal, limited liability for its members, and can enter into contracts in its own name.

Uploaded by

Tania Majumder
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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“Concept of Company & various

essential features”

SUBJECT : LEGAL ENVIRONMENT OF BUSINESS;


SUB-CODE: INM 582;LECTURE-1:
PROF.RAGHUNATH CHAKRABORTY.
INTRODUCTION:

A company has different definitions based on the


country it is situated in.
In the UK:
A company is a body corporate or an incorporated
business organization registered under the
companies act. It can be a limited or an unlimited
company, private or a public company, company
limited by guarantee or a company having a share
capital, or a community interest company.
Definition (Continued):

According to the law in the USA:


A company can be a “corporation, partnership, association, joint-
stock company, trust, fund, or organized group of persons,
whether incorporated or not, and (in an official capacity) any
receiver, trustee in bankruptcy, or similar official, or
liquidating agent, for any of the foregoing”
The Companies Act 2013 of India defines a company
as-
A registered association which is an artificial legal person,
having an independent legal, entity with a perpetual
succession, a common seal for its signatures, a common capital
comprised of transferable shares and carrying limited liability.
Definition(Continued):

A more precise, global and modern definition of a


company could be:
A business entity which acts as an artificial legal
person, formed by a legal person or a group of legal
persons to engage in or carry on a business or
industrial enterprise.
Few points that should be noted in this definition:

Legal Person: A legal person could be human or a


non-human entity which is recognised by law as having
legal rights and is subject to obligations.
A person or a group of persons: It is no more
required to be an association of persons to form a
company. A company can also be started as a single
person company (one-person company).
Since the definition, features, characteristics, and types
of companies differ in different countries (especially in
the United States), all the following sections will be
focused on an Indian and UK perspective of a company. 
Features & Characteristics Of A Company

Incorporated association: A company comes into


existence when it is registered under the Companies
Act (or other equivalent act under the law). A company
has to fulfil requirements in terms of documents
(MOA, AOA), shareholders, directors, and share
capital to be deemed as a legal association.
Artificial Legal Person: In the eyes of the law, A
company is an artificial legal person which has the
rights to acquire or dispose of any property, to enter
into contracts in its own name, and to sue and be sued
by others.
Features & Characteristics Of A Company

Separate Legal Entity: A company has a distinct entity and is independent of its
members or people controlling it. A separate legal entity means that only the company
is responsible to repay creditors and to get sued for its deeds. The individual members
cannot be sued for actions performed by the company. Similarly, the company is not
liable to pay personal debts of the members.
Perpetual Existence: Unlike other non-registered business entities, a company is a
stable business organisation. Its life doesn’t depend on the life of its shareholders,
directors, or employees. Members may come and go but the company goes on forever.
Common Seal: A company being an artificial legal person, uses its common seal (with
the name of the company engraved on it) as a substitute for its signature. Any
document bearing the common seal of the company will be legally binding on the
company.
Limited Liability: A company may be limited by guarantee or limited by shares. In a
company limited by shares, the liability of the shareholders is limited to the unpaid
value of their shares. In a company limited by guarantee, the liability of the members is
limited to the amount they had agreed upon to contribute to the assets of the company
in the event of it being wound up.
CONCLUSION:

Today’s class I have discussed the basic concept of


Company , definition & various essential features of
Company. Tomorrow I will discuss the various types
of Companies.
Internet Link:
https://www.feedough.com/what-is-a-company-mea
ning-types-features-of-a-company
/

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