A company has some unique features that set it apart from the rest of the organizations that also carry out businesses. One can carry out business without having registered as a company under the law.
A Company is vested with a corporate character, so it bears its name, functions under that name, and might also additionally have a seal. A company’s property is separate and different from the ones of its individuals. It is different from the individuals who compose it. Therefore, it can own its property, incur debts, borrow money, etc. so a Company can enter into contracts and sue or be sued like an individual. Its shareholders are its notional proprietors, and they do not own anything besides possession of stocks issued. A shareholder cannot be held answerable for the acts of the employer although he holds the whole percentage capital. Thus, ‘incorporation’ is the act of forming a legal business enterprise as a juristic character. A juristic character is in regulation additionally conferred with rights and duties and is dealt with in accordance with regulation. A Company is an artificial person created via law. It isn’t a person, however; it acts through human beings. It is taken into consideration as a legal person who can contract own properties in its name, sue, and may be sued. Furthermore, it is known as an artificial person considering it’s far invisible, intangible which exists only in the eyes of law. Though considered as an Artificial and juristic person, the company is not a citizen.
The privilege of limited liability is one of the fundamental advantages of doing business under the type of organization as a company. The company, being a separate person, is the proprietor of its belongings and bound to the extent of its liabilities. The legal responsibility of a member as a shareholder extends to the contribution to the capital as much as the nominal fee of the stocks held.
An integrated corporation by no means dies, besides while it is wound up as according to law. A corporation, being a separate individual in the eyes of law, is unaffected by the demise or departure of any member, and it stays the same as before, regardless of overall changes that take place in the membership. Perpetual succession can be understood as the membership of an organization and can also additionally be changing from time to time, however that shall have no effect on its continuity. The membership of an incorporated corporation can also additionally be altered both due to the fact, that one shareholder has sold/transferred his stocks to any other or his stocks devolve on his representatives on his demise, or he ceases to be a member according to the provisions of the Companies Act. Thus, perpetual succession denotes the capacity of a corporation to keep its life through the succession of people who step into the shoes of those who are no longer a part of the company.
Transferability of Shares
The capital of a company is split into parts, known as stocks. The stocks are assumed to be movable belongings and, restricted by positive conditions, are freely transferable so that no shareholder is completely or always wedded to a company. When the joint-stock companies had been established, the idea was that their stocks ought to be transferable. Section 44 of the Companies Act, 2013 enunciates the principle providing that the stocks are movable belongings held via way of means of the individuals and may be transferred from one individual to another in accordance with the articles.
Limitation of Action
A company that is incorporated under the Companies Act cannot go past the power given to it in its Memorandum of Association. The Memorandum of Association of the company regulates the powers and describes the objectives of the company and gives the edifice upon which the whole shape of the company. Every action taken by the company is limited within the scope of its Memorandum of Association. To allow it to perform its actions without such restrictions and barriers generally enough powers are granted within the Memorandum of Association. But as soon as the powers have been laid down, it cannot go past such powers until the Memorandum of Association, itself is altered before doing any such act.
Termination of Existence of a Company
Being an artificial juridical person, a company cannot die a natural death. Since it is created via law, includes its affairs in accordance with the law for the duration of its existence and the long run is effaced by the law itself. Generally, the life of a company is terminated through winding up. However, to keep away from winding up, on certain occasions companies adopt techniques like reorganization, reconstruction, and amalgamation.
To conclude it can be said that a company can be understood as an organization that is separate from its members, that can own its property, incur bets, or borrow loans. It can sue and can be sued. It is created by law and effaced also through law.