Definitions:
A company is an artificial being, invisible, intangible and existing only in the contemplation of law. - Chief Justice Marshall
A company is an incorporated association which is an artificial person created by law having a separate entity with perpetual succession and a common seal. - Haney
As per companies Act,
A company means a company as defined in Section 3. – Section 2(10)
Company means a company formed and registered under this act or an existing Company. – Section 3(1)(i)
Existing Company means a company formed and registered under any of the previous company laws. – Section 3(1)(ii)
Above are the definitions of the companies. Now let’s know about the Characteristics of the Company.
Voluntary Association : It’s a voluntary association of persons.
Separate legal entity : It’s a separate legal entity and distinct from the members and has an independent corporate existence. (Refer Case: Solomon Vs. Solomon & Co. Ltd., Kandoli Tea Company ltd.)
Limited Liability : It may be either limited by shares or limited by guarantee. In case of limited br shares the liability of members is limited to the extent of money remaining unpaid on shares held by them. In case of limited by guarantee, the liability of the members is limited to such an amount as the members maLimited Liability : It may be either limited by shares or limited by guarantee. In case of limited br shares the liability of members is limited to the extent of money remaining unpaid on shares held by them. In case of limited by guarantee, the liability of the members is limited to such an amount as the members may undertake to contribute, in the event of its winding up.
Perpetual Succession : It’s an juristic person and does not depend on life of its members. According to Gover, “Members may come and go, but the company goess on for ever. (Refer Case: Meat Supplies Guildford ltd.)
Common Seal : It’s an official signature of the company. As the company is intangible and has no physical existence, has to act through its members and agents. And all contracts entered by its agents and members must me made under the seal of the company.
Transferability of Shares : The shares and interest of the members are freely transferable as per provisions prescribed in the articles of association.
Own and Hold property in its own name : Company is a legal person. It is capable of owing, enjoying and disposing of the property in its own name. Member can not claim himself to be owner of Company’s property. The property of the company is not the property of its shareholders. (Refer Case : Macaure Vs. Northern Assurance Co. Ltd.)
Capacity to sue & be sued : A company being a body corporate can sue and be sued in its own name.
Limitaion of action : The creditors can make their claims only against company not against shareholders. It is only company which can sell for any unpaid capital from its shareholders.
Representative management : The company is managed by elected representative/agents of the shareholders. i.e. Board of Directors.
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