“A company is an artificial person created by law, who is like the right person but who has no physical existence.” Explain completely and state the features of the company. [“A company is a legal person just as much as an individual but with no physical existence.” Explainfully and state the characteristics of the company.]
Pt. Ravi Shankar Shukla V.V. 2018) “Company is an artificial person, created by law. it is a separate
exists, it enjoys perpetual succession and has a common currency.” Discuss this statement and explain the characteristics of a company.
[“A company is an artificial person created by law having a separate entity
with a perpetual successions and a common seal.” Discuss the above statement
and explain the characteristics of a company.]
(Meaning and Definition of a Company) The word ‘company’ is derived from Latin language in which ‘com’ means ‘together’.
And ‘pany’ means ‘bread’. In the beginning a company meant an association of such persons or who ate their bread or food together. Do business related things on this food
There were 18. Nowadays company means such a community of persons in which there is joint capital. In general terms, company means a voluntary association of certain persons formed for the purpose of profit whose capital is divided into transferable limited liability shares and whose registration is under the Companies Act as an artificial person.
(1) According to Justice James, “company means any general
A community of many persons formed for a purpose.” (2) According to Justice Lindley, “company means an association of persons who collect capital for the attainment of a common object.”
(3) L. According to L. H. Haney, “an artificial
legal person, having a separate entity, having perpetual succession and having a
common currency.” (4) According to section 2(20) of the Companies Act, 2013, “company means a company which has been amalgamated or incorporated under this Act or any earlier Companies Act.”
Thus, it is clear that company means a company amalgamated under the Companies Act.
artificial person having a separate existence and unbroken succession from its members,
Which is formed for the fulfillment of a particular purpose, has a common currency and the liability of the members is generally limited.
Characteristics of a Company
The main features or characteristics of the company can be clarified as follows (1) An Artificial Person Created by Law – The company is considered to be an artificial person created by the law, because it does not have a God giving birth. Rather, it is born under the company legislation. As many rights and responsibilities as human beings, the same can be with the company. The only difference between the two is that man is born and dies naturally, whereas a company is formed and ended according to the law made by man.
(2) Separate Legal Entity – Being a person created by legislation, the existence of the company is completely separate from its members. Hidayatullah Khan, former Chief Justice of the Supreme Court of India and former Vice President of India, has written that “an amalgamated company is a separate entity and the law treats it as separate from its members. Such a separate existence arises as soon as it is amalgamated. In other words, the existence of a company is distinct from the people or members who set up the company or buy its shares. Not only this, the company and the directors of the company also have separate existence. Even if almost all the shares of a company are with the same person, then the company and such person will continue to exist separately. This principle was propounded by the House of Lords of England in the dispute of Salomon Vs Salome and Company Limited.
(3) Perceptual Succession – Perpetual succession means permanent existence. Because the company is formed by law, it is called a statutory person. Therefore, its termination is also done by legislation. Therefore, until the legal procedures for its dissolution are completed, the existence of the company continues indefinitely. The death of the members of the company, transfer of shares, their bankruptcy etc. does not affect the existence of the company in any way, even if all the members of the company die. (4) Limited Liability: The liability of the members of the company is purchased by them.
The share capital is limited. Shareholders on the company are liable only to the extent
He has not paid on the shares purchased by him. At present there are two types of seams
Liability companies – (i) limited by shares, and (ii) only companies established by guarantee
can. Liability of members in a company limited by shares up to the value of the share purchased by them
Limited, while limited to the amount of money guaranteed in a company limited by the guarantor. (5) Common Seal – The company is an artificial person created under the legislation. (a) It enters into contracts through its representatives. The agreements made by these representatives must be subject to universal currency. That is why every company after amalgamation has to maintain a common seal on which the name of the company is inscribed in bold letters. • Any form issued by the company will be valid only if the company’s common seal is printed on it.
(6) Share Capital and Shareholders – A major feature of the company is that its capital is divided into many small parts. These small parts are called fractions. The person who buys these shares is called a shareholder of the company.
(7) Limitations of the Activities – A company cannot act outside its councilor’s memorandum and councilor’s articles. Its scope of work is limited by the Companies Act and its memorandum and articles.
(8) Voluntary Association for Profit – Every company is formed with the aim of earning profit keeping in mind the social interest. After paying each interest in the profits of the company, the company is divided among the equity shareholders in accordance with the rules.
are given. The company is a voluntary association. No one can be made a forcible shareholder (9) Transferable Shares – Ordinarily the shareholders of the company can be their own.
have the right to transfer the shares, that is, they can transfer their shares in favor of any other person.
(10) Number of Members – The number of members in a public company is not less than 7 and there is no maximum limit. But the number of members in a private company can be minimum 2 and maximum 200.
(11) Right to Sue and to be Sued may prosecute any person or entity. Similarly, any person or organization can also file a lawsuit against the company. This feature results from the fact that the company is a statutory person.
(12) Separate Property – It is true that the property of the company is not the property of its shareholders, but the property of the company itself. Hence the company in its name
Can buy and sell property, keep it in his name, can keep it mortgage. and can use it.