Angela Kathuria Ballb student 3rd year Gitarattan International Business School
A company is a body or an reality that has a separate legal actuality from the members who comprise of it. It’s a legal fabrication that has been created by the Companies Act, 1956. This independent commercial personality that’s conferred upon a company on its creation is veritably unique in its features. For case, a cooperation has no actuality piecemeal from its members.
There are different people who contribute in colorful ways to the working of the company.
Who looks out for the company when the directors haven’t yet been appointed?
Promoters live to give the fiscal and fiduciary aid in the setting up of a company and they’re the individualities who constitute the yet unformed company at the time of submitting documents and enrollment .
The other important corridor are played by the directors and shareholders. The board of directors take care of the business and operation of the company, and the shareholders help keep the company round. Indeed the directors are appointed after the conformation and enrollment of the company.
The business is done in the name of the company and all the gains accrue to it, out of which tips are paid to the shareholders – who are the investors in the company.
What Are The Features Of A Company?
When a company is being incorporated, the existent( s) setting up the company, will have an idea of what they want out of the objectification, and they can choose from choices that vary according to identity, power, liabilityetc.
Perpetual Actuality After a company is set up, it may continue to live and serve until it’s wound up or the object for which it was set up is achieved. thus, indeed if all the members presently comprising a company pass down or leave the company, it continues to live. This is done so that the identity of the company isn’t limited to its directors or members. The identity of a company remains as long as it continues to conduct business under the same name and terms.
The only way a company will cease to live is if it’s wound up. This shall be dealt with in detail latterly. Until there’s any reason to wind- up, it’ll continue to run. In fact, indeed if the company has no finances and isn’t doing any business for a while, the company continues to live until an order for winding up has been passed.
Capacity to sue and be sued inferring from the notion of separate legal identity, it follows that a company has the capacity to sue against a malefactor and has the capacity of being sued for civil wrongs.
When there’s indecorous conduct of business by the company, or there’s a need to specifically apply a contract, or for any other civil remedy, the company is a legal reality that may sue and be sued. The company may not be held criminally liable as a felonious act requires mens rea, or a shamefaced mind, which can not be proved in the case of a company.
Try being a Judge!
In India, defaming someone by publishing falsehood about them is acrime.However, can the person who commissioned the announcement be held criminally liable?
If a company broadcasts an announcement openly mocking a rival product.
Limiting Liability Business always involves an element of threat; occasionally the threat leads to high returns and occasionally to losses. Monetary arrears are bound to do in the course of conduct of any business.
An existent may dodge unlimited liability which could ruin a company and master the thing of perpetual actuality. The law allows a company to put a cap beforehand on the extent to which it’ll be liable in the event of dereliction. Any arrears arising out of business conducted in the name of the company, with the permission of its shareholders, will be limited to the extent specified by the company.
Also, although a company is a legal person, it can not be held criminally liable because of the absence of the critical conception known as mens rea, or a shamefaced mind.
Transmittable Shares Anyone who contributes financially towards the working of the company by buying a share of the company owns that much of the company. Every shareholder, is therefore a partial proprietor of a company. In a private company, there can not be further than 50 shareholders, which is a restriction on the transferability of shares. A public company’s shares, on the other hand, may be traded freely on the stock request. One of the primary attributes of a public company, in fact, is the free transferability of shares.
Example When the stock request news says that the shares of ‘ A ’ company have fallen by ‘ x ’ points, they mean that the value at which the shares are being traded is lower than the value at which they were first released.
Separate Property A company is a legal person and may therefore enjoy property in its own right. The legal personhood of the company gives it certain inalienable attributes, similar as that it can enter into contracts, it has arrears, it’s liable to be tested etc. This personhood separates the conduct of the people acting on the company’s behalf and the liability of the company itself.
Case Law Salomonv. Salomon &Co.Ltd.( 1895- 99) All ER 33( HL)
Data of the Case
In the well known case of Salomonv. Salomon &Co.Ltd.( 1895- 99) All ER 33( HL), Salomon was a prosperous leather trafficker. He converted his business into a Limited Company — Salomon &Co. Ltd. The company so formed comported of Salomon, his woman
And five of his children as members. The company bought the business of Salomon for£,000, the purchase consideration was paid in terms of£,000 debenture conferring a charge over the company’s means,£,000 in completely paid£ 1 share each and the balance in cash. The company in lower than one time ran into difficulties and liquidation proceedings commenced. The means of the company weren’t indeed sufficient to discharge the debentures( held entirely by Salomon himself). And nothing was left for the relaxed creditors.
Decision
The House of Lords unanimously held that the company had been validly constituted, since the Act only needed seven members holding at least one share each. It said nothing about their being independent, or that there should be anything like a balance of power in the constitution of the company. Hence, the business belonged to the company and not to Salomon. Salomon was its agent. The company wasn’t the agent of Salomon.
References
https://www.taxmann.com/post/blog/what-is-a-company-definition-characteristics-and-latest-case-laws/?amp
https://www.google.com/amp/s/blog.ipleaders.in/everything-need-know-company-law/%3famp=1
Aishwarya Says:
The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.
If you would also like to contribute to my website, then do share your articles or poems to secondinnings.hr@gmail.com
Join our Whatsapp Group for latest Job Opening