This Article was written by Ms. Neelam Singh , a 1st year  BA LL.B student  from Lloyd Law College

Introduction

The Latin words “Company,” which means “with or together,” and “Pains,” which means “bread,” are combined to form the word “Company.” At first, it was used to describe a group of people who ate together. A company is nothing more than a group of people who have joined forces or given money to a common cause and created a separate legal entity in the form of a company for that purpose. The term “company” was defined in Halsbury’s Laws of England as “a collection of many individuals united into one body under special domination,” with “perpetual succession under an artificial form,” and “vested by the policies of law with the capacity to act in several respects as an individual,” particularly for taking and granting property, for contracting obligation, for suing and being sued, for enjoying privileges and immunities in common, and exercising a variety of political rights, more or less extensive, according to However, in the case of State Trading Corporation of India v. CTO, the Supreme Court of India ruled that the Indian Constitution prohibits granting a company citizenship.

As an entity, a company has a number of distinct characteristics that make it unique. A company is defined by the following characteristics:

 Separate Legal Entity:

On joining under regulation, an organization turns into a different lawful element when contrasted with its individuals. The organization is distinct from its legal members. It is distinct from its members in terms of its assets and liabilities, as well as its own name and seal. It is able to own property, go into debt, borrow money, have a bank account, hire people, sign contracts, sue and be sued separately, and have a bank account.

Limited Liability:

The obligation of the individuals from the organization is restricted to commitment to the resources of the organization upto the assumed worth of offers held by him. A part is responsible to pay just the uncalled cash due on shares held by him when called upon to pay and that’s it, regardless of whether liabilities of the organization far surpasses its resources. Then again, accomplices of an organization firm have limitless responsibility for example on the off chance that the resources of the firm are not sufficient to pay the liabilities of the firm, the lenders can compel the accomplices to make great the deficiency from their own resources. In the case of a company, this cannot be accomplished until all members have paid for their shares.

Perpetual Succession:

Unless it is specifically wound up or the purpose for which it was established has been accomplished, a business does not cease to exist or die. Although a company’s membership may fluctuate from time to time, this has no effect on the company’s existence. The company’s existence is unaffected by member death or bankruptcy.

Separate Property:

A business is its own legal entity. The company owns the property. During the company’s existence, a member cannot claim ownership of the property.

Share Transferability:

Shares in a company can be freely transferred, but only under certain conditions, so no one is tied to the company forever. When a member transfers his shares to another individual, the transferee assumes the role of the transferor and acquires all of the transferor’s rights regarding those shares.

Common Seal:

A business is not a real person but rather an artificial entity. In this manner, it acts through its Directorate for completing its exercises and going into different arrangements. Contracts of this kind must have the company’s seal on them. The normal seal is the authority mark of the 

organization. On the common seal, the company’s name must be engraved. Any record not bearing the mark of the organization may not be acknowledged as legitimate and might not have any lawful power.

Suitability and being sued:

In contrast to its members, a company can sue or be sued under its own name.

Separate Leadership:

An organization is directed and overseen by its administrative work force for example the Directorate. The investors are basically the holders of the offers in the organization and need not be essentially the administrators of the organization.

One Share One Vote:

One share equals one vote when voting in a company. For example, a person who owns ten shares has ten votes in the company. In contrast, a co-operative society’s voting system follows the “One Member – One Vote” principle, which states that each member has one vote regardless of the number of shares held.

Types of Companies

Company that is not a private company is called a public company.

Privately owned business implies an organization which by its articles of affiliation:

Confines the right of individuals to move its portions

Limits the quantity of its individuals to fifty. Employees and ex-employees are not to be taken into account when coming up with this 50-member total.

Prohibits public invitations to subscribe for the company’s shares or debentures.

A private company ceases to be a private company and forfeits all of its rights and exemptions if it violates any of the three aforementioned provisions.