An existing company means a company formed and registered under any of the former Companies Acts. It gets a separate entity apart from the members constituting it. It can buy or sell both movable and immovable property in its name. It can borrow or lend money.
It can sue or be sued like any person. Registration 2. Legal Entity 3. Perpetual Succession 4. Transferability of Shares 5. Limited Liability of Members 6. Common Seal 8. Board 9. Separation of Ownership and Management Management and Control Incorporated Association of Persons Risk-Bearing Articles of Regulations Prescribed Mode of Winding Up.
The money contributed by them forms the capital of the company. It is an artificial person created by law. The common stock so contributed is denoted in money and is the capital of the company. The persons, who contribute it or to whom it belongs, are members. Legal person — It is created by law.
It is considered as a person in the eyes of law. Artificial person — It has no body and mind of its own. It can act only through other persons elected for the purpose.
Continued existence — Key Characteristics Of A Company company has a life of its own Owner Of Waste Management Company from the life of its members.
So the death of a member will not affect the life of the company. Limited liability — The liability of the members are limited to the extent of the face value of the shares held by them.
Freely transferable — Shares of a company are freely transferred except in case of a private company. Can buy and sell assets — A company at its own discretion can buy or sell any asset.
Can sue and Xr Company sued — A company like any other person can sue a third party and be sued. Separation of ownership and management — A company is managed through a board of directors elected by its members. A member has no right to participate in the management of its day-to-day affairs.
Common seal — Every company should have a common seal of its own. It is similar to the signature of a natural person. Dissolution — The company Walworth Valve Company be dissolved only by which creates it.
The essential characteristics of a company may be listed as under:. A company comes into existence on registration under the Companies Act. It is an incorporated association. A joint stock company may be incorporated as a private or public company or one person company. A company formed and registered under the Companies Act is a legal entity separate and distinct from its members.
It may contract, sue and be sued in its own name. It has no physical body and exists only in the eyes of law. As the life of the company is not affected by changes in individual shareholders, it is said to have perpetual succession i. Even the death or insolvency of a member or even all members does not affect the corporate existence of the company. Members may come, members may go, Key Characteristics Of A Company the company continues its operations unless it is wound up. Shareholders have the right to transfer their shares.
The shares of a company are freely transferable and can be sold or purchased in the stock exchange. However, in the case of a private company, certain restrictions are placed on the rights of a member to transfer his shares. It means that the liability of the shareholders is limited upto the value of the shares held by them.
The property of the company is not considered as the joint property of the shareholders although the same has been purchased from the capital contributed by the shareholders. A company, being an artificial person, cannot sign its name on any document.
So a company functions with the help of a Common Seal which is the official signature of a company. However, the Companies Amendment Act, has made the common seal optional by omitting the words and a common seal from Section 9 so as to provide an alternative mode of authorisation for Companies who opt for not to have a common seal; the authorisation shall be made by two directors or by a director and the Company Secretary wherever the company has appointed a Company Secretary.
A document not bearing a common seal or authenticated as required, is not authentic and as such is not binding on the company. The management of the company is delegated to a board, called board of directors. The affairs of a company are regulated by the Companies Act. Section 68 David Beckham Motorcycle Garage Company the Companies Act permits a limited company to buy back its own shares under certain circumstances.
A company is not a citizen and therefore cannot enjoy the fundamental rights like right to vote which are available to citizens only. Sole proprietorship and partnership forms of business organisations could not meet the growing demands of a very big business, because of their limitations such as — limited capital, limited managerial ability, unlimited liability and other drawbacks.
Therefore, a Company form of business organisation came into existence to do away with the defects of sole proprietorship and partnership forms of business organisations. A Company is a voluntary association of persons formed through the process of law, for the purpose of carrying on some business. Following are the essential characteristics of a company:. Separate Legal Entity — A Company is a legal person and its entity is quite distinct and separate from its members.
It can purchase and sell the properties in its own name, can open bank account in its own name and can enter into contracts. Since a Company has a legal personality distinct from that of its members, a creditor of such a Company can sue only the Company for his debts and not any of its members.
Perpetual Existence — The existence of a Company is not affected by the retirement, death, lunacy or insolvency of its members. Shareholders may come and Shareholders may go but the Company goes on forever, unless wound up according to Companies Act. Limited Liability — The liability Key Characteristics Of A Company the shareholder of a Company is Organizational Chart For Google Company to the unpaid value of his shares.
For example, if the face value of a share in a Company is Rs. Common Seal — Since the Company has no physical existence, it must act through its agents, called directors. All documents prepared by the directors must bear the seal of the Company. The common seal acts as the official signature of the Company. Transferability of Shares — The Capital of the Company is divided into parts, called shares.
These shares are freely transferable subject to certain conditions. Separation of Management from Ownership — Shareholders are the true owners of a Company, but usually, the number of shareholders is quite large, and as such it is neither possible nor desirable for each member to take part in the day-to-day management of the Company. The distinctive characteristics of a company are as follows:.
A company has an existence entirely distinct from and independent of its members. It can own property and enter into contracts in its own name.
It can sue and be sued in its own name. There can be contracts and suits between a company and the individual members who compose it. The assets and liabilities of the company are not the assets and liabilities of the individual members and vice versa. No member can directly claim any ownership right in the assets of the company. A company is an artificial person created by law and existing only in contemplation of law.
It is intangible and invisible having no body and no soul. It is an artificial person because it does not come into existence through natural birth and it does not possess the physical attributes of a natural person. Like a natural person, it has rights and obligations in terms of law. But it cannot do those acts which only a natural person can do, e.
A company is not a citizen and it enjoys no franchise or other fundamental rights. A company enjoys continuous or uninterrupted existence and its life is not affected by the death, insolvency, lunacy, etc. Members may come and go but the company survives so long as it is not wound up.
Being a creature of law, a company can be dissolved only through the legal process of winding Sau Sea Foods Inc Company. It is like a river which retains its identity though the parts composing it continuously change.
Liability of the members of a limited company is limited to the value of the shares subscribed to or to the amount of a guarantee given by them. Unlimited companies are an exception rather than the general rule.
A company being an artificial person cannot sign for itself. Therefore, the law provides for the use of common seal as a substitute for its signature.
Any document bearing the common seal of the company and duly witnessed signed by at least two directors is legally binding on the company.
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