This paper deal with the concept of Company or What Is Company?
according to companies Act 2013.
The word Company has no strictly technical or legal meaning . it may be
described to imply an association of persons for some common object or objects .
The word Company , in simple term , may be described to mean a voluntary
association of person who have come together for carrying on some business and
sharing the profits there from.
Indian law provides two main types of organizations for such association:
partnership and Company . Although the word 'Company' is
colloquially applied to both , the statute regards companies and Company law as
distinct from partnerships and partnership law.
The Act does not define a Company in term of its features. Section 2(20) Of
The Companies Act 2013 defines a Company to mean a Company incorporated
under this Act or under any previous Company law. in order to understand the
meaning of Company, let us see the definitions given by some authorities:
A) Lord Justice Lindley - A Company is an association of many
person who contribute money or monies worth to a common stock and employed in
some trade or business and who share the profit and loss arising the form. the
common stock so contributed is denoted in money and is capital of the
Company. The person who contribute to it or to whom it partains are
members. The shares are always transferable although the right to transfer is
often more or less restricted.
B) Prof. Haney - A Company is an artificial person created by law, having
separate entity, with a perpetual succession and common seal.
Characteristics Features of Company:
Incorporated Association- A Company law must be incorporated or registered under the companies Act.
minimum number of members required for this purpose is seven in the case of
a 'public Company' and two in the case of a 'private Company'. However,
section -3 of the companies Act, 2013 allows formation of one person
Legal Entity Distinct From Its Members This feature is also known as Corporative Personality. And the legal
entity of Company is separate from the entity of its members. this is the
reason that the rights and liability of Company are separate from those
person by whom the Company has been created. (Saloman Vs. Saloman & Co.
Ltd. [1895-99] ALL ER 33 (HL) ).
Artificial Person Its very important feature of Company that Company is the Artificial
person. Company is known as such type of or Artificial person because
Company is create by law and destroyed by law.
Limited Liability One of the principal advantages of trading through the medium of a limited
Company is that the members of the Company are only liable to contribute
towards payment of its debts to a limited extent. In the case of unlimited
liability companies, members shall continue to be liable till each paisa has
been paid off.
Separate Property In India this principle of separate property was best lid down by the
supreme court in Bacha F. Guzdarv. Cit, Bombay (Supra). The supreme
court held that a share holder is not the part owner of the Company or its
property, he is only given certain rights by law, for example, to vote or
attend the meetings, or to receive dividends. (Macaura Vs. Northern
Assurance Company Ltd.  AC 619 )
Transferability of Shares The Act in section 44 echoes this
feature by declaring The shares,
debentures or other interest of any member in a Company shall be movable
property, transferable in the manner provided by the article of Company.
A shareholder can transfer his shares to any person without the consent of
Perpetual Succession Company being an artificial person cannot be incapacitated by illness and it
does not have an allotted span of life. Being distinct from the members, the
death, insolvency or retirement of its members leaves the Company
unaffected. Members may come and go but the Company can go for ever. It
continues even if all its human members are dead. Even where during the war
all the members of a private Company, while in general meeting were killed
by a bomb, the Company survived. Not even Hydrogen Bomb could have
destroyed it. (case- k/9meat suppliers Guildford) ltd. Re(1966)1 W.L.R.
- Comman Seal
Common seal of Company is also important feature of Company as the feature
like legal entity of any Company.
Sources of This Article:
- Company law (a comprehensive text book on companies Act 2013 ) 8th
edition by Dr. G. K. Kapoor, Sanjay Dhamija.)
Written By: Sunita Meena, 7th sem. b.a.l.l.b. Law College MLSU