The affairs of a company are regulated by the Companies Act. Can sue and be sued – A company like any other person can sue a third party and be sued. Continued existence – A company has a life of its own distinct from the life of its members. So the death of a member will not affect the life of the company. Our mission is to provide an online platform to help students to discuss anything and everything about Essay. The concept of independent corporate entity may under certain circumstances be disregarded.
A joint stock company may be incorporated as a private or public company or one person company. Section 15 of the Act provides that where the promoters of a company have made a contract before its incorporation for the purposes of the company, and if the contract is warranted by the terms of incorporation, the company may adopt and enforce it.
A developing industrial world needed a legal form of ownership that would provide limited liability for the owners and perpetual life for the business. This is https://accounting-services.net/ answered through the company form of organisation. Therefore, what follows next is the meaning of a company, its main features, advantages, and disadvantages.
The Stock Exchanges provide adequate facilities for the sale and purchase of shares. Thus, perpetual succession denotes the ability of a company to maintain its existence by the succession of new individuals who step into the shoes of those who cease to be members of the company. Members can freely transfer and sell their shares .The right to transfer share is a statutory right of members. Ministry of Corporate Affairs had issued a notification for certification of various forms. A small company, which is a private company, enjoys certain privileges as compared to a normal private company.
Place for Holding Board Meetings
A company is a legal person and entirely distinct from its members, is capable of owning, enjoying and disposing of property in its own name. The company is the real person in which all its property is vested, and by which it is controlled, managed and disposed of. So one of the nature of company is that it has separate property from its members. A company is created with the sanction of law and is not itself a human being, it is therefore, called artificial; and since it is clothed with certain rights and obligations, it is called a person.
- As the company has no physical form, it cannot sign its name on a contract.
- The company is capable of holding and enjoying property in its own name.
- It includes features such as Limited Liability, Perpetual Succession etc.
- Since it can act and do almost everything an actual legal person can do, it is called an artificial person.
- 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.
- The member of a public limited company can sell his shares to others without the consent of other shareholders.
It is called an artificial person since it is invisible, intangible, existing only in the contemplation of law. In the legal sense in India, a company is an association of both natural and artificial persons . In terms of the Companies Act, 2013 (Act No. 18 of 2013) a “company” means a company incorporated under this Act or under any previous company law [Section 2]. Nowadays, business matters have become more complicated and cannot be discussed at festive gatherings.
Role of Promoters in Company Establishment
The articles of a company shall be in respective forms specified in Tables F, G, H, I and J in Schedule I as may be applicable to such company. The articles of a company shall contain the regulations for management 6 Advantages of Incorporation of a Company Under Companies Act, 1956 of the company. To carry on the business of mechanical engineers and general contractors. As per MCA notification dated 5th June, 2015, a Government company’s name must end with | the word “Limited”.
- Being the creation of law, the nature of the company is that it possesses only the powers conferred upon it by its Memorandum of Association which is the charter of the company.
- A company may adopt all or any of the regulations contained in the model articles applicable to such company.
- Members may come and members may go, but the company goes on undisturbed until dissolved by a process of law.
- Here a company created a subsidiary and transferred to it, its investment holdings in a bid to reduce its liability to pay bonus to its workers.
- The directors are the representatives of the shareholders.
Therefore, the company form of organization has assumed greater importance. It denotes a joint-stock enterprise in which the capital is contributed by several people. Thus, in popular parlance, a company denotes an association of likeminded persons formed for the purpose of carrying on some business or undertaking.
A company, being an artificial juridical person, does not die a natural death. It is created by law, carries on its affairs according to law throughout its life and ultimately is effaced by law.
What are the advantages of incorporation of a company under companies Act 2013?
Advantages of incorporation of a company are limited liability, transferable shares, perpetual succession, separate property, the capacity to sue, flexibility and autonomy. Incorporated businesses offer many more advantages over sole proprietorship companies or partnership companies.
Also the shareholders cannot bind the company by their acts. As the company is an artificial creature of the law, distinct and separate from its members, a shareholder can both own its shares and be its creditor. The life of the company is independent of the lives of its members.
In fact transferability of shares and limited liability are the enabling factors for the tremendous rise of companies all over the world. Company is an incorporated association of persons created by the law of the country. In India companies are formed and registered under the Companies Act 1956.
But the company survived, not even a hydrogen bomb could have destroyed it’. The concept of ‘Company’ or ‘Corporation’ in business is not new but was dealt with, in 4th century BC itself during ‘Arthashastra’ days.