DEFINiATION OF COMPANY –
As per section 2(20) and section 2(67) of the Companies Act 2013 it means company incorporated under this Act or any of the previous company law.
CHARACTERSTICS OR FEATURES OF A COMPANY (SEC.9)
As per section 9 of Companies Act 2013 following are the characteristics of company :
1. Artificial Person :
i) A Company is an artificial person created by law. It is not a human being but it acts through human beings.
ii) It is considered as a legal person who can enter into contracts, possess properties in its own name, sue and can be sued by others etc.
iii) It is called an artificial person since it is invisible, intangible, existing only in the contemplation of law. It is capable of enjoying rights and being subject to duties.
2. Separate Legal Entity :
i) A company is legal person in the eyes of law distinct from its members.
ii) Therefore it is capable of owning property, incurring debts, borrowing money, having a bank account, employing people, entering into contracts and suing or being sued in the same manner as an individual.
iii) A company is separate person having its own rights and obligations.
3. Perpetual Succession :
i) A company incorporated under companies Act never dies, except when it is wound up as per law.
ii) Perpetual succession, means that the membership of a company may keep changing from time to time, but that shall not affect its continuity.
iii) An incorporated company is not affected by death or departure of any member.
iv) Professor L.C.B. Gower rightly mentions, “Members may come and go, but the company can go on forever.
During the war all the members of one private company, while in general meeting, were killed by a bomb, but the company survived — not even a hydrogen bomb could have destroyed it”.
4. Separate Property :
i) A company can own and enjoy property on its own name.
ii) Members are not owners or co-owners of companies property.
iii) In a decided case court held that “no member can claim himself to be the owner of the company’s property during its existence or in its winding-up”.
5. Limited Liability :
i) Limited liability is biggest advantage for companies. The liability of a member as shareholder, extends to the contribution to the capital of the company up to the nominal value of the shares held and not paid by him.
ii) In the case of a company limited by guarantee, the liability of members is limited to a specified amount of the guarantee mentioned in the memorandum.
Exception of Limited Liabilities-
- When no. of members of company reduced, in case of public company below 7 or incase of private company below 2 and company carry business more than 6 month from the date of such reduction than every member of company that time liable to pay whole debt and may be sued.
- when company incorporated as unlimited company.
- Where a company has been got incorporated by any fraudulent means than the liability of members of company are unlimited.