A company means an association of people to carry on an economic or non-economic activity. A partnership is different from a company as a company is a person in the eyes of law which can sue or be sued; can enter into contracts in its own name etc. It has a distinct personality of its own different from its members. The Companies Act, 1956 is the law that governs companies in India. It also deals with foreign companies having business in India. It is essential that a company must be registered. Once a company is registered, it dies only through the process of dissolution. The information provided deals with the formation, registration and dissolution of a company; the various kinds of companies and the distinction between public and private limited companies. The following are the main characteristics and distinctive features of a company form of enterprise:
Essential Characteristics of a Company
♦ It is an incorporated association. A company comes into existence on the registration under the companies Act. A joint stock company may be incorporated as a private or public company. ♦ A company formed and registered under the companies Act is a legal entity separate and distinct from its members. It may contract, use 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 the individual shareholders, it is said to have perpetual succession (i.e., continuity of life). Even the death or insolvency of a member (or all members) does not affect the corporate existence of the company. Members may come and members may go, but the company continues its operation 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...