Meaning & Nature of a company

 Meaning of "Company" -

• The term 'company' means a group or an association of person united for carrying on a business with a view to earn profits.

• However, one must remember that companies may also be formed for the promotion of commerce, art, science, religion or charity or any other useful object under companies Act.

Definition of "Company" -

• According to Professor Haney - "A company is an incorporated association, which is an artificial person created by law, having a separate legal entity, with a perpetual succession and a common seal"

Nature, Features or characteristics of a "Company" -

1. Incorporated Association - It is only a group or association of person get themselves registered under the companies Act, 2013 does the company come into existence.                                                                                                                                                                                                                                                                                                                           
2. Artificial Legal Person - A company is a person created by a process other than natural birth. It is, thus known as artificial legal person. Since it is formed by law it is an artificial legal person having all rights of an individual. Therefore, it has to depend upon the natural person namely the directors, officers, shareholders etc.                                                                                                                                                                                                            
3. Separate Legal Entity - Once a company is incorporated, it must be treated like any other independent person. The motives of those who promoted it are irrelevant. The personality of the company is different from the personality of the promoters and members who created it. This concept of 'Separate Legal Entity' is in fact, the backbone of the company Law.                                                                                                                                                                                               
4. Separate Property - A company, being a legal person, is capable of owning, enjoying and disposing of property in its own name. Although, the capital and assets are contributed by the shareholders, yet, the company becomes the owner of its capital and assets.                                                                                                                                                   
5. Limited Liability - The liability of members of a company is limited either by shares or guarantee. This is one of the main advantages of trading through a company.                                                                                                                                                                             
6. Perpetual Succession - A company has a perpetual succession. Perpetual succession means that a company has continuous existence in spite of a change in the membership of the company. The life of a company does not depend on the life of any of its members. Its existence is not affected by the death or insolvency of its members. Members may come and go, but, Company can go on forever.                                                                                                                                                                                                                         
7. Transferable Shares - The shares of a public company are freely transferable and members can dispose of their shares whenever they like.                                                                                                                                                                                                                     
8. Common Seal - A company, being an artificial person, has no body like a natural person and, as such, it cannot sign documents for itself. It acts through natural person who are called directors. Therefore, the law has provided for the use of a common seal with the name of the company engraved on it, as a substitute for its signatures.                                                                                                                                                                                                                                     
9. Separation of ownership & management - A company is owned by a number of shareholder which is too large a body to manage the affairs of the company. So, In this case shareholders appoint their agents or representatives (called directors) to manage the operation of the company. These directors further hire professional managers to run the day to day affairs of the company.