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Definition of Company : Stock Market Courses in Hyderabad

ASC NCFM Academy Hyderabad – Stock Market : Definition of Company


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Definition of Company : Stock Market Courses in Hyderabad

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Definition of Company:

Company is an artificial person created by Law and having separated legal entity with a perpetual succession, common seal and liability is limited.

Characteristics of a Company
Company is having the following Characteristics:
Separate Legal entity
Limited Liability
Perpetual Succession
Common Seal
Transferability of Shares
Separate Property
Separate Legal Entity

A company is in law regarded as an entity separate from its members. It has an independent corporate existence.

Any of its members can enter into contracts with it in the same manner as any other individual can and he cannot be held liable for the acts of the company even if he holds virtually the entire share capital.

The company’s money and property belongs to it and not to the shareholders (although the shareholders own the company)

Limited Liability

A company may be a company limited by shares or a company limited by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of the shares.

Perpetual Succession

Being an artificial person a company never dies, nor does its life depend on the life of its members. Members may come and go but the company can go on forever. It continues to exist even if all its members are dead. The existence of company can be terminated only by law.

It means that a company’s existence persists irrespective of the change in the composition of its membership.

Common Seal

Since a company has no physical existence, it must act through its agents and all such contracts entered into by its agents must be under a seal of the company. The common seal acts as the official signature of the company.

Transferability Of Shares

The capital of a company is divided into parts called shares. These shares are, subject to certain conditions, freely transferable, so that no shareholder is permanently wedded to the company. When the join stock companies were established the great object was that the shares should be capable of being easily transferred.

Separate Property

As a company is a legal person distinct from its members, it is capable of owning, enjoying and disposing of property in its own name. Although its capital and assets are contributed by its shareholders, they are not the private and joint owners of its property. The company is the real person in which all its property is vested and by which it is controlled, managed and disposed of.

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