Basics of Company Law

Basics of Company Law

The word ‘Company’ springs from a Latin word (Com=with or together; panis =bread), and it originally mentioned an association of persons who took their meals together.
A company may be a voluntary association of persons, recognized by law, having a particular name, a standard seal, formed to hold on business for profit, with capital divisible into transferable shares, indebtedness, a company body and perpetual succession.
In terms of the businesses Act, 2013 (Act No. 18 of 2013) a “Company” means a corporation incorporated under this Act or under any previous company law [Section 2(20)].
As the corporate body is creation of law and is not a human being, it is an artificial juristic person clothed by various rights, liabilities, powers and duties prescribed by the law.


1. Artificial person- A company is created by law. It is not a human being but acts through them only. It is referred as an artificial person because it is invisible and intangible.


2. Limited Liability- The principle of limited liability is a feature as well as a privilege of the corporate form of enterprise. In other words, the liability of the members is restricted. It means that the shareholders enjoy immunity from liability up to a certain limit. A shareholder can’t be called upon to pay anything quite the unpaid value of the share that he has undertaken to pay under a contract between himself and therefore the company. Members, whilst an entire, are neither the owners of the company’s undertakings, nor responsible for its debts.


3. Perpetual Succession- a corporation doesn’t cease to exist unless it’s specifically aroused or the task that it had been formed has been completed. Membership of a corporation may keep it up changing from time to time but that doesn’t affect lifetime of the corporate. Insolvency or Death of member doesn’t affect the existence of the corporate.


4. Separate Legal Entity- When a company is incorporated under the law it becomes a separate legal entity which bears its own name, acts under name, has a seal of its own and its assets are separate and distinct from those of its members. It is capable of owning property, incurring debt, and borrowing money, employing people, having a checking account, getting into contracts and suing and being sued separately.


5. Not a Citizen- Although a company is a legal person, it is not a citizen under the Indian Constitution or Citizenship Act, 1955. It can act only though natural persons.


6. Capacity to sue and be sued- To sue means to institute legal proceedings against (a person) or to bring a suit in a court of law. All legal proceedings against the corporate are to be instituted in its name. Similarly, the corporate may bring an action against anyone in its own name.


7. Transferability of shares- The capital of a corporation is split into parts, called shares. The shares are said to be movable property and, subject to certain conditions, freely transferable, in order that no shareholder is permanently or necessarily wedded to a corporation.


8. Act within Limits- the Company cannot go beyond what is mentioned in the Memorandum of Association and Articles of Association. MOA where the main objects of the company are specified and AOA is document in which ways and directions are suggested to get those objectives.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

You may also like to read:

A day when I pampered myself

My grandmother and my son

Showing off your baby bump

  

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.