Indian Companies Act, 1956

The Companies Act, 1956 is an act enacted by the Parliament of India in the year 1956. It received the assent of the Parliament on 18th of January, 1956, and the act commenced on 1st of April, 1956.

The Companies Act is an act to consolidate and amend the laws relating to companies and certain other associations.

What is a Company?

A company is an artificial person which is created by law. The definition of the word “Company” is given in Section 3 (1) (i) of the Companies Act, 1956. As per this Section, company means “a company formed and registered under this Act or an existing company”.

A company may be defined as an association of artificial persons having a separate legal entity with perpetual succession and a common seal.

Features of a Company

A company has certain features and characteristics. Some of the characteristic features of a company are as follows:-

  • Separate Legal Entity

The most distinct feature of a company is that a company has a separate legal entity. Every company has a legal entity which is distinct and separate from that of its members. A company can enter into contracts, open bank accounts in its own name, sue and be sued by its members as well as the outsiders. The rights and obligations of a company are distinct from that of its members.

  • Perpetual Succession

A company is an artificial person which is created by law and comes to an end only by law. The existence of a company is not affected by its members. A company remains into existence even on the death, insolvency, retirement, insanity, etc. of its members. Even if all the members of the company die, then also the company remains into existence.

  • Limited Liability

One of the essential features of a company is that the liability of its members is limited. The liability of the members is dependent on the type of a company. The liability of the company is different from that of its members.

  • Artificial Legal Person

Another important feature of a company is that a company is an artificial legal person and it is created by law. A company is an artificial legal person because it is created by law and its creation is a process and not a natural birth and also has a similar right as that of a human.

  • Common Seal

A company is an artificial person and works with the agency of human beings and it needs an official signature. The official signature of the company is affixed on all its documents. This signature of the company is known as common seal. The common seal is the official signature of a company. However, with the Companies (Amendment) Act, 2015, the common seal has been made optional.

  • Incorporated Association

A company is an association of persons which is created by law. The incorporation of a company requires the registration of documents with the Registrar of Companies.

  • Separation of Ownership and Management

Another important feature of a company is that the ownership and management of the company are not in the same person. Company is owned by the shareholders while the directors of a company are accountable for management of the company.

  • Transferability of Shares

One of the features of a company is that the shares held by the shareholders are transferable by nature. The ownership of the shares is easily transferable in accordance with the mentioned terms in the Articles of Association. However, there are certain objections in the transferability of shares in case of a private company.

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.

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