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Understanding what a Company means
An artificial person created legally is called a company. It is a voluntary association of individuals or various individuals to gain sure profits.
In simple words, a company is a lawfully created establishment formed by the alliance of various bodies, people, groups, or groups, etc., whose primary focus is to achieve a common goal/purpose.
The Companies Act of 2013 defines a company as a legally verified organisation with a common trademark that is easy to recognize, limited liabilities, and an independent legislative set of rules.
Key Features of a Company
A Non-Living Entity– A company has its name. All the business transactions of a company occur due to the underlying fact that the company owns its bank account. These two aspects make ‘a company’ a lawfully good ‘artificial’ body.
A company legally has all the rights to this, own land and property under its name, sue or file a case against any other company or even an individual in court. A company also possesses a right to team up or collaborate with other companies, resulting in partners.
Thus, a company can keep in mind all the laws that perform tasks that an ordinary human can do; this makes a company an artificial entity.
A Separate Legal Entity means that a company is not dependent on the people to control its operations. If an employee of the company is unable to pay all their loans or is in debt, then the company has nothing to do with it.
This works the other way round too, i.e., if a company has a heavy pending loan to pay, then the employees are not responsible for it.
Included Organisation– A company is only verified if it abides by all the laws legally and falls under all the requirements of the Act of Company. Once verified, only then can a company start its business functions.
Limited Answerability– The answerability of a person holding shares or stocks of the company is restricted to the value of the shares they own. In a business limited by share, this is the case. In the case of businesses limited by guarantee, when the contributors’ shares are seen as an asset in the company, if the company goes bankrupt, the shareholders must pay a small amount to cover the company’s loss as a helping hand.
Ordinary Recognizable Symbol– A company is considered to be an artificial body. Thus, it must have a seal to represent itself with its name and address engraved on it. This can be considered as the icon of representation for the company.
Long-Lasting Existence– The existence of a company must be long-lasting; that is, it must last for a very long period. Unlike employees on a job or a partnership that only lasts for a few months, a company must survive.
Types of Companies
Incorporated Companies– An Incorporated Company is company that is an organisation of people who invest their money in the company’s capital. The existence of such a type of company is not dependent on its members.
Unincorporated Companies– An Unincorporated Company is a Company that is organised by multiple people who have agreed to a partnership to run a business and earn profits equally.
Chartered Company– A Charted Corporation is a Company that is founded as a result of the crown’s issuance and regulation of a charter.
Statutory Companies– A Statutory Company is a Company that is built up with the aid of a special act of the house of the legislature.
Registered Companies– A Registered Company is a verified and legal company that abides by all the rules of The Companies Act of 1956. The Registrar gives such companies a Certificate of Incorporation.
Registered companies can further be of different types:
- Companies limited by shares: The responsibility of members in a corporation limited by shares is restricted by the memorandum to the amount, if any, unpaid on the shares they hold.
- Companies limited by guarantee: It is a public or private limited liability company in which members’ liability is restricted to the amount they agree to pay to the company’s assets if the memorandum winds it up.
- Unlimited Companies: A corporation that has no limit on its members’ responsibility is known as an unlimited company.
Private Companies– A Private Company is a privately held firm that does not offer or trade its shares to the general public on stock exchanges but rather offers, owns, and trades or exchanges it’s stock privately.
Public Company– A Public Company is a Company that has its shares of stock that are intended to be freely traded on the stock market exchange.
Government Companies– A Government Company is one in which the government owns fifty-one percent or more of the equity share capital. Private people or people in business might own the remaining shares.
Foreign Companies– A foreign company is located outside of India yet does business in the country.
Conclusion
Forming a public or private business is lengthy and involves a lot of paperwork. Before deciding to start a business or an urban company, it’s a good idea to learn about the many sorts of businesses and which one would be ideal for you.
A company can surely profit if started with the right mindset and pure intentions to build a business. Running a company is not easy; the right efforts and dedication will surely help an individual grow with his company and achieve all the goals they desire.
