What is Company? What are its Features?

Introduction In corporate accounting , commerce students have to learn accounting treatment of issue of share capital , debenture and its redemption , bonus and right issue at graduation level . They also have to solve the problems of final accounts of different companies . For proper accounting treatment , learning of Indian Company Law 19 ! is must . "o , this topic is being discussed here. If you are starting to learn Company or Corporate #ccounting , then this article will be useful for you because after reading this article , you will understand , the brief history , meaning , definition of Company and its si$ features .

History First of #ll, in France this word was used for body of soldiers see %Fr. Term Compaignie&.. #fter year 1 '', this word became famous in business. (roup of businessmen was called company. Example I can e$plain the meaning of company with a simple e$ample. "uppose, two persons want to do business at large scale but they have limited money. They are also not interested to ma)e partnership due to its unlimited liability. They go to the office of registrar of companies and fill the form of creation of company and attaching re*uired documents. They also pay the re*uired fees. #fter this, registrar will register their company. This registered company will be independent Identity. Definition of Company Indian Company law 19 !+s section ,-1. -i. define company, /Company is the organisation which is formed and registered under this law or any previous law0 Explanation of Company From above e$ample and definition, we can understand that company is voluntary and autonomous association of persons. This is made for achieving business ob1ectives. It acts li)e human being. Company can purchase assets or sell it. It can ta)e also debt. It can open ban) account. It is fully free from its members. Company is operated through board of directors.

Company vs. Corporation There is no solid difference between Company and Corporation. 2ut , these days Corporation word is mostly used in finance area because this word is most popular in 3"# economy . 4edia is also publishing all stories of Industries by using Corporation as )eyword in India. #ll features of Company li)e a separate legal entity having its own rights, own property , sign binding contracts , privileges, and liabilities distinct from those of its members can be seen in Corporation . Features of Company:-

1. Separate legal entity It is the feature of company that company is not 1ust association of persons but it hasseparate legal entity. It is an artificial person in the eye of law. Its asset is not the asset of shareholder. It can contract with members. This feature was firstly accepted in "alomon vs "alomon and Company ltd. "alomon was the dealer and manufacturer of leather boot and shoe. 5e had a wife, a daughter and other five sons. 5e sold his business to "alomon and company ltd which he made himself he also made his family as its shareholder. 5is wife, daughter and his other four sons purchased one share of this company and rest, he purchased. 5e purchased 6 7'''' shares and 6 1'''' shares. #fter one, due to economic trouble and other reasons business failed and the company was put into li*uidation. #t that time financial position of company was #ssets 6!''' 8ebentures 61'''' 3nsecured Creditors 6 9''' :$ternal creditors demanded their money because "olomon and "olomon Company were both one person and this business was of "olomon and it was being operated by him. It was a fraud. 2ut The 5ouse held; <:ither the limited company was a legal entity or it was not. If it were, the business belonged to it and not to 4r. "alomon. If it was not, there was no person and no thing to be an agent %of& at all= and it is impossible to say at the same time that there is a company and there is not.< The 5ouse further noted; <The company is at law a different person altogether from the %shareholders& ...= and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands received the profits, the company is not in law the agent of the %shareholders& or trustee for them. >or are the %shareholders&, as members, liable in any shape or form, e$cept to the e$tent and in the manner provided for by the #ct.< In end court decided that "olomon and company are different from "olomon and "olomon is secured creditor. "o his given loan should be returned first. . Separate !roperty It is also feature of company that property of company is different from its members. It can purchase or sell property without the permission of shareholders. In other words, assets of company are not the assets of members li)e partnership. ". #imited #ia$ility Limited liability is also another important feature of company. It is the reason that large number of investors invest in limited liability companies. It is the liability of company to repay not the liability of its members. 4embers+ liability is only limited up to the purchased value of shares. They have to pay balance amount of their shares. %. !erpetual Succession The life of company is very stable that human being+s life. There is no effect of changing, death, insolvency of respected member on company. Its e$istence is not affected by members+ e$istence. "hares can easily transfer from one member to another member, so li*uidation of company is only possible by law. &. Common Seal

Company can not sign on any contract because it is artificial person and it wor)s with common seal. :very document of contract with company is only valid, if there is common seal of company on it. ' (ig)t to Sue Company can sue on other parties li)e natural person for protecting its assets and properties. ?ther persons can also charge on the company.

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