The word company is derived from the Latin word ‘com’ i.e. with or together and ‘panis’ i.e. bread. Originally it refers to an association of persons or merchant men discussing matters and taking food together.
However, as per companies Act, 2013 company which is formed and incorporated under the Companies Act, 2013 or any of the previous company laws.
According to Lord Justice Hanay, “company as “an artificial person created by law with a perpetual succession and a common seal”.
Features or Characteristics of a Company :-
- Incorporated Association: A company comes into existence through the operation of law.
- Perpetual Existence: company has its own existence doesn’t depend on its members, it will be continues in existence despite the death, insolvency or change of members.
- Separate Legal Entity: company has its own separate legal entity and is not affected by changes in its membership.
- Common Seal: Company cannot sign the documents. Therefore common seal is affixed on all documents by the person authorize to do so and puts his signature, but now, the use of common seal has been made optional.
- Limited Liability: The liability of shareholders of a company is limited to the extent he has agreed to pay to the company.
- Not a citizen: A company is not a citizen as a natural person because it is created by law.
- Transferability of Shares: shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability.
- Maintenance of Books: A limited company is required by law to maintain books of account.
- Periodic Audit: A company has to get its accounts periodically audited through the chartered accountants.
- Right of Access to Information: The shareholders of a company have right to inspect its books of account and to seek information.