Company as a Business Medium:
“A Company means a company formed and registered under the Companies Act, 1956 or under the previous laws relating to companies – Section 3(1)(iii)
An association formed not for profit acquires a corporate life within the meaning of a company by reason of a license" - Section 25(1)
Characteristics:-
- Corporate Personality – Being a separate legal entity it bears its own name and acts under a corporate name.
- Limited Liability
- Perpetual Succession – Members may come and go but the company will go forever.
- Separate Property – no member can claim himself to be owner of Company property during its existence or winding up.
- Transferability of Shares – Section 82
- Common Seal
- Capacity to Sue and Be sued
- Contractual Rights – A Company being a legal entity different from its members can enter into contracts in its own name.
- Limitation of Action - company cannot go beyond what is stated in the Memorandum of Association.
- Separate Management – The Company is administered and managed by its managerial personnel.
- Voluntary Association for Profit
- Termination of Existence – Company is created by Law, carries on its affairs according to law and ultimately is terminated by means of law.
Nature, Form and Types of Business Enterprises
- Sole Proprietor – One man Company
- Joint Hindu Family – undivided family businnes
- Partnership – Minimum TWO and maximum 20 members, 10 in case of Banking Company – section 11
- Co- operative Society
- Company
Concept of Corporate Personality
Lifting of Corporate Veil:-
Where a fraudulent and dishonest use is made of legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality – Section 45, 147, 212, 247 and 542.
Personal Liability Of Directors and Members:
- Reduction of Membership below the statutory minimum - Section 45
- Mis – description of name – Section 45
- Subsidiary Company – A holding company is required to disclose to its members the accounts of its subsidiaries - Section 212 and 214
- Fraudulent Conduct – Section 542
- Failure to return Application Money if the minimum subscription has not been received – Section 69(5)
- Misrepresentation in Prospectus – Section 62
- Non payment of Tax
- Ultra vires Acts
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