Meaning and Definition of Company
In simple language a company is an entity created by law and is separated from its owner. A company is a corporate bodies form to carry out certain activities for a particular purpose. It is a body formed by the person who contribute capital are known as shareholders. Shareholders are the real owner of the company. The shareholders have limited liability up to their invested amount of share capital. Share is the part of the capital invested by the shareholders in the company. The amount of share is not returnable by the company but transferable from one person to another. Or company is a voluntary association of a number of individuals established for some common purpose of economic gain. It is established by different individual so that a large scale of capital can be raised to meet the mass volume of production.
Nepal company act 2074:" A company refers to any company formed and registered under these act."
From the above definition it is clear that a company is a voluntary association of a group of people willing to carry out a business for which the amount of capital is collected by issuing the shares. It is an artificial person which is created by the specific law with a perpetual succession.
Things to remember
A company is a voluntary association of a group of people willing to carry out a business for a which the amount of capital is collected by issuing the sales. It is an artificial person which is created by the specific law with perpetual succession.
Characteristics of a company.
The main characteristics of a company are as follow:
An artificial person: A company is an artificial person created by the law and having a separate existence of its own. Like a real person it can buy or sell the properties in its own name it can sue and can we used by others . It can conduct a lawful business and enter into contract with others.
2.Seperate legal entity:A company enjoy a benefit of a seperate legal entity from its owner. The company itself is liable to carry out its activities. So shareholders shall not be liable even he/she invested a large amount of capital. Due to this feature ,the company can sue and can be sued as per the law.
3.Perpetual succession:A company is created and liquidity only by the law. The death ,insolvency ,inability or lunacy of shareholders do not affect the life of a company. Any share holders may come or go but the company exist for a long period of time.
4.Limited Liability:The liability of every share holders of a company is limited to the extent of the face value of the share purchased.Even if the assets of the company are not sufficient to pay the liabilities of the company shareholders are not liable to pay anything more than the face value of the shares held by them.
5.Transferability of share:The capital of the company is divided into a number of units which are called shares. This shares are transferable. Or shareholder is free to withdraw his membership from the company by transferring shares. The holding of a shares can be transferred from one person to another mainly by way of sale of shares.
6. Common seal: Being an artificial person company cannot act and sign it self. It acts a through its officer. A common a sale is the official signature of a company full list of all the acts of the company are authorised by its common seal. All the documents are affixed by the common seal for making valid document.
7.Representative management:There is a separation between ownership and management of a company full stops your holders do not participate directly in the day today management of the company. So they elect their representatives among themselves. This representative manage the company on behalf of the shareholders and they are called directors. The director of the legal representatives of the shareholders.
Things to remember
The main characteristics of a company are:
Artificial person.
Separate legal entity.
Perpetual succession.
Limited liability.
Transferable share.
Common seal.
Representatives management.
No comments:
Post a Comment