MEANING &

CHARACTERISTICS OF
A COMPANY

Meaning
A company is Registered association
which is an artificial legal person,
Having an independent legal entity
with a perpetual succession, a
common seal for its signatures, a
common
capital
comprised
of
transferable shares and carrying
limited liability

Characteristics of
Company
1) Incorporated Association when
it is registered under the company
act

2) Artificial Legal Person It exists

in the eyes of the law and cannot
act on its own. It has to act through
a board of directors elected by
shareholders

3) Separate Legal Entity- The

property of the company is to be
used for the benefits of the company
and nor for the personal benefits of
the shareholders

4) Perpetual Existence- Its life does

not depend upon the death,
insolvency or retirement of any or all
shareholders, directors.

5) Common Seal it acts through

natural person who are called its
directors.

6) Limited Liability- limited to the

unpaid value of particular thing

7) Transferable Shares- The right to

transfer shares is a statutory right
and it cannot be taken away by
provision in articles

8) Separate Property It is capable

of owing, enjoying and disposing of
property in its own name

Distinction b/w Company

and Partnership
COMPANY

PARTNERSHIP

1. MODE OF
CREATION
2. LEGAL
STATUTE
3. LIABILITY

By Registration

By agreement

Legal entity distinct

from members

Firms and Partners

are not separate

Limited Liability of
members

Unlimited joint

4. AUTHORITY

Divorce b/w
ownership and
management

Right to share
management

5. TRANFER OF Public CompanyFreely transferable

SHARES

No right to transfer
of share by the
partners- limited
rights

COMPANY

PARTNERSHIP

6. NUMBER OF
MEMBERS

Private company
min- 2
Max- 200
Public company
min- 7
Max No limit

Min- 2
Max 20

7.RESOURCES

Large and
Unlimited
Resources

Limited

8.GENERAL
POWERS

Alteration Difficult

Easy to Change

9. LEGAL
FORMALITIES

Statutory books,
Audit, Publication,
registration filing
etc.

No legal Formality

10. DISSOLUTION

Only according to

By agreement

TYPES OF COMPANIES
By Mode of Incorporation
On the Basis of Number of
Members
On the Basis of Control
On the Basis of Ownership of
Company
On the Basis of Nationality of
Company

1)Classification of companies By
Mode of Incorporation
I. Chartered Companies
II. Statutory Companies
III.Registered or Incorporated
Companies
Companies Limited by shares
Companies Limited By
Guarantee
Unlimited companies

 Chartered Companies - These are

incorporated under a special charter by a
monarch. Examples- The East Indian
Company and The Bank of England.
Statutory Companies- These companies
are incorporated by a special act passed
by the central or state legislature.
Example- Reserve bank of India, State
Bank of India etc.
Registered or Incorporated companies
Companies limited by shares
Companies limited by Guarantee
Unlimited Companies

2) On the Basis of Number of

Members
Private Company

Public Company

3) On the basis of
Control
Holding Company- if it has power
to control over the other company.
By holding more than 51% of its voting
rights
By holding more than 51% of the equity
capital

Subsidiary Company when its

control is exercised by the latter.

4)On the Basis of Ownership of

Companies
Government Companies A
company of which not less than 51%
of paid up capital is held be the
central government or by state
government.
Non Government Companies except government companies

5) On the Basis of
Nationality
Indian Companies registered in
India under companies act and have
their registered office in India.
Foreign Companies- Incorporated
outside India which has an
established place of business in
India.