The characteristics of a Company or Advantages of Forming a company are as follows:
The above flowchart shows the different characteristics which are explained under:
a) Separate legal entity:
From the day the Company incorporates it holds its own identity which a separate and different from the members who constituted the same.
it has its own identity in the eyes of Law.
b) Limited Liability:
it is the most principle advantage for a company . A company limited by shares if goes into losses, it has to pay off the debts till the extent of its own extent.
Example, if a company has debts of ₹25 lac and it has an asset value of ₹20 lac then it can pay off ₹20 lac to the creditors of the company and it wont be liable further to pay ₹5 lac.
if it would have been an unlimited company, the members of the company becomes personally liable if the company has no funds to pay off all the debts the company has.
c) Perpetual succession:
MEMBERS MAY COME, MEMBERS MAY GO but the COMPANY will go on FOREVER.
it means the company has its own life, it is nowhere connected to the life of its members.
AN INCORPORATED BODY NEVER DIES.
d) Separate Property:
A company is a Legal Person and hence it is capable of having its own assets and property.
It can enjoy the owning, disposing off the property in its own name.
The property of the company is not the property of its shareholders.
e) Common Seal:
It is known as the Official Signature of the company. As we know that the company has no physical existence hence it has to act through its agents and every contract in which a company is going to be must have a common seal engraved in the particular document.
f) Capacity to sue and to be sued:
Being company a separate legal identity, it can sue anyone and can be sued IN ITS OWN NAME.
g) Transferability of Shares :
Shares of a company are freely transferable. In the case of a Private company, there are some restrictions in the subject of transfer. A company must provide in the Articles the manner of restriction it is going to apply in the case of transferability of shares.
The above flowchart shows the different characteristics which are explained under:
a) Separate legal entity:
From the day the Company incorporates it holds its own identity which a separate and different from the members who constituted the same.
it has its own identity in the eyes of Law.
b) Limited Liability:
it is the most principle advantage for a company . A company limited by shares if goes into losses, it has to pay off the debts till the extent of its own extent.
Example, if a company has debts of ₹25 lac and it has an asset value of ₹20 lac then it can pay off ₹20 lac to the creditors of the company and it wont be liable further to pay ₹5 lac.
if it would have been an unlimited company, the members of the company becomes personally liable if the company has no funds to pay off all the debts the company has.
c) Perpetual succession:
MEMBERS MAY COME, MEMBERS MAY GO but the COMPANY will go on FOREVER.
it means the company has its own life, it is nowhere connected to the life of its members.
AN INCORPORATED BODY NEVER DIES.
d) Separate Property:
A company is a Legal Person and hence it is capable of having its own assets and property.
It can enjoy the owning, disposing off the property in its own name.
The property of the company is not the property of its shareholders.
e) Common Seal:
It is known as the Official Signature of the company. As we know that the company has no physical existence hence it has to act through its agents and every contract in which a company is going to be must have a common seal engraved in the particular document.
f) Capacity to sue and to be sued:
Being company a separate legal identity, it can sue anyone and can be sued IN ITS OWN NAME.
g) Transferability of Shares :
Shares of a company are freely transferable. In the case of a Private company, there are some restrictions in the subject of transfer. A company must provide in the Articles the manner of restriction it is going to apply in the case of transferability of shares.
For sure AMRUT..
ReplyDeleteThe contents of the same will be posted soon..