What is a Company?
Section 2(20) of the Companies Act, 2013 states the meaning of a Company. This section states that “Company means the incorporation of a company by association of different persons under the laws established by the Companies Act 2013 or any other previous company act”. The main reason for the formation of a company is to create a separate “Body Corporate” which has its own separate legal identity. The word company is coined from a Latin word (com and panis) Com means together and Panis means bread, so in general terms, we can say that the association of people who eat together is a company.
Any company that is formed by the Companies Act, 2013 or any other previous company act has a separate individual status as a Legal Person and they can enjoy various rights that are given to the citizen of the country. The existence of any company does not depend upon its members, the company is an independent entity that has a separate identity and can sue any other person or entity and can be sued also.
Key Takeaways:
- A company is a legal entity that is formed by a group of individuals to engage in and operate a business organization in a commercial or industrial capacity.
- The business line of a company depends on its structure which can range from a partnership to a proprietorship, or even a corporation.
- A company is purposely organized to earn profits from running its business.
Table of Content
- Features of a Company under Companies Act, 2013
- 1. Separate Legal Entity
- 2. Perpetual Succession
- 3. Limited Liability
- 4. Artificial Legal Person
- 5. Common Seal
- Conclusion
- Features of a Company – FAQs