A Company is formed to carry on the business at the large scale, larger than by a single person, business association or a partnership firm. Since large amount of capital is required to conduct larger businesses, a company is considered better than other forms.
A company has a legal personality unlike a partnership firm and is registered under the Companies Act and is governed by the Company Law / Corporate Law. It has a separate identity different from the members of the company. Since a company assumes its own personality, the rights and duties of a company are different from those enjoyed by the members of the company. The shareholders of a company are not its proprietors, but mere suppliers of capital. A company can sue and be sued on its own name.
- An incorporated company is an entity with perpetual succession. The death of a partner or insolvency of a partner does not affect the existence of the company.
- Unlike partnership, the shares of a member in a company can be transferred without the consent of other members.
- A company may be registered with limited or unlimited liability. In case of limited liability companies, the liability of a member in the company is limited to a certain extent.
- In case of a company limited by shares, the liability of a member is limited to the extent of amount unpaid on the shares held by him.
- In case of a company limited by guarantee, the liability of a member is limited to the amount undertaken to contribute to the assets of the company.
- A company is different from a public corporation or a statutory corporation. A public or a statutory corporation is created by a specific statute owned or controlled by the State. A public corporation is a State within the meaning of Article 12 of the Constitution of India. It is subject to writ jurisdiction of the Supreme Court or High Court.
Lindley defines Company as "an association of many persons who contribute money or money's worth to a common stock and employ it for a common purpose".
Section 3 of the Indian Companies Act, 1956 defines 'Company' as a company registered under the present Companies Act (Act I of 1956) or under any of the previous Companies Acts.
According to Buckley, there are two key elements for a company. First, if there are many members of the association that it cannot be described as a firm or a partnership, and second, the consent of all the other members is not required to the transfer of a member's interest.
Kinds of Companies
- Unincorporated Companies
- Incorporated Companies
The companies can also be classified by the number of persons required to form each of the above companies
- Public companies
- Private companies
Definition of Company in various Statutes / Legislation
- Pakistan: Section 2 of Pakistan Companies Ordinance, 1984: Section 2(7) defines 'Company', Sec. 2(8) defines 'Company limited by shares' and Sec 2(9) defines 'Company limited by guarantee'.
Related Cases / Recent Cases / Case Law
- Stanley, Re,  1 Ch 131: The word “company” has no strictly technical or legal meaning.
- Incorporation of a Company
- Lifting the Corporate Veil
- Memorandum of Association
- Articles of Association
- Doctrine of Ultra-Vires
- Doctrine of Indoor Management
- Prospectus of a Company