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Characteristics of A Company

The main characteristics of accompany may be listed as under:

(i)    It is an incorporated association. A company comes into existence on registration under the Companies Act. A joint stock company may be incorporated as a private or public company

(ii)    A company formed and registered under the Companies Act is a legal entity separate and distinct from its members. It may contract, sue and be sued in its won name. It has no physical body and exits only in the eyes of law.

(iii)    As the life of the company is not affected by changes in individual shareholders. it is said to have perpetual succession. Even the death or insolvency of a member does not affect may go, but the company continues its operations unless it is would up.

(iv)    Shareholders have the right to transfer their shares. The shares of a company are freely transferable and can be sold or purchased in the stock exchange. However, in the case of a private company, certain restrictions are placed on the rights of a member to transfer his shares.

(v)    Limited liability of members is another most important characteristics of a company. It means that the liability of the shareholders is limited up to the value of the shares held by them. Once the shareholders have paid the full nominal vale of the shares the have agreed to take, they cannot be held responsible for any of the debts of the company which cannot be met from company’s assets. The companies Act permits the formation of companies with unlimited liability. But such companies are very rare.

(vi)    A company is capable of owning, using and disposing of assets in its own name. The property  of the company is not considered as the joint property of the shareholders although the same has been purchased from the capital contributed by the shareholders.

(vii)    A company, being an artificial person, cannot sign its name on any documents. So a company functions with the help of a common seal which seal is not authentic and as such is one binding on the company.

(viii)    The management of the company is delegated to a board of directors.

(ix)    The affairs of a company are regulated by the Companies Act.

(x)    A company is not a citizen and therefore cannot enjoy the fundamental rights like right to vote which are available to citizens only.

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