Salient Features
1. Separate legal entity
A company is a person created by law. It means that it comes
into existence only by complying with all formalities prescribed
under the Companies Act, 1956. It enjoys a separate personality of
its own, different from the members composing it. This enables a
company to enter into valid contracts with others including its
members and deal with the property in any way it likes. It can sue
others in its own name and be sued in its own name by others
including its members.
2. Perpetual Succession- Continuity of Life
“Members may come and go but the company can go on
forever” (Lord Gower). This is because company’s existence does
not depend upon the existence of even promoters who were
instrumental in its formation. Neither change in the membership of
the company nor the death of its members has any impact on the
continuity of its life.
3. Common Seal
Though the separate personality of the company is legally
recognised, it needs human agency to act. Obviously it cannot sign.
Any contract entered into by a company, to be valid, must bear the
official seal of the company.
4. Limited Liability
The liability of the members of a company is generally
limited to the value of shares. When once the full value of the shares
is paid up, there is no more liability for the shareholders. The feature
of limited liability attracts a large number of investors to subscribe
to the shares of the company.
5. Easy Transferability of Shares
In the case of public limited companies, their fully paid
shares can be transferred to others without any difficulty. However,
in the case of private limited companies, the right to transfer the
shares is subject to certain restrictions.
1. Separate legal entity
A company is a person created by law. It means that it comes
into existence only by complying with all formalities prescribed
under the Companies Act, 1956. It enjoys a separate personality of
its own, different from the members composing it. This enables a
company to enter into valid contracts with others including its
members and deal with the property in any way it likes. It can sue
others in its own name and be sued in its own name by others
including its members.
2. Perpetual Succession- Continuity of Life
“Members may come and go but the company can go on
forever” (Lord Gower). This is because company’s existence does
not depend upon the existence of even promoters who were
instrumental in its formation. Neither change in the membership of
the company nor the death of its members has any impact on the
continuity of its life.
3. Common Seal
Though the separate personality of the company is legally
recognised, it needs human agency to act. Obviously it cannot sign.
Any contract entered into by a company, to be valid, must bear the
official seal of the company.
4. Limited Liability
The liability of the members of a company is generally
limited to the value of shares. When once the full value of the shares
is paid up, there is no more liability for the shareholders. The feature
of limited liability attracts a large number of investors to subscribe
to the shares of the company.
5. Easy Transferability of Shares
In the case of public limited companies, their fully paid
shares can be transferred to others without any difficulty. However,
in the case of private limited companies, the right to transfer the
shares is subject to certain restrictions.
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