Companies Act Essay example

881 Words Sep 13th, 2012 4 Pages
THE COMPANIES ACT, 1956
DEFINITION AND NATURE OF A COMPANY

Learning Objectives
At the end of this chapter, you will be able to
• Identify the meaning and nature of a company
• Identify the important characteristics of a company
Introduction
Today, we will begin with the Companies Act that was passed in 1956.
In the lecture of today we will discuss the meaning and nature of a company.
Do you know what do we mean by company?
In simple words, a company can be defined as a group of persons associated together for the purpose of carrying on a business, with a view to earn profits. The word ‘Company’ is an amalgamation of the Latin word ‘Com’ meaning “with or together” and ‘Pains’ meaning “bread”. Thus, a company is nothing but a
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The common stock so contributed is denoted in money and is the capital of the company. The persons who contribute it or to whom it belongs are members. The proportion of capital to which each member is entitled is his share. The shares are always transferable although the right to transfer is more or less restricted.”
The Supreme Court of India has held in the case of State Trading Corporation of India v/s CTO that a company cannot have the status of a citizen under the Constitution of India.
Let us learn about its important characteristics.
Characteristics of a Company
A company as an entity has several distinct features, which together make it a unique organization. The following are the defining characteristics of a company: -
Separate Legal Entity
On incorporation under law, a company becomes a separate legal entity as compared to its members. The company is different and distinct from its members in law. It has its own name and its own seal, its assets and liabilities are separate and distinct from those of its members. It is capable of

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