Company is an artificial person created under the Indian Companies’ Act,2013. There are various types of companies which include Private Limited Company, Public Limited Company, One Person Company (OPC) and Section 8 Company i.e. Not for Profit Company.
Company form of business can be understood as an association of persons formed for the purpose of carrying on some business or undertaking. A company is a body corporate having separate legal identity having status separate from members constituting it.
Why choose Company form of Organisation?
As you know that the sole proprietorship and partnership forms of organisation could not meet the growing needs of huge capital and managerial skills required for increased scale of business and growing economic activities. The liability of owner/owners of these organisations is unlimited. In order to overcome these problems a new form of business organisation known as company came into existence.
-Artificial legal person
A company is an artificial person as it is created by law. It has almost all the rights and powers of a natural person. It can enter into contract. It can sue in its own name and can be sued.
A company has an independent and separate existence distinct from its shareholders. Changes in its membership due to death, insolvency etc. does not affect its existence and its continuity
The liability of the shareholders of a company is limited to the extent of face value of shares held by them. No shareholder can be called upon to pay more than the face value of the shares held by them. At the most the shareholders may be asked to pay the unpaid value of shares.
· Transferability of shares:
The shares of the company are easily transferable. The shares can be bought and sold in the stock market.
Only when the Company is properly constituted under the Act and the certificate of Incorporation has being obtained from the Registrar of Companies, it can be duly registered. The following are the basic details needed for formation of Company.