Before reading this article on the features or characteristics of a company, I want to ask myself- Is a Company a Property of the Shareholders ? The traditional view that the company is the property of the shareholders is now an exploded myth. A company according to the new socioeconomic thinking, is a social institution having chines and responsibilities towards the community in which it functions. Maximization of social welfare should be the legitimate goal of a company and shareholders should be regarded not as proprietors of the company, but as suppliers of capital.
The Essential Features Or Characteristics Of A Company (incorporated) can be summarized as follows:
1. Registration: A company comes into existence only alter registration under the Companies Act. But a Statutory Corporation is formed and commence business as notified or stated m the Act and as passed in the Legislature. In case of partnership registration is not compulsory.
2. Voluntary Association: A company is an association many persons on a voluntary basis. Therefore a company, formed by the choice and consent of the members.
3. Legal personality: A company is regarded by a single person. It has a legal personality. This rule applies even in the case of “One-man Company.”
4. Contractual capacity: A shareholder of a company, in its individual capacity, cannot bind the company in a way. The shareholder of a company can enter into any contract with the company and can be an employee of the company.
5. Management: A company is managed by the board of Directors, whole time Directors, Managing Director or Manager. These persons are selected in the manner provided by the Act and the Articles of Association of the company. A shareholder, as such, cannot participate in the management.
6. Capital: A company must have a capital, otherwise it cannot work.
7. Permanent existence: The company has Perpetual’ succession. The death or insolvency of a shareholder does not affect its existence. A company comes into end only when it is liquidated according to provisions of the Companies Act.
8. Registered Office: A company must have a registered office.
9. Common Seal: A company must have a Common Seal.
10. Limited Liability: The liabilities of shareholder of a company are usually limited. The creditors of a company are not creditors of individual shareholders and a decree obtained against a company cannot be executed against any shareholders. It can only be executed against the assets of the company.
11. Transferability:- The shareholder of a company can transfer its share and ordinarily the transferee becomes, a member of the company.
12. Statutory Obligations: A company is required to comply with various statutory obligations regarding management, e.g., filing balance sheets, maintaining proper account books and registers etc.
13. Not a citizen: A company is an artificial person, not a natural person. Therefore a company is not a Citizen, although it may have a Domicile.
14. Residence: A company has a residence (for taxation and other purpose). A company does not possess any fundamental rights.
15. No fundamental rights: Though a company has no fundamental rights, it can challenge a law as void if the law happens to violate fundamental rights of citizens. In order to succeed the company must prove that the impugned law is expropriatory of a citizen’s property.
16. Social Objective: The present view as regard the legal nature of Company Law is that the Company is a social institution having duties and responsibilities toward the community, its workers, the national economy and progress.
17. Centrally Administrated: The administration of Company Law is entrusted to the Central Government.
18. “Lifting the veil” of the company.