COMPANY-DEFINITON & MEANING

INTRODUCTION:
The rapid growth of trade, commerce and industry in modern times has brought
about a number of changes in the size of a firm. With the expansion in the scale of
operation of business undertakings, enterprises organized on the basis of sole
proprietorship, or partnership found themselves unequal to the task of meeting all
the capital requirements of the present day large scale business. Thus, a new form of
business organization came into existence and this is called a 'Joint Stock Company'
or simply a company.
The word 'company' is derived from the Latin words, 'com' which means
'together' and the word 'panies' which means 'bread'. A company is thus an association
of persons who took their meal together. In simple language the term company means
an association of persons formed for some common purpose. When a few person form
a company for the purpose of some business of profit it is called a joint-stock
company. The persons forming the company are called 'share holders' The liability of
the members of the company is usually limited.

DEFINITION
The Indian Companies Act 1956 section 3(1) defines a company as "a company
formed and registered under this act or under other previous Acts". This is not a
comprehensive definition A more popular definition is the one given by theLord
Justice Lindley. According to him a company is "an association of many persons who
contribute money or money's worth to a common stock and employed it in some trade
or business and who share the profit or loss arising there from. The common stock so
contributed is denoted in money and is the capital of the company. The persons who
contributed it or ti whom it belongs are members The portion of capital to which each
member is entitled is his share The shares are always transferable although the right to
transfer them may be restricted".

Company vs Corporation:
All corporations are companies, but not all companies are corporations. Company is a
much broader term than corporation, and it encompasses a lot of different types of
businesses. These are a few of the key differences between a company and a
corporation.

Company:
A company is any entity that engages in business.
Companies can be structured in different ways. For example, your company can be a
sole proprietorship, a partnership, or a corporation. Depending on which different type
of company you're dealing with, it may be owned by one person or a group of people.
Liability in most types of company is assumed by the owners, and can either be
limited or unlimited depending on the type.

Corporation:
Corporations are different from other types of company in that they exist separately
from their legal owners. That means that liability is separate as well. With
corporations, liability is limited to the holding of shares. In fact, shareholding is a
major difference between corporations and other types of companies. With
corporations, the shareholders each own a small piece of the larger corporate structure.
Most companies are typically owned by one or a small handful of people, while
corporations can be owned by thousands of different individuals.

Characteristics of a Company
A company as an entity has many distinct features which together make it a unique
organization. The essential characteristics of a company are following:

Separate Legal Entity:

Under Incorporation law, a company becomes a separate legal entity as compared to its
members. The company is distinct and different from its members in law. It has its own seal
and its own name, its assets and liabilities are separate and distinct from those of its members.
It is capable of owning property, incurring debt, and borrowing money, employing people,
having a bank account, entering into contracts and suing and being sued separately.

Limited Liability:
The liability of the members of the company is limited to contribution to the assets of the
company upto the face value of shares held by him. A member is liable to pay only the
uncalled money due on shares held by him. If the assets of the firm are not sufficient to pay
the liabilities of the firm, the creditors can force the partners to make good the deficit from
their personal assets. This cannot be done in the case of a company once the members have
paid all their dues towards the shares held by them in the company.

Artificial legal person :

A company is an artificial legal person in .he sense that on the one hand, it is created by a
process other than natural birth and does not possess the physical attributes of a natural
person, and on the other hand, it is clothed with many of the rights of a natural person. It is
invisible, intangible immortal (law alone can dissolve it) and exists only in the eyes or law. It
has no body, no soul, no conscience, neither it is subject to the imbecilities of the body. It is
because of these physical disabilities that a company is called an artificial person. But it
cannot be treated as a fictitious entity because it really exists.

Perpetual Succession:
A company does not cease to exist unless it is specifically wound up or the task for which it
was formed has been completed. Membership of a company may keep on changing from time
to time but that does not affect life of the company. Insolvency or Death of member does not
affect the existence of the company.

Separate Property:
A company is a distinct legal entity. The company's property is its own. A member cannot
claim to be owner of the company's property during the existence of the company.

Transferability of Shares:
Shares in a company are freely transferable, subject to certain conditions, such that no shareholder is permanently or necessarily wedded to a company. When a member transfers his
shares to another person, the transferee steps into the shoes of the transferor and acquires all
the rights of the transferor in respect of those shares.

Common Seal:
A company is an artificial person and does not have a physical presence. Thus, it acts through
its Board of Directors for carrying out its activities and entering into various agreements.
Such contracts must be under the seal of the company. The common seal is the official
signature of the company. The name of the company must be engraved on the common seal.
Any document not bearing the seal of the company may not be accepted as authentic and may
not have any legal force.

Capacity to sue and being sued:

A company can sue or be sued in its own name as distinct from its members.

Separate Management:
A company is administered and managed by its managerial personnel i.e. the Board of
Directors. The shareholders are simply the holders of the shares in the company and need not
be necessarily the managers of the company.

One Share-One Vote:

The principle of voting in a company is one share-one vote i.e. if a person has 10 shares, he
has 10 votes in the company. This is in direct distinction to the voting principle of a co4

operative society where the "One Member - One Vote" principle applies i.e. irrespective of
the number of shares held, one member has only one vote.

CONCLUSION:
A parent company is a company that owns enough voting stock in another firm to control
management and operations by influencing or electing its board of directors; the second
company being deemed as a subsidiary of the parent company. The definition of a parent
company differs by jurisdiction, with the definition normally being defined by way of laws
dealing with companies in that jurisdiction.

REFERENCES:
1. Black's Law and lee Dictionary. Second Pocket Edition. Bryan A. Garner, editor.
West. 2001.
2. "Company legal definition of company". TheFreeDictionary.com.