Thursday, September 13, 2018

ELEMENTS OF COMPANY LAW

ELEMENTS OF COMPANY LAW



INTRODUCTION :

Industrial has revolution led to the emergence of huge scale enterprise businesses. These organization require massive investments and the hazard involved could be very excessive. Limited sources and unlimited legal responsibility of partners are essential limitations of partnerships of partnerships in undertaking big business. Joint Stock Company shape of business company has come to be extraordinarily popular because it gives a strategy to Overcome the constraints of partnership business. The Multinational businesses like Coca-Cola and, General Motors have their buyers and clients unfold at some point of the sector. The large Indian Companies can also encompass the names like Reliance, Talco Bajaj Auto, Infosys Technologies, Hindustan Lever Ltd., Ranbaxy Laboratories Ltd.,and Larsen and Tubro etc.

MEANING OF COMPANY :


Section 3 (1) (i) of the Companies Act, 1956 defines a company as “a company formed and registered under this Act or an existing company”. Section 3(1) (ii) Of the act states that “an existing company means a company formed and registered under any of the previous companies laws”. This definition does not reveal the distinctive characteristics of a company. According to Chief Justice Marshall of USA, “A company is a person, artificial, invisible, intangible, and existing only in the contemplation of the law. Being a mere creature of law, it possesses only those properties which the character of the creation of its creation confers upon it either expressly or as incidental to its very existence”.

Another comprehensive and clean definition of an agency is given by using Lord Justice Lindley, “A corporation is meant an affiliation of many folks who make a contribution cash or cash’s well worth to a not unusual stock and hire it in a few change or commercial enterprise, and who share the income and loss (as the case can be) arising therefrom. The commonplace inventory contributed is denoted in money and is the capital of the enterprise. The persons who make contributions it, or to whom it belongs, are contributors. The percentage of capital to which every member is entitled is his share. Shares are continually transferable despite the fact that the right to transfer them is regularly extra or less limited”.

CHARACTERISTICS OF A COMPANY :

                                                            1. Incorporated association :

 A corporation is created while it's far registered beneath the Companies Act. It comes into being from the date mentioned within the certificates of incorporation. It may be referred to on this connection that Section 11 offers that an affiliation of more than ten people wearing on enterprise in banking or an association or greater than twenty persons sporting on any other kind of enterprise needs to be registered underneath the Companies Act and is deemed to be an unlawful association, if it is not so registered.

2. Artificial legal person :

An employer is a synthetic person. Negatively talking, it is not a natural individual. It exists inside the eyes of the law and can not act on its own. It has to behave thru a board of directors elected via shareholders. It becomes rightly talked about in Bates V Standard Land Co. That: “The board of administrators is the brains and the best brains of the enterprise, which is the body and the organization can and does act best via
them”.

3. Separate Legal Entity : 

A corporation has a legal wonderful entity and is impartial of its participants. The creditors of the organization can recover their cash only from the company and the property of the company. They cannot sue individual members. Similarly, the business enterprise isn't in any manner chargeable for the character debts of its individuals. The belongings of the organization are to be used for the advantage of the company and nor for

4. Perpetual Existence :

An agency is a strong shape of business enterprise. Its life does no longer depend upon the loss of life, insolvency or retirement of all or any shareholder (s) or director (s). Law creates it and regulation on my own can dissolve it. Members can also come and move but the organization can move on forever. “During the war, all the member of 1 non-public organization, even as in popular assembly, had been killed by means of a bomb. But the organization survived; no longer even a hydrogen bomb ought to have destroyed i”. The company may be as compared with a flowing river in which the water continues on converting continuously, nevertheless, the identification of the river remains equal. Thus, a business enterprise has a perpetual life,
regardless of changes in its club.

5.Common Seal :

As turned into talked about earlier, an organization being a synthetic individual has no frame similar to herbal person and as such, it cannot sign documents for itself. It acts via an herbal character who's called its administrators. But having a legal personality.

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