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Lord justice Linley has defined a company as an association of many persons, who
contribute money or moneys worth to a common stock and employ it for a common
purpose. The common stock so contributed is denoted in money and is the capital of
the company The persons who contributed is denoted in money and is the capital
of the company .The persons who contributed is denoted in money and is the capital
of the company .the person who contribute it or to whom it belongs are members
the proportion of capital to which each member is entitled is his share.
In brief a company can be defined as an artificial (legal) person with its independent
legal entity.
Main features.
Based on the above definite, given below are the main features of company form of
ownership.
Common seal, Being an artificial person company cannot sign the documents
hence it uses a common seal on which its name is engraved putting the
common seal on papers
Transferability of share the member of a public limited company can sell his
share as to other without the consent of other shareholders yes he has to
flow the procedure laid down in the companies Act for transferring his shares
to others in case of a private limited company.
prefer to form a private company. Following are the important privileges granted to a
private company.
For forming a private company, not less than two members are required.
A private company is required to have only two directors.
Such company is not required to file prospectus or a statement in lieu of
prospectus with the register of companies.
It can commence its business immediately after incorporation
It is also not required to hold a statutory meeting nor it is require to file a
statutory report.
The directors of a private company are not required to give their consent to act
or to take up their qualification shares prior to their appointment.
A non member cannot inspect the copies of the profit and loss/c filed with to
Registrar of companies.
Limit on payment of maximum managerial remuneration does not apply to a
private company.
Restrictions on appointment and reappointment of managing director do not
apply to such company.
A private company is not required to maintain an index of it membership.
Advantages.
The important among the advantages of company form of ownership are as follows: Limited, the liability of shareholders, unless and otherwise stated is limited to the
face value of shares a held by them or guarantee give by them.
Professional management. In company business, the management is in the
hands
of the directors who are elected by the share holders and are will
experienced persons
easy by issuing
all this
provides its annual report to the shareholders as the competitors do also find
out the details of all financial data.
Legal Restrictions ,Compared to proprietorship and partnership , a company has
to comply with more legal requirements it claims considerable time and effort.
Management Mischiefs, sometimes the managers and directors
misuse the
company resources for their personal benefits .this bring losses to the company
and company is closed.
Lack of personal interest, unlike proprietorship and
affairs of a company are looked after by salaried managers since they are the
employees
commitment in the company .This may result in inefficiency and in turn losses.