Introduction
A company is a artificial person. It gets its existence when it is incorporated by the issue of a certificate of incorporation by the registrar of companies. It is a corporate personality having an existence, which is independent of and distinct from from the members of the shareholders of the company. It is a legal entity having a perpetual succession. Being an artificial person, it has practically an unending life. It's life doesn't depend on the life of its members. Even if all of them die, the company continues to live. The company, being a legal person, is capable of suing and being sued. A company, having existence independent of its members, the property of company is it's proper. The liability of its members is limited, to the extent of the value of share or shares which a particular member hold or purchase.
The silent features of company are :
1.Independent Corporate Existence
Section 2(20) of the companies Act, 2013 defines "company" as a company incorporated under this Act or under any previous company law.
A company comes into existence on its incorporation, i.e., on the issue of certificate of incorporation by the registrar. It has corporate existence independent of its members.
On incorporation, the company becomes a body corporate having perpetual succession. It is a person different from its members. It's assets do not belong to the members, nor the liabilities of company are liabilities of members also the depts of company have to be paid by the company.
The feature of separate independent existence of a company may be illustrated by referring to the case of salomon v. Salomon and co. Ltd.
The question here was does a company whose sole subscribers are from single family and if the debenture holder is head of family which in this case was Salomon should creditors pay their unsecured payment. It was observed :
"It is difficult to understand how a body corporate thus created by Statute can lose its individuality by issuing the bulk of its capital to one person. The company is at law a different person altogether from the subscribers of the memorandum; and though it may be that after incorporation the business is precisely the same as the before, the same person are managers and the same hands receive the profits, the company is not in law their agent or trustee. "
Referring to one-man company as in Salomon's case, it was observed by the Bombay High Court:
"Under the law an incorporated company is a distinct entity... and it is not permissible or relevant to enquire whether the directors belonged to the same family or whether it is..a 'one-man company'. "
2. Perpetual Succession
A company being an artificial person has a perpetual succession, i.e., it continues to live practically forever. Unlike company having a distinct legal personality continues to live in spite of the death, insolvency, or some other incapacity of the members. The membership of the company may change from time to time, without in any way affecting the continuous existence of the company.
3. It can sue and be sued
A company is a Juristic person, i.e., it has a distinct legal personality. Being a legal person, a company can sue and be sued in its own name.
4. It has its own seperate property
The property of the company belongs to the company itself, rather than to its members. A company is a legal entity and, therefore, it has a right like any other person to own, enjoy or dispose of its property without any specific rights of the shareholders in respect of such property. A shareholder merely contributes to the capital of the company by investing certain amount in it. His right is only to some benefit or return in lieu of such investment he is not a part owner of a company or its property. Even if the shares are transferred the company remains unaffected.
5. Limited liability of the members
The debts of the company have to be paid by the company itself rather than by its members. In case of a company limited by shares as is generally the case, the liability of any member of the company is limited to the extent of the nominal value of the share held by him. As a general rule, no member of a company can be made liable to pay more than the amount unpaid on the shares held by him whether during the active life of the company or at the time of time of its winding up.
The feature of limited liability of a company is of advantage to each member of the company insofar as he can't be required to pay more than the nominal value of shares held by him.
6. Transferable Shares
Section 44 of the Companies Act, 2013 recognizes the shares or other interest of any member in a company as movable property, transferable in a manner provided by the articles of the company.
According to the Sale of Goods Act, the term "goods" include stocks and shares, and therefore, the shares held by a person could be sold as goods. When the shares are transferred, the transferee becomes a member of the company in place of the transferor.
Common seal for the transfer of shares has been made optional after the amendment of 2015.
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