Companies Act 1956
The companies act 1956 in an Act of the parliament of India, enacted in 1956, which enable companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.
The companies Act 1956 is administered by the government of India through the ministry of corporate affairs and the office of registrar of companies, official Liquidators, public trustee, company law board, director of inspection, etc. The registrar of companies (ROC) handles incorporation of new companies and the administration of running companies.
Company is a group of persons associated together for the attainment of a common object. Such as the economic gain of its members. However,in law any association of persons for any common object can be registered as a company.
According to Justice Lindley__”A company is an association of many persons who contribute money or money’s worth to a common stock and employs it in some trade or business and who share the profit and loss arising there from”.
According to Justice Marshal of U.S.A.__ A company as”a person,artificial,invisible and existing only in the eyes of the law.
According to Indian Companies Act__“A company means a company formed and registered under this Act or an existing company”.
Thus, those associations which use the word company as a part of their names,but have not been registered as companies under the companies Act,are not companies within the meaning of the Act.
Company Characteristics/ Nature of Company
1. voluntary association: A company,as mentioned earlier,is a voluntary association of persons,i.e., it can neither compel a person to become its member nor to give up its membership. It is the personal choice of people and their lust for profit or some other objective of their own.
2. Separate legal entity: In the eyes of law, a company is regarded as an entity separated from its members, It has an independent corporate existence, the company’s money and property belongs to the company and not to the shareholders. It can hold property, make contracts and employ persons, it can sue or sued. Therefore a company can enter into contracts with the members and in the same manner the members can enter into contracts with the company.
3. Perpetual existence: A company has a perpetual succession i.e,. it neither dies nor does its life depends on that of its members. It is not in any manner affected by insolvency. Mental disorder or retirement of any of its members. It is created by a process of law and can be put to an end only by a process of law.
Members may come and go but the company can go on forever until the company is dissolved. It continues to exist even if all its human members are dead.
4. Common seal: Since a company has no physical existence, it must act through its agents and all such contracts entered into by its agents must be under the seal of the company. The common seal acts as an official signature of the company. The company’s seal is affixed on all documents executed for and on its behalf.
5. Limited liability: A company may be limited by shares or limited by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of the shares. If the face value of a share is Rs. 20 and the member has already paid Rs.10. He can be called upon to pay not more than Rs.10 during the lifetime of the company. In case of a company limited by the guarantee, the liability of the member is limited to such amount as guarantee by the member in the event of its being wind up.
6. Transferability of shares: The share of a joint stock company are freely transferable except in the case of a private limited company. Every member owning a fully paid-up shares is usually at liberty to dispose it off according to his choice. Restriction imposed by the articles on the absolute right of the members to transfer shares shall be void. In the case of private companies, transfer of shares shall not be permitted except according to the conditions laid down in the articles of association.
7. Separate property: A company can own separate property in its own name. Although its capital and assets are contributed by its shareholders, they are not the private and joint owners if its property. The company is the real person in which all its property is vested and by which it is controlled, managed and disposed of.
8. Capacity to Sue: A company can use and be sued in its corporate name. It may also inflict or suffer wrongs. It can infact do have done most of the things, which may be done by or to a human being.