Meaning and Definition of a Company
The word ‘company’ is derived from the Latin word
(Com=with or together; pains =bread), and it originally referred to an
association of persons who took their meals together. A company is a corporate
body and a legal person having status and personality distinct and separate
from the members constituting it.
It is called a body corporate because, the persons
composing it are made into one body by incorporating it according to the law
and clothing it with legal personality. The word ‘corporation’ is derived from
the Latin term ‘corpus’ which means ‘body’.
‘corporation’ is a legal person created by a process other than natural birth.
It is, for this reason, sometimes called artificial legal person. As a legal
person, a corporate is capable of enjoying many of the rights and incurring
many of the liabilities of a natural person.
An incorporated company owes its existence either
to a special Act of Parliament or to company law. Public corporations like LIC,
RBI, SBI etc., have been brought into existence through special Acts of
Parliament, whereas companies like Tata Steel Ltd., Reliance Industries Limited
have been formed under the Company law i.e. Companies Act, 1956 which is being
replaced by the Companies Act, 2013
In the legal
sense, a company is an association of both natural and artificial persons
and is incorporated under the existing law of a country.
of the Companies Act, 2013 [Section 2(20)] “company” means a company
incorporated under this Act or under any previous company law.
Justice Lindley has defined a company as “an association of many persons who
contribute money or money’s worth to a common stock and employ it in some trade
or business and who share the profit and loss arising there from.
The common stock so contributed is denoted in money
and is the capital of the company. The persons who contributed in it or form
it, or to whom it belongs, are members. The proportion of capital to which each
member is entitled is “share”. The shares are always transferable although the
right to transfer them may be restricted.”
above definition, it can be concluded that a company is registered association,
having its own corporate and legal personality distinct which is separate from
its members with a perpetual succession, a common seal for its signatures, a
common capital comprised of transferable shares and carrying limited liability.
(These aspects are discussed in 11thstd)
Body corporate means a corporate entity which has a
legal existence. According to section 2(11) “body corporate” or “corporation”
includes a private company, public company, one personal company, small
company, Limited Liability Partnerships, foreign company incorporated outside
India, but does not include
1. a co-operative society registered under any law
relating to co-operative societies; and
2. any other body corporate (not being a company as
defined in this Act),