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’.
Accordingly, ‘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.
In terms of the Companies Act, 2013 [Section 2(20)] “company” means a company incorporated under this Act or under any previous company law.
Lord 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.”
From the 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),