Section 2(20) of the companies Act2013 provides that “Company means a company incorporated under this Act or under any previous company Law.”

Characteristics of a Company 1. Incorporated Association 2. Separate legal entity Saloman vs. Saloman and company Ltd.(1897) 3. Limited Liability Limited by share, Limited by guarantee without share capital, Limited by guarantee with share capital, unlimited company unlimited company Separate Property Macura vs. Northern Assurance co. Ltd.(1925)

Perpetual Succession Transferability of shares Common seal It is made optional to have common seal in its absence authorisation can be done by 2 directors or by one director and CS where ever a company has appointed a company secretary. Company to sue and be sued 9. A company is not a citizen

Advantages of corporation Artificial legal person Limited liability Prepetual Succession Transferability of shares Infinite membership Permanency of capital and protection to creditors Mobilisation to huge resources Separate property Ease in control and management Capacity to sue

Disadvantages of corporation Formalities Corporate disclosures Loss of privacy Detailed winding up procedures Control by few More tax burden in certain cases Possibility of frauds

Lifting up of corporate veil Common Law Exceptions Determination of character Daimler Co. Ltd. V. Continental Tyre and Rubber Co. Ltd.(1916) Where company is a sham Prevention of fraud or improper conduct Gilford Motor Co. Ltd V. Horne Where the company is acting as an agent of the shareholders Protection of revenue Avoidance of welfare legislation Punishment of contempt of court Ascertaining true nature of transaction if alleged as sham Determination of technical competency 10. Formation of subsidiary company to act as an agent

Statutory Exceptions Mis-statements in Prospectus Mis-description of company’s name Failure to refund application money Investigation of ownership of company Fraudulent conduct Liability for ultra vires Acts

Distinction between Companies and Partnership firm