Characteristics of Company

Characteristics or Features of a Company

The main characteristics of a company are as follows:

An artificial person

A company is an artificial person created by law and having a separate existence of its own.

Like a real person, it can purchase and sell the property in its own name.

It can sue (take legal action) to other person and company and it can be sued by others.

It can conduct a lawful business and enter into contracts with others.

Separate legal entity

A company is a separate legal entity from its shareholders or owners.

A company cannot be held liable for the actions of its owners and similarly a shareholder cannot be held liable for the acts of the company.

Perpetual succession

A company is created by law and only law can liquidate it.

The death, insolvency, inability or lunacy of members does not affect the life of a company.

Shareholders or members may come and go, but the company goes on forever.

Limited liability

The liability of every owner or shareholder of a company is limited to the extent of the face value of the shares purchased.

Even if, the assets of the company are not sufficient to pay the claims of the creditors, no owners or shareholders bound to pay anything more than the face or nominal value of the shares held by them.

Transfer of shares

The capital of the company is divided into a number of units, which are called shares.

These shares are transferable.

A shareholder is free to withdraw his membership from the company by transferring shares.

The holding of shares can be transferred from one person to another mainly by selling.

Common seal

Being an artificial person, the company cannot act and sign itself.

It acts through its officers.

Stamp and logo are common seal and they are the official signature of a company.

All the acts of the company are authorized by its stamp and logo (common seal).

All the documents are attested by the common seal for making valid documents.

Representative management

There is a separation between shareholders and management of a limited company.

Shareholders do not participate directly in day-to-day business activities of the company.

Therefore, shareholders elect management to represent from themselves.

These representatives manage the company on behalf of the shareholders.

They are called directors. The directors are the legal representatives of the shareholders.

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