Feature / Characteristics of the company
The feature of the company helps us to distinguish between between a company and the other business associations.
In general , therefore if an association does posses all the following feature ,it can be called as company and if not ,it is not a company.
- Separate Legal entity
Company is independent from its members . once company is incorporated ,it is treated as the legal person.
The company is capable to enjoy all the right to be enjoyed by the natural person with certain exception.
Member can not treat companies assets as their own
Salomon vs Salomon & Co Ltd is the leading case regarding the legal existence of the company.
- Limited liability
The company being separate legal entity ,its member are not liable for the debt.
The shareholders of the company are only liable to that extent of held shares.
However, companies may be formed with unlimited liability of members or members may guarantee particular amount .
In such cases of unlimited liability companies ,members are liable till each paisa has been paid off.
Unless wrong doing and fraud committed ,Board of directors and other staff of the company can not be held liable for the loss suffered by the company.
- Perpetual Succession
The shareholders or members of the company may come and go but the company run continuously irrespective of the change of shareholders or directors.
Death of existing shareholders does not affect the life of the company.
- Common seal
Seal of the company means seals used by the it for various purposes.
It is the signature of the of the company
When common seal is affixed in the letter or document ,it acknowledges that company has accepting the content mentioned therein.
Section 26 of the companies Act ,2063,provides provision regarding use of seal.
- Separate Property
Company is capable of owing ,enjoying and disposing of property in its own name.
Although its capital and assets are contributed by its shareholders ,they are not the private and joint owner of its property.
- Capacity to sue and to be sued.
If aggrieved by some wrong doing ,it may sue or be sued its directors ,staffs ,shareholders ,others in its own name .
Company can sue its own staff or officials as well as shareholders and they can sue their own company.
- Transferability of share
A share is right to a specified amount of share capital of a company carrying with it certain rights and liabilities.
With certain exception ,share of the company are freely transferable as mentioned in the article of association of the company
- Management by professional / Representation
As it is quite impossible to control and manage company by the shareholders ,due to the large size of the public companies .
Therefore ,company provided provision regarding the board of directors of the company.
Board of directors are the representative of the shareholders as they are elected in the general meeting.
- Borrowing Capacity
Company can borrow loan and obtain other credit facilities to meet its business or trade target.
Neither the shareholders nor the directors are personally or collectively liable for borrowing by the company.
- Imposition of the tax
Higher tax is imposed on income of the company
No tax rebate or exemption to the income of the company as availed by the individual company.