Friday, 20 May 2016

Introduction and Overview of Company

The Indian Companies Act is inspired from the English Company law and it has been amended from time to time to bring about changes in the structure and framework of company law.  In India companies are governed and regulated by the Companies Act, 1956 and the Companies Act, 2013

The word Company is derived from the Latin word (Com meaning “with or together”; panis meaning bread), and was basically referred to as association of persons. With the passage of time the word gained more importance as it denotes joint stock enterprises where capital is contributed by a number of persons entitled to contribute as per its memorandum of association and its articles of association.     

A company is a body corporate and a legal entity having status and personality distinct and separate from that of the members consisting it.  It is called a body corporate as the persons composing it are made into one body by incorporating it as per the companies act and thus making it a legal person.  Similarly the word corporation is derived from the Latin term “corpus” meaning ‘body’.  Hence “corporation” or “body corporate” is a legal person created by special process of law.  It is for this reason sometimes called artificial legal person. As a legal person, a corporation is capable of enjoying may rights and liabilities of a natural person.  The incorporated company / body corporate owes its existence either from specific company legislation or special acts of parliament.  For example in India the new Companies Act, 2013 or the special act of parliament like the Life Insurance Corporation of India Act.

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