4. •Association of persons
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A company is an association of people come together with common motive.
In private limited company should have 2 people and public limited company
should have 7 people to get registered. One person company only one.
In private ltd share holder should not be more than 200 and in public limited
no limit.
5. • Independent legal entity
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The company is created under law, so it has separate legal entity apart from members.
The company is not bound by the act of members and member do not act as a agent .
As member can hold shares of company , life of company is independent.
Company can sue others, can be sued by others.
6. • Limited Liability
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The liability of shareholders is limited to the shares.
In case of company incurs huge liabilities , the shareholders can pay unpaid balance
on their shares.
The debt of company in its own name and the shareholders will not be personal liable
for it.
Share holder of a limited company have unlimited liability.
The liability of members is limited to their guarantee, it is limited to the guaranteed
amount.
7. • Common seal
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A company artificial person can not put its signature.
The company must have a seal and get its name on it.
The seal of company is affixed on all important documents and contracts as a
signature .
The directors must witness the seal.
8. • Transferability of shares
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The shares of the company can be transferred by its shareholders.
Whenever the member wants to sale the shares they can follow the process.
Under article of association , company can put certain restrictions on the transfer of
shares but it can not stop.
However private company can put more restrictions on transferability of shares ,
virtually making it zero
9. • Separation of Ownership and management
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The shareholders of the company are widely scattered .
A shareholder may like to invest money but may not interested in its management the
companies are managed by the board of Directors.
The ownership and management are in two are in two separate hands . Share holders
donthave right to participate in company management.
The right to manage company affairs is vested in the directors who are elected
representative of the shareholders.
10. • Perpetual Existence
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The company has permanent existence . The shareholders may come or go but the
company will go forever.
The company is not affected by death or lunacy or insolvency of its shareholders.
The company may change shareholders but company will be continued .
11. •Corporate finance
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A joint stock company, generally raises large amount of funds . The capital is divided
into shares of small denomination.
A large no of persons purchase shares and contributes to the capital of the company.
Since there is no limit on numbers of maximum members in public companies , large
amount of funds can be raised .
12. •Centralized and delegated management
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A joint stock company is an autonomous and self governed body .the share holders
being large In numbers can look day to day activity.
They elect directors in general body meting for managing the company. All policies are
decided by vote .
The centralized management and demographic functions brings in unity of action.
13. • Publication of Accounts
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Company required to file annual statements with the registrar of companies at end of
financial year.
The annual statement are available for inspection in the office of the registrar.
Thank You
