A company, under the Companies Act, refers to a legal entity that is incorporated and registered under the provisions of the specific Companies Act of a particular jurisdiction. It is an organization formed for the purpose of carrying out business activities or other lawful activities. The term "company" typically implies an incorporated business entity with a distinct legal personality and certain features, as defined by the Companies Act.
key features of a company under the Companies Act:
Separate Legal Entity: A company is legally separate from its owners and can own assets, make contracts, and go to court on its own behalf.
Limited Liability: Shareholders' personal assets are protected; they're only liable for the amount they invested in the company.
Perpetual Succession: The company continues to exist even if ownership changes or shareholders pass away.
Transferability of Shares: Ownership can be transferred by buying or selling shares.
Common Seal: The company's official signature used for important documents.
Separation of Ownership and Management: Owners (shareholders) aren't necessarily involved in day-to-day management; a board of directors handles that.
Statutory Compliance: Companies must follow rules like submitting financial statements, holding meetings, and practicing good governance.
Memorandum and Articles of Association: These are the company's rulebook, explaining its purpose and how it's run.
Corporate Governance: Ensuring ethical behavior, transparency, and accountability in company operations.
Regulation: Companies are regulated by the Companies Act, which covers their creation, functioning, management, and ending.
Advantages of company under companies act 2013:-
Certainly, here are the advantages of a company explained briefly in bullet points:
Limited Liability: Shareholders' personal assets are protected from the company's debts and liabilities.
Raising Capital: Companies can raise funds by issuing shares to investors, enabling business expansion.
Perpetual Existence: The company can continue its operations even if ownership changes or shareholders leave.
Professional Management: A board of directors oversees operations, bringing expertise and efficient decision-making.
Transferable Ownership: Shares can be bought or sold, allowing easy ownership transfer without disrupting operations.
Separation of Ownership and Control: Shareholders don't need to manage day-to-day operations, focusing on investment.
Legal Entity: The company has its own legal identity, enabling it to own property, make contracts, and sue/be sued.
Employee Benefits: Companies can provide benefits like employee stock options, attracting and retaining talent.
Access to Resources: Companies can tap into technology, skills, and facilities to enhance operations.
Access to Markets: Companies can enter capital markets for funding, enhancing visibility and opportunities.
Diversification of Risk: Ownership is divided among shareholders, reducing individual risk exposure.
Tax Benefits: Certain tax advantages are available, varying based on jurisdiction and structure.
Continuity: The company can continue its operations despite changes in ownership or management.
Brand Building: Companies can establish recognizable brands, contributing to customer loyalty and growth.
Pooling Resources: Multiple investors pool their resources, enabling larger-scale projects.
Community Impact: Companies can contribute to economic growth, job creation, and social development.
Disadvantages of company under companies act 2013:-
Complex Formation: Setting up a company involves intricate legal processes and paperwork.
Regulatory Burden: Companies must follow numerous rules, which can be time-consuming and costly.
Double Taxation: Some companies may face taxes on profits at both corporate and individual levels.
Limited Control: Shareholders often have limited say in daily operations, managed by professionals.
Conflict of Interests: Different shareholders' interests can clash, making decisions complicated.
High Initial Costs: Creating a company can be expensive due to legal and compliance fees.
Transparency Demand: Public companies must reveal sensitive data, impacting privacy.
Takeover Vulnerability: Public companies can be at risk of hostile takeovers.
Shareholder Disputes: Disagreements among shareholders can lead to conflicts.
Loss of Privacy: Public companies must disclose financial details, reducing confidentiality.
CSR Balancing: Juggling profit with social responsibility can be hard.
Ownership Dilution: Issuing more shares can reduce existing owners' stakes.
Flexibility Loss: Companies can struggle to swiftly adapt to changes. #businessstudies #youtube #new
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