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Слайды и текст этой презентации

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Forms of company. Advantages and disadvantages of incorporation.

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What is a company? As a group of persons, associated together to achieve some common objective. In its legal sense, the term company, as per the Companies Act, 2013, under section 2(20), is defined as “a company incorporated under the Companies Act 2013 or any previous company law.”

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Basic similar characteristics of business corporations legal personality limited liability transferable shares delegated management under a board structure investor ownership

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Advantages of Incorporation of a Company Creates a Separate Legal Entity: Company has Perpetual Succession Can own Separate Property Capacity to sue and be sued Easier access to Capital

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Creates a Separate Legal Entity This states that a company is independent and separate from its members, and the members cannot be held liable for the acts of the company, even when a particular member owns majority of shares. This was held in the case of Salomon v Salomon & Co. Ltd. (1897) AC 22.

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Company has Perpetual Succession The term perpetual succession means continuous existence, which means that a company never dies, even if the members cease to exist. The membership of a company changes from time to time, but that has no effect on the existence of the company. The company only comes to an end, when it is wound up according to law, as per the provisions of the Companies Act, 2013.

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Can own Separate Property : Since a company is termed as a separate legal entity in the eyes of law, it can hold property in its own name and the members cannot claim to be the owner of the companies property(s). The Supreme Court, in the case of Bacha F. Guzdar v CIT Bombay stated that a company being a legal person, in which all its property is vested and by which it is controlled, managed and disposed of a member cannot, ensure the companies property on its own name.

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Capacity to sue and be sued The company has the capacity of suing a person or being sued by another person in its own name. A company, though can be sued or sue in its own name, it has to be represented by a natural person and any complaint which is not represented by a natural person is liable to be dismissed in the same way in which an individual complaint is liable to be dismissed in the absence of the complainant.

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Easier access to Capital Raising capital is easier for a corporation, since a corporation can issue shares of stock. This may make it easier for your business to grow and develop. If the in the market for a bank loan, that’s another reason to incorporate, since n most cases, banks prefer and easily lend money to incorporated business ventures.