A company is a type of business. Organization which makes goods or services in an organized manner and sells them to the public for profit.
It is a legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial
Company abbreviated as Co.
It is a natural legal entity formed by the association and group of people to work together towards achieving a common objective.
Features of Company
- Incorporated Association: It is an incorporated association of persons created by the law of the country. In India, companies are formed and registered under the Companies Act 1956. Incorporation requires registration of formal documents with the Registrar of Companies.
- Separate Legal Entity: It has a separate legal entity and is not affected by changes in its membership.
- Limited Liability: The liability of every shareholder is limited to the amount he has agreed to pay to the company on the shares allotted to him
- Not a citizen: A company is not a citizen in the same sense as a natural person is, though it is created by the process of law. It has a legal existence but does not enjoy the citizenship rights and duties as are enjoyed by the natural citizens.
- Maintenance of Books: A limited company is required by law to keep a prescribed set of account books and any failure in this regard attracts penalties.
- Periodic Audit: A company has to get its accounts periodically audited through the chartered accountants appointed for the purpose by the shareholders on the recommendation of the board of directors.
- Right of Access to Information: the right of the shareholders of a company to inspect its books of account, with the exception of books open for inspection under the Statute, is governed by the Articles of Association. The shareholders have a right to seek information from the directors by participating in the meetings of the company and through the periodic reports.
- Transferability of Shares: The capital is contributed by the shareholders through the subscription of shares. Such shares are transferable by its members except in the case of a private limited company, which may have certain restrictions on such transferability
Difference between Public Ltd. & Private Ltd.
| Features | Public limited company | Private limited company |
| Minimum members | 7 | 2 |
| Minimum directors | 3 | 2 |
| Maximum members | Unlimited | 200 |
| Minimum capital | 500000 | 100000 |
| Invitation to public | Yes | No |
| Issue of prospectus | Yes | No |
| Quorum at AGM | 5 Members | 2 Members |
| Certificate for commencement of Business ( Mandatory) | Yes | No |
| Term used at the end of name | Limited | Private Limited |
| Managerial remuneration | No restriction | Can not exceed more than 11% of Net Profits |
| Statutory meeting (Mandatory) | Yes | No |