Introduction :
The word ‘company‘ is derived from the Latin words ‘Com‘ and ‘Panis,’ which mean together and bread, respectively, and was first used to refer to a group of people who shared meals.
A company is a more significant form of business. A company is a term used to describe a collection of individuals who have gathered to conduct business or reach an agreement. A company is a legal body with a unique status and personality from the persons who make up its membership. It’s called a body corporate because the people who make it up are combined into one body and given legal status by incorporating it according to the law.
The term corporation is derived from the Latin corpus, which means “body.” As a result, a corporation is a legal entity that is formed by a procedure other than natural birth. Because of this, it is sometimes referred to as an artificial legal person. A company, as a legal entity, has many of the same rights and responsibilities as a natural person.
Advantages of formation of the company :
The following are some of the benefits of forming a corporation:
1. Independent corporate existence:
The company’s distinguishing attribute is its independent corporate existence. A corporation formed under the legislation is given a corporate identity. As a result, it has its own identity and assets that are different from those of its members.
2. Limited liability :
“One of the primary benefits of doing business under the corporate form of organization is the privilege of restricted liability for business debts.”
As a distinct person, the firm owns its own assets and is bound by its liabilities. A member’s obligation as a shareholder is limited to the amount contributed to the company’s capital up to the nominal value of the shares owned.
3. Perpetual succession:
An incorporated firm has perpetual succession. It’s a living thing that never dies. It indicates that the company’s membership may change from time to time, but the company’s continuity is unaffected.
The corporation shall remain the same entity, with the same privileges and immunities, estates, and belongings, despite the whole change in membership. Individual members’ deaths or insolvencies have no effect on the company’s continued existence. Members may come and go, but the business can continue indefinitely.
4. Separate property:
Because a corporation is a legal entity separate from its shareholders, it can possess, enjoy, and dispose of the property in its own name. Although its shareholders contribute funds and assets, they are not the sole or joint proprietors of its property. The company is the legal entity in which all of the firm’s assets are vested and through which it is managed, controlled, and disposed of.
5. Transferable shares :
The capital of the firm is made up of shares. The shares are considered moveable property and are readily transferable under specific conditions. The members’ shares are moveable property, according to Section 44 of the Companies Act 2013, and can be transferred from one person to another in the manner stipulated by the articles.
6. Capacity to sue and be sued :
A corporation is a legal entity that may sue and be sued in its own name. All legal actions taken against the firm must be filed in the company’s name. When a firm suffers damage, it has the right to sue in order to safeguard its good reputation. It can sue for defamatory statements made about it that are likely to harm its company or property.
7. Professional management:
The business sector can attract an increasing number of professional managers. The environment of independent functioning of managers in the organization allows young management graduates to acquire outstanding managing talents. Companies can develop the businesses that they can provide.
8. Finances:
The corporation is the only form of corporate organization that is permitted to raise money through public subscription, either through shares or debentures. Furthermore, public financial institutions are more ready to lend to corporations than to other types of commercial organizations. Companies also have the sole right to borrow money and provide security in the form of a floating charge.
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