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Introduction of
Company - Coggle Diagram
Introduction of
Company
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Definition
Section 2(20) of the Companies Act, 2013, provides that a 'company' means a company incorporated
under this Act or under any previous company law.
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Advantages of Company
- A company is a legal entity, distinct and independent of those persons who from time to time are
called its members.
- The liability of the company's members are limited
to the extent they have agreed to contribute towards the
capital of the company with reference to the number of shares and/or
the amount of guarantee respectively undertaken by them.
- As the company is having an independent personality of its own,.
- The company being a juristic person, distinct from the members constituting it, a company can acquire, own, enjoy and alienate property in its own name. As such the property would be that of the company and no member can make any claim upon it so long as the company is a going concern.
- The company being a legal entity can sue and also be sued in its own name.
- The continuity of the company and its functioning-is not effected by the death, disability or retirement of any of its members. The company continues to exist, irrespective of change in its membership. It is commonly referred to as "perpetual succession"
- Transfer of member's interest in the company can be readily attained without in any way adversely affecting its property, business, or existence.
- Transferability of the company's shares provides an element of liquidity to the investors in respect of their investment in the shares of the company and thus facilitates increased investment in the company's funds without, in any way, adversely affecting its economic stability.
- The members of the company equitably share the profit by way of dividend and the company's assets in the event of its winding up distributed in proportion of its capital respectively contributed by them.
- Shares of small denomination afford an opportunity to the small investors to invest according to their capacity.
Disadvantages of Compan
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- Separation of control from ownership
- Greater social responsibility
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- Detailed winding-up procedure
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ILLEGAL ASSOCIATION
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LIABILITY OF MEMBERS
a) Personally liable for all liabilities incurred in carrying on the business of, or by, the illegal association; and
b) Punishable with fine up to Rs.1,00,000/-
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