Company Law
What is Company Law?
An artificial person created by law, having a separate legal entity, perpetual succession, and a common seal.
Key points
- Define a company and its essential characteristics.
- Distinguish between different types of companies.
- Understand the concept of separate legal entity and limited liability.
- Identify the key provisions of the Companies Act, 2013 relevant to company formation.
Common exam trap
Confusing a company with a partnership firm.
Definitions
- Term
Company
- Meaning
An artificial person created by law, having a separate legal entity, perpetual succession, and a common seal.
- Term
Separate Legal Entity
- Meaning
The principle that a company is a legal person distinct from its members, capable of owning property and entering into contracts in its own name.
- Term
Perpetual Succession
- Meaning
The continuity of a company's existence, unaffected by the death, insolvency, or retirement of its members.
- Term
Limited Liability
- Meaning
A condition where the financial liability of members of a company is limited to the amount of their investment or guarantee.
Learning objectives
Define a company and its essential characteristics.
Distinguish between different types of companies.
Understand the concept of separate legal entity and limited liability.
Identify the key provisions of the Companies Act, 2013 relevant to company formation.
Prerequisites
Basic understanding of legal terms.
Familiarity with business structures.
Common mistakes
Confusing a company with a partnership firm.
Overlooking the concept of separate legal entity and its implications.
Misinterpreting the restrictions on transfer of shares in private companies.
Not differentiating between a public and private company's capital-raising abilities.
Keywords
Company Law
Companies Act 2013
Separate Legal Entity
Limited Liability
Perpetual Succession
Private Company
Public Company
One Person Company
Artificial Person
Practice preview
Which of the following is NOT a characteristic of a company?…
easy
The concept of 'separate legal entity' means that a company:…
easy
Perpetual succession implies that a company:…
easy