A company can be defined as any organization that is set up by people and intended for business. It is duly registered under a law for the company act. Any company is taken to be like an assumed legal individual who has an entity in addition to legal status.
There could be various types of companies such as private and public companies and unlimited or limited companies.
Various characteristics could make up a company. In this write-up, we would throw more light on the various characteristics that a business has.
Characteristics of any Company
1- It Is A Legal Body:
A company could be taken to be an individual. This simply implies that it is a separate body from the individuals that created the group of people for business.
Just like other people from a particular country, the company as well as duties and rights handed out to it by the rules of that country. However, the business does not possess any fundamental rights. As a result, the company can conduct business, have property as well as possess other assets. A group stays a detached entity, even though a single individual or a number of shareholders own the organization.
A business group could take a loan. It is also accountable to pay its tax to a government of the country where it is run.
2- An Incorporated Organization:
The company turns into a legal body, as soon as it is listed under the act made for companies in a country. All of the conditions have to be met in order to attain a company’s legal status. Added to this, every other requirement like shareholders, share capital, directors, and others are necessary to have been arranged, before one can register any company within the law.
In spite of this, it is not necessary to have a firm registered in partnership; however, there always will be some legal advantages that it will not benefit from if you do otherwise.
3- Free will Participation:
Companies are set up following the free will participation of every member of the group. The investment brought by each member as an investment is totally voluntary.
4- Perpetual Existence:
The legal identity of a company is independent of its owners, directors, shareholders, and workers. The life of any business group is not affected by the lives or existence of those persons who are connected to the group. It would go on existing, even long after the individuals who made up the business firm.
5- Ability to Become a Party to a Contract:
For the very fact that a business is an entity of its own, it has the ability to take part in a contract with another party. Shareholders of a company cannot bind a company at all. People are able to transact business with a company by taking part in a contract with the group, or they could furthermore sign binding contracts to become employees of that business entity.
6- Shareholders have Limited Liability:
For any given business, the shareholders have something called limited liability in that company. This means that shareholders of any company are not liable if by chance the company becomes bankrupt. The losses paid from the company’s estate or assets.
7- A common Seal:
A corporation is an imitation of a person in the sense that it has a seal that equated to the autograph of a person. The corporate seal of an organization has the power to make any document lawfully binding to the company. In addition, it stands as proof that the document is authentic.
8- A Corporation Could Stand As A Trustee:
Just like an individual, a company could be a trustee as well. In spite of this, the legal organization which drew up the legal documents of the company must give approval before the company can stand as trustee.
9- Ability to Possess Property:
Just like any human being, a company also has the ability to possess its very own assets and property in its name. Shareholders or members of the company have the ability to lay claims to the property of that company, as soon as the corporation becomes permanently closed for business.
10- A Physical Structure That Is Registered:
It is essential that a company has a lawfully registered office or space from which it operates its day to day activities. For instance, organizations such as Nike and Apple began their firms in tiny rooms and such places mentioned as the physical location or office of that establishment.
11- Capital to Take Off:
One more very vital characteristic of any company is that must have capital. If there is no capital, there would be no company. A single individual could provide a company’s capital. Several members of a company could also provide the capital for the company.
12- Ability to Transfer Shares:
The shares that make up any company transfer with ease from a shareholder to other shareholders. Following the transfer of such shares, the right of ownership of the member who is handing over his shares also becomes transferred. It is not difficult to transfer a share in a public corporation. On the other hand, a number of restrictions exist when one wants to transfer shares in a private corporation. The entire share market operates on the ability to transfer shares from an individual to another.
13- You Cannot Combine Management With Ownership:
Those individuals who have shares in any company have a say in that. An individual that owns as little as one share can be termed the proprietor of that business. The management and the shareholders of a corporation might not exchange one for the other. This is because there could be a vast number of people who have shares in a company. All the same, shareholders have very important roles to play in deciding who and who become members of the management team of the business.
Shareholders appoint the director as well as the top managers of their group, based on an agreement. This management teamwork towards attaining the aims and objectives which the shareholders or owners of that company have mapped out. On the other hand, the hiring of managers at the department level as well as the hiring of other employees is a task for the managers.
14- An Artificial Citizen of the State:
For the mere fact that a business entity considered a simulated citizen of a country where it is based, it has to, as a point of duty pays its taxes, in addition to keeping to the laws and regulations of that country. That notwithstanding, it does not share in the fundamental right which human citizens of that country have. For instance, it does not have the right to vote in order to choose a political leader in a country. On the other hand, a human citizen can vote for a leader.
15- If Involved In Crime, a Corporation Could Be Held Liable:
A corporation could have a criminal case filed against it. In spite of that, a designate from the company has to represent that business during the court proceedings, as a stand-in for the entity.
16- A company has Social Obligations:
Just like other reliable nationals of any country, a corporation as well as responsibilities and obligations to the society where it operates, as well as towards its workers and staff who run the day to day activities.