17 Essential Features of a Company

The principal features of an incorporated company can be summarized as follows:

1. Registration:

A company comes into existence only after registration under the Companies Act. But a Statutory Corporation is formed and commence business as notified or stated in the Act and as passed in Legislature. In case of partnership, registration is not compulsory.


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2. Voluntary Association:

A company is an association of many persons on a voluntary basis. Therefore a company is formed by the choice and consent of the members.

3. Legal Personality:


A company is regarded by law as a single person. It has a legal personality. This rule applies even in the case of “One-man Company.”

4. Contractual Capacity:

A shareholder of a company, in its individual capacity, cannot bind the company in any way. The shareholder of a company can enter into contract with the company and can be an employee of the company.

5. Management

A company is managed by the Board of Directors, whole time Directors, Managing Directors or Manager. These persons are selected in the manner provided by the Act and the Articles of Association of the company. A shareholder, as such, cannot participate in the management.

6. Capital

A company must have a capital, otherwise it cannot work.

7. Permanent Existence


The company has perpetual succession. The death or insolvency of a shareholder does not affect its existence. A company comes into end only when it is liquidated according to provision of the Companies Act.

8. Registered Office

A company must have a registered office.

9. Common Seal

A company must have a Common Seal.

10. Limited Liability

The liabilities of shareholder of a company are usually limited. The creditors of a company are not creditors of individual shareholders and a decree obtained against a company cannot be executed against any shareholders. It can only be executed against the assets of the company.

11. Transferability


The shareholder of a company can transfer its share and ordinarily the transferee becomes a member of the company.

12. Statutory Obligations

A company is required to comply with various statutory obligations regarding management, e.g., filing balance sheets, maintaining proper account books and registers etc.

13. Not a Citizen

A company is an artificial person, not a natural person. Therefore a company is not a citizen, although it may have a Domicile

14. Residence

A company has a residence (for taxation and other purpose). A company does not posses any fundamental rights.

15. No Fundamental Rights

Though a company has no fundamental rights, it can challenge a law as void if the law happens to violate fundamental rights of citizens. In order to succeed the company must prove that the impugned law is expropriator of a citizen’s property.

16. Social Objective

The present view as regard the legal nature of Company Law is that the Company is a social institution having duties and responsibilities toward the community, its workers, the national economy and progress.

17. Centrally Administrated

The administration of company Law is entrusted to the Central Government.

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