A company is a voluntary and autonomous association of certain persons with capital divided into numerous transferable shares formed to carry out a particular purpose in common.
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It is an artificial person created by law to achieve the object for which it is formed. Section (1) (i) of the Companies Act, 1956 defines company as “Company formed and registered under any f the former Companies Acts.” Thus it is an abstract person, invisible, intangible and existing only in the contemplation of law.
What is a company definition
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It can hold, purchase or sell both movable and immovable property, incur and pay debts, open a bank account in its own name and sue and be sued in the same manner as an individual. Law creates it and law only an dissolve it. Its existence is altogether independent of life of its members. Members may come and go but the company would go for ever. Transferability of shares has given perpetual succession to a company. Death, insanity or insolvency of a member or any member will not affect the existence of the company at all. A company is a legal entity quite distinct and separate from the persons who are its members.
A company can now but its shares under certain conditions. A shareholder is not the agent of the company. He cannot incur any debt so as to bind the company. They cannot bind the company by their acts. The same person can be a shareholder and a creditor of the company. The ownership is divorced from management because a joint stock company is managed by a Board of Directors elected by the shareholders.