Characteristics of Company

Supriyo Sir
Characteristics of company

Discuss the Characteristics of a company.

Or, Write down the Features of a company.

Or, Discuss the nature of a company.

The four characteristics of the company are discussed below:

1. Ownership and Control:

A person or organization that buys one or more shares is called a shareholder. Again the shareholders are the owners of the company. In the case of a public company, minimum number of members is 7 and in the case of a private company, the number is 2. In the case of a private company, the maximum number of members (excluding employees, and shareholders) cannot be more than 50. But in the case of public companies, there is no such limit. The ownership of the company is variable as the shares are freely transferable. Shareholders do not participate directly in day-to-day operations and policy-making. The management of the company is vested in a board of directors consisting of elected representatives from among the general and equity shareholders.

2. Statutory meeting:

The company has to convene a statutory meeting for the shareholders one month after the commencement of the work of the company but within six months. It is mandatory to convene this meeting as per Section 165 of the Companies Act. This meeting is once in the life of the company.

3. Risk:

The liability of the members of the limited company is limited. This means that the shareholders of a limited liability company, limited by the share price, are liable for the company’s debt upto the amount of money they purchase. The risk of a shareholder of this national company is limited by the face value of the shares. Limited or ‘Ltd’ is added to the end of the company name to denote the limited liability of the shareholders. In case of private company, ‘Private Limited’ must be written.

4. Audit:

According to the Companies Act of 1956, auditing of company’s accounts is compulsory. It is mandatory to publish this report to the shareholders at the annual general meeting of the company after examining the accounts with a qualified auditor.

Important Questions from this Chapter:

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