Company - Definition - Law Dictionary Home Dictionary Definition company

Definition :

Company [fr. compagnia, Ital., which word is still printed on Bank of England notes as 'compa'], a body of persons associated for purposes of busi-ness, sometimes, but not now so frequently as some years ago, styled a Joint Stock Company.

A company has its origin either (1) in a charter, as the Bank of England and many insurance companies; or (2) in a special Act of Parliament, with which, as authorizing an undertaking of a public nature such as a railway, the Companies Clauses Consolidation Act, 1845 (8 & 9 Vict. c. 16), is necessarily incorporated; or (3) in registration under the Companies Acts, 1862 and subsequent Acts, now consolidated into the (English) Companies Act, 1925 (19 & 20 Geo. 5, c. 23).

By s. 13 of the Act of 1925 (1) on the registration of the memorandum of a company the registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited. (2) From the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability of the members to contribute to the assets of the company in the event of its being wound up as in mentioned in the Act.

Companies having a share capital are not entitled to commence business before the registrar has delivered a certificate that the company is so entitled. This does not apply to private companies or to any company registered before 1901 or any company registered before 1st July, 1908, which has not issued a prospectus for public subscription of shares, see s. 94.

The main distinction between ordinary partnerships for business purposes and company partnerships is that a duly constituted company is a 'person' in law (see CORPORATION), while a mere partnership is not a legal entity, although the partners may sue and be sued in the firm's name, and the consequence is that in ordinary partnerships the whole property of each partner is liable for the debts of the partnership, whereas in limited company partnerships the liability of the partner'or shareholders, as they are called'is limited either by the charter, Act of Parliament, or memorandum of association. For though companies may be and have been registered with unlimited liability since that principle was first, in 1855, applied to ordinary companies, so few unlimited companies now remain, since the conversion of unlimited into limited companies was allowed in 1879, and see now s. 16 of the Companies Act, 1929, that unlimited companies may be practically disregarded. But if a limited company carries on business for more than six months after with less than seven members, each member having knowledge of the reduction below the minimum becomes severally liable for the whole of the debts contracted during the period of reduction. In the case of private companies the minimum number is two. [(English) Companies Act,1929, s. 28]

Before the 1929 Act, the Act of 1862 had been frequently amended, chiefly as the result of close and careful expert examination as to the best means of remedying certain defects in the working of the Acts which enabled persons to make use of them for dishonest purposes. The Act of 1929, by ss. 357 and 358, requires registration of every company, association or partnership of more than ten persons for banking and of more than twenty persons for carrying on any other business having for its object the acquisition of gain, unless it be formed under special Act of Parliament, or letters-patent, or be a mining company subject to the jurisdiction of the Stannaries (see STANNARY).

The first s. provides for incorporation and is as follows:--

2. (1) Any seven or more persons or where the company to be formed will be a private company, any two or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without liability.

(2) Such a company may be either--

(i) A company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed a 'company limited by guarantee'); or

(ii) A company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act termed a 'company limited by guarantee'); or

(iii) A company not having any limit on the liability of its members (in this Act termed an 'unlimited company').

Companies incorporated outside Great Britain which carry on business within Great Britain are subject to Part XI. (ss. 343-353) of the (English) Companies Act, 1929. This part of the Act applies to all such companies which have established or establish a place of business in Great Britain in extension of s. 74 of the Companies (Consolidation) Act, 1908, which only applied to companies establishing a place of business here after 1st April, 1909. The meaning of establishing a place of business was discussed in Lord Advocate v. Huron & Erie Loan Co., 1911 SC 612, see also s. 90 as to charges by such companies or acquired by them.

Companies limited by shares or by guarantee must add the word 'limited' after their name whenever used, but in some cases the licence of the Board of Trade to dispense with limited may be obtained, see (English) Companies Act, 1929, s. 18. All companies subject to the Act must have a registered office (s. 92, ibid.). As to name, see ss. 17 to 19.

As to registration under the (English) Companies Act, 1929, of companies not formed under that Act, see ss. 321-336 ibid.

Consult Palmer; See ASSOCIATION; DIRECTORS; FOREIGN COMPANY; PRIVATE COMPANY; SUBSIDIARY COMPANY; STANNARY.

Company means--

(i) any Indian company, or

(ii) any association, whether incorporated or not and whether Indian or non-Indian, which is or was assessable or was assessed as a company for the assessment for the year ending on the 31st day of March, 1948, or which is declared by general or special order of the Central Board of Revenue to be a company for the purposes of this Act, State of Uttar Pradesh v. Buland Sugar Co. Ltd., (1979) 3 SCC 96: AIR 1979 SC 1104: (1979) 3 SCR 419.

the expression 'company' means a company registered under the Indian Companies Act, 1890 or under the (English) Companies Acts, 1862 to 1882 or incorporated by an Act of Parliament of the United Kingdom or by an Indian law, or by Royal Charter or Letters Patent and includes a society registered under the Societies Registration Act, 1860, and a registered society within the meaning of the Cooperative Societies Act, 1912, or any other law relating to cooperative societies for the time being in force in any State. [Land Acquisition Act,1894, s. 3 (e)]. State of Punjab v. Raja Ram, AIR 1981 SC 1694 (1696): (1981) 2 SCC 66: (1981) 2 SCR 712.

The concept of a company has undergone radical transformation in the last few decades. The traditional view of a company was that it was a convenient mechanical device for carrying on trade and industry, a mere legal framework providing a convenient institutional container for holding and using the powers of company management. The company law was at that time conceived merely as a statute intended to regulate the structure and mode of operation of a special type of economic institution called company. This was the view which prevailed for a long time in juristic circles all over the democratic world including United State of America, United Kingdom and India. That was the time when the doctrine of laissez-faire held sway and it dominated the political and economic scene. This doctrine glorified the concept of a free economic society in which State intervention in social and economic matters was kept at the lowest possible level. But gradually this doctrine was eroded by the emergence of new social value which recognised the role of the State as an active participant in the social and economic life of the citizen in order to bring about general welfare and common good of the community. With this change in socio-economic thinking, the developing role of companies in modern economy and their increasing impact on individuals and groups, through the ramifications of their activities, began to be increasingly recognised. It began to be realised that the company is a species of social organisation, with a life and dynamics of its own and exercising a significant power in contemporary society. The new concept of corporate responsi-bility transcending the limited traditional views about the relationship between management and shareholders and embracing within its scope much wider groups affected by the trading activities and other connected operations of companies, emerged as an important feature of contemporary thought on the role of the corporation in modern society. The adoption of the socialistic pattern of society as the ultimate goal of the country's economic and social policies hastened the emergence of this new concept of the corporation. The socio-economic objectives set out in Part IV of the Constitution have since guided and shaped this new corporate philosophy. A company, according to the new socio-economic thinking, is a social institution having duties and responsibilities towards the community in which it functions, National Textile Workers' Union v. P.R. Ramakrishnan, (1983) 1 SCC 228: AIR 1983 SC 75. [Companies Act (1 of 1956), s. 3]

A company is, in some respects, an institution like a State functioning under its 'basic Constitution' consisting of the Companies Act and the Memorandum of Association, Life Insurance Corpn. of India v. Escorts Ltd., (1986) 1 SCC 264: AIR 1986 SC 1370: (1985) Supp 3 SCR 909.

Company, means any company as defined in s. 3 of the Companies Act, 1956; and includes a foreign company within the meaning of s. 591 of that Act. [Banking Regulation Act, 1949 (10 of 1949), s. 5 (d)]

Company, means any company as defined in s. 3 of the Companies Act, 1956 and includes a foreign company within the meaning of s. 591 of that Act. [Payment of Bonus Act, 1965 (21 of 1965), s. 2 (9)]

Company, shall have the meaning assigned to it in clause (17) of s. 2 of the Income-tax Act. [Wealth-tax Act, 1957 (27 of 1957), s. 2 (h)]

The expression 'company' as defined in the Land Acquisition Act includes a co-operative society within the meaning of Co-operative Societies Act, 1912. Ratilal Shankarabhai v. State of Gujarat, (1970) 2 SCC 264: AIR 1970 SC 984.

A company is a creature of statute. Its birth, progress, and extinction are all controlled by the statute, Neptune Assurance Co. Ltd. v. Union of India, (1973) 1 SCC 310: AIR 1973 SC 602: (1973) 2 SCR 940.

Company is defined under s. 2(8) as meaning a company as defined in the Indian Income Tax Act, 1922. The Indian Income Tax Act, 1922, s. 2(5A) defines a company as follows:

the expression means--

(i) a company as defined in s. 3 of the Companies Act, 1956, other than a Government company referred to in clause (cc).

(ii) a society registered under the Societies Registra-tion Act, 1860, or under any corresponding law for the time being in force in a State, other than a society referred to in clause (cc).

(iii) a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State, other than a co-operative society referred to in clause (cc).

--for the purpose of s. 141, a firm comes within the ambit of a company, Monaben Ketanbhai Shan v. State of Gujarat, (2004) 7 SCC 15 (17): AIR 2004 SC 4274. (Negotiable Instruments Act, 1881, s. 141)

Means a company formed and registered under the Companies Act, 1985 (UK) Halsbury's Laws of England, Vol. 1(2), para 10, p. 9.

Includes any body corporate, whether incorporated in Great Britain or else where, and references to directors and other officers of a company and to voting power at any general meeting of a company have effect with any necessary modifications, Insolvency Act, 1986, s. 435(1)(UK), Halsbury's Laws of England, Vol. 3(2), para 5, p. 10.