Why to form a company ?
There are different forms of
organisations to choose from to do business such as sole proprietorship,
partnership, co-operative societies, and joint stock company. Each one
of these organisations has special features and characteristics of its
own. The company as a form business organization that has come to
acquire a pre- eminent position in modern times.Its superiority over
other forms of business organisation is due to the following special
characteristics :
Distinct legal entity :
On registration a company
acquires a distinct legal entity of its own capable of assets,
incurring liabilities and debts, charging and being claimed. A
partnership firm on the other hand has no independent existence apart
from its partners in the legal entity.
Limited Liability of a company member:
A company members liability is limited
to the duration they have contributed or have undertaken to contribute
to the capital of the company.The creditors of the company have no
rights against the company members as they cannot look beyond.The
benefits of the company for gratification of their claims for registrations.
Perceptual existence :
Once the company is registered
that has perceptual existence. It never dies notwithstanding any change
in its members. The death or insolvency of a member does not change the
corporate entity. Which continues to remain in existence eternally till
it is wound up in conformity with the provisions of the law under which
it is incorporated of a company.
Common seal :
Once the company is registered that also
has a common seal. In the case of corporate bodies they are not living
persons who can sign. The common seal is a physical impression made upon
written documents executed by a company for his seal.
Transferability of shares :
The shares and other interests of
members in a company are portable properties. The shares are
transferable in the manner provided by the objects of the registration
company.
Option to contribute :
The members have the choice to
contribute to the capital of the company according to their capacity.
They can receive their share of profit earned by the company. In
proportion the company to the share capital contributed by them.
The company has a huge capital base:
A company has a large capital base to
meet their requirement of funds for business. The company is issuing
their shares to any number of persons except in the type of a private limited company. The private company members cannot exceed fifty.
Subject to the discipline of law :
The company is subject to the discipline
of regulatory allocations of the companies act 1956 of the directives
and its objects. The area of its business activities is clearly defined
by the objects clause of its directive of association which is its
charter. The objects are the bye laws regulating the internal administration of the company. The objectives laid down in the directive of the company for achieving.
Preferential treatment :
The company to form of business
organisation is accorded preferential treatment by the creditors. The
banks and financial institutions for grant of loans and by the state
industrial development corporations for grant of incentives for
promotion and development of Industry.Where the registration in Chennai has an companies act that a business is to be incorporated.
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