A company, abbreviated as co., is a legal entity made up of an association of people, be they natural, legal, or a mixture of both, for carrying on a commercial or industrial enterprise. Company members share a common purpose, and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared goals. Companies take various forms, such as: Public Limited Company & Private Limited Company.
A public limited company is a voluntary association of members which is incorporated and, therefore has a separate
legal existence and the liability of whose members is limited. A company must have a minimum of seven members
but there is no limit as regards the maximum number. The company collects its capital by the sale of its shares and
those who buy the shares are called the members. The amount so collected is called the share capital. The shares of a
company are freely transferable and that too without the prior consent of other shareholders or without subsequent
notice to the company. The liability of a member of a company is limited to the face value of the shares he owns. Once
he has paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the
company. The shareholders of a company do not have the right to participate in the day-to-day management of the
business of a company. This ensures separation of ownership from management. The power of decision making in a
company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule.
This ensures a unity of direction in management. As a company is an independent legal person, its existence is not
affected by the death, retirement or insolvency of any of its shareholders.
Advantages: Continuity of existence, larger amount of capital, Unity of direction, efficient management, Limited liability