“A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.”
A company is “an association of many persons who contribute money or money’s worth to a common stock and employ it in some trade or business, and who share the profit and loss (as the case may be) arising therefrom.” —James Stephenson
“A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.” —Prof. L.H. Haney
“A corporation is an artificial being, invisible, intangible and existing only in contemplation of the law. Being a mere creation of law, it possesses only the properties which the charter of its creation confers upon it either expressly or as incidental to its very existence.” —Chief justice Marshall
“A company means a company formed an registered under this Act.”
Analysis of Definitions
An analysis of above mentioned definitions brings out the following facts:
- A company is an artificial person under law.
- It has separate legal entity than its members.
- It possesses only those properties which have been conferred on it by the charter of its creation.
- It is a voluntary association of persons.
- It is created to earn profits.
- It has a capital which is contributed by the members.
- The capital is divided into small parts known as shares.
- The persons who own these shares are called members.
- The shares of a company are easily transferable.
- The capital of a company is employed for a common purpose.
Types of Companies:
On the basis of ownership the companies can be classified into following categories:
- Private Company
- Public Company
According to companies Act, a private company is one which has the following characteristics:
(i) It has a minimum of two members and a maximum of fifty members.
(ii) A private company restricts the rights of members to transfer their shares.
(iii) It prohibits any invitation to the public to subscribe to its shares and debentures.
(iv) Does not invite general public to invest deposits in the company,
(v) It has a minimum paid up capital of Rs. One lakh.
A private company is an ideal form of organization when a business is to be expanded at a large scale without involving large number of shareholding groups.
According to Section 31(1)((iv) of the Indian Companies Act, all companies other than private companies are called public companies. It is a company in which public at large is interested.
A public company has the following trait:
(i) It is formed with a minimum of seven members.
(ii) It invites general public to subscribe to its shares.
(iii) There is no restriction on the maximum number of members.
(iv) It permits the transfer of shares.
(v) Has minimum paid up capital of Rs. Five lakhs.
(vi) It must allot shares within 120 days from the issue of prospectus.
(vii) Before starting the business it requires a certificate of commencement from the Registrar of Companies.