A PRESENTATION ON

COMPANY
Introduction
 When business is large in size and involves a heavy risk sole
proprietorship and partnership do not fit as they involves unlimited
liability.
 Similarly, sole proprietorship and partnership have limited life. Due
to limited scale of operation, they cannot employ professional
management.
 In addition, sole proprietorship and partnership – due to limited
scale of operations – cannot take benefits of the economies of scale.
 
 To overcome these limitations, the company form is preferable.   A
joint stock company is a corporate form of organisation.  In the year
2013, the Companies Act, 2013 has been formed. Thereafter, any
joint stock company is registered under the Companies Act, 2013.  
DEFINITIONS
 H. Haney: “A voluntary association of individuals for profit,
having a capital divided into transferable shares, the ownership
of which is the condition of membership.”
 Ashwathappa: “A Company is an artificial and invisible being
recognized by the law and created to pursue business
objectives.”
 More clearly, in a precise manner, the term ‘joint stock company’
is defined as: A company is an incorporated association, which
is an artificial person, created by Law in force, having a distinct
name, common seal, and perpetual succession.
  
FEATURES
 An Artificial Person;- A company is legally separate from its
owners. It is a ‘legal person’ and it continues to exist even though
its ownership changes several times. Being a legal person, a
company can own property,   take legal actions, and enter into
contracts on its own name. 
 Compulsory Incorporation (or Corporate Body)A joint stock
company is a corporate form of organisation.   A company is
created by registration under the Companies Act. It comes into
existence when the Registrar of Companies enter is name in the
Register and issue a Certificate of Incorporation. Registration is
compulsory.
 After 30thAugust,2013 company can be registered under the
Companies Act, 2013.
 Common Seal- A company is an artificial person, and not a natural person.
Therefore, it cannot sign documents for itself. It has its common seal and is known by
its name. It is the signature of the company.  Of course, signatures of two directors as
witnesses are necessary in addition to the common seal.  The seal is affixed on the
contract, share certificates, documents, and the day-to-day transactions of the
company.
 Perpetual Existence-A company is an artificial person and has a separate identity.
Its existence is not affected by lunacy, resignation, insolvency, withdrawal, or death of
its members/shareholders or directors.  Note that its formation is voluntary, but
continuance is compulsory.
 It cannot be dissolved unless the Law in force permits. It enjoys a perpetual life and
provides stability in its operations.
 Separate Management-A company is an artificial person and its ownership is
completely separate from its management. Shareholders (who are owners of
company) do not manage the company. The management is under the charge of the
Board of Directors and a body of executives working under the Board.    The Board of
Directors ran the company as per the provisions of the Article. Company can afford
an efficient and expert management.
 Transferability of Shares- Normally, a share of a company is a movable
property and can be transferable as per the provisions of the Act. A
member can enjoy a statutory right to sell his shares and get them
transferred in the name of the buyer on the company’s Register of
Members.
 People can easily buy or sell shares at any time.  Shares are the liquid asset
and can be readily converted into cash. Free transferability and good
marketability of shares offer many benefits to both the company as well as
its shareholders.
 Limited Liability- In a joint stock company, the member’s liability is
usually limited to face value of shares that she/he holds.  Every member
(or shareholder) knows in advance the magnitude of risk or loss. 
 In case of liquidation or extraordinary loss incurred, private property of
the member is not attachable.
 Number of Members
 In a private company, there are minimum two
members and maximum 200 members. In case of
public limited company, there shall be minimum
seven members and there is no restriction to the
maximum number of members. Under the
Companies Act, 2013, a One Person Company can
also be created, with only one member.
MERITS
 Huge Capital: The company form of organisation is able to collect a large amount
of capital. There are millions of shareholders who can invest their money in the
company’s total share capital.  Limited liability, easy transferability, efficient
management, and other benefits associated with a company form of organisation
can attract investors to invest in share capital. 
 Limited Liability of Members: In a limited company, the members/shareholders
have limited liability. In case of a heavy loss or liquidation, the members’ liability
is limited to the value of shares they hold. For example, if a person holds 1000
shares of Rs. 10 each. In any type of circumstances, his maximum liability or loss
is limited to Rs. 10000 only.
 Steady or Perpetual Life Span: Obviously, a company is an artificial person,
created by the Law. It has a separate identity. Change in membership (i.e., transfer
of shares) or management does not have any impact on the company’s      In short,
its existence is not affected by lunacy, resignation, insolvency, withdrawal or death
of its members/shareholders or directors.  
 Enterprising and Efficient Management: Shareholders elect
capable and experienced persons as the directors of the board.
 Similarly, a company can employ professionally qualified,
capable, and experienced managers to manage various
activities.
 Benefits of Economies of Scale: Normally, a company
undertakes its operations on a large scale. It can afford the
latest technology and innovative methods. Due to large scale
purchase, production, and distribution, overall cost can be
reduced. Per unit cost can be brought to low. This can further
strengthen its competitive strengths.
 Transferability of Shares: Normally, a share of the company can be
transferable as per the provisions.  Shares become the liquid asset and can
be readily converted into cash. Free transferability and good marketability
of shares offer many benefits to both the company as well as its
shareholders.
 Creditable Form of Business Organisation: A company maintains more
systematic and transparent record of economic transactions. It declares its
business record publicly. Companies also contribute liberally to social
welfare activities. It creates public confidence.  Creditors, banks, or
financial institutions are eager to lend money to good companies
 Scope for Expansion: Large amount of resources, strong earning, capable
managing body, professional managers, rich contacts, strong customer base,
high credit in society, limited liability, etc., offers infinite scope for
expansions.
DEMERITS
 Lengthy and Costly Formation: Company formulation involves a lot of
documents and formalities. Experts are paid heavy fees for company formation.
Similarly, raising share capital through the public issue is also lengthy and costly
affair. Thus, promotion of a company is a difficult, expensive, lengthy, time-
consuming, and complex task.
 Possibility of Fraudulent Management: In joint stock companies, there is chance
of fraudulent transactions. The managing body may take undue advantages for
their personal benefits. Some decisions are taken on a personal ground.
 Overambitious and selfish promoters and directors manipulate accounting records
and mislead the shareholders, financers, government, and the whole society.
 Sahara Group, King Fisher, Satyam Computers, etc., are some of the examples. 
 Dictatorship in Management: Democratic management is only ideology.
Management of company is not democratic but seems to be oligarchic.  A few big
shareholders dominate the board, and consequently the company management. The
control is centralized in a few hands. The Companies Act has granted many powers
to shareholders. But they hardly exercise the powers.  There is possibility of
misuse of power as well as resources.
 Lack of Business Secrecy: A company has to disclose all business affairs to the public. It
has to show its financial records – sales, profit-loss, and other information. Similarly, they
have to discuss business strategies in the annual meetings and furnish information to its
investors. Lack of business secrets may harm the company’s long term business interest.
 Very High Management Costs: Company management is expensive. Top position holder
– chairman, directors, CEO, and top officials are paid high salaries. Also, they are entitled
for a number of fringe benefits or allowances.  Billions of rupees are spent for creating
facilities and conveniences for   their comfort and dignity throughout the world. 
Chairmen, CEOs and   top executives are paid crores of rupees.
 Monopolistic control & Exploitation of consumers: Companies often forms of business
combinations to eliminate competition, thereby creating monopoly and charging maximum
prices from the consumers. By such practices companies do supernormal profits and
exploit the consumers.
 Excessive Government control and interference: As discussed earlier, there are too
many provisions and legalities that a company has to undergo from time to time. This
excessive control and interference hampers the functioning the company and reduces the
level of enthusiasm.
 INTRODUCTION
 A One Person Company (OPC) has a recent origin. 
 The concept of an OPC was introduced by the Companies Act,
2013.
 As per the Act, a single person can constitute a company under the
One Person Company (OPC) concept. 
 The introduction of the One Person Company (OPC) in the legal
system is a move that would encourage corporatization of and
entrepreneurship. (Sole properitorship)
 It is a corporate form of Limited Liability partnership.
 It safeguards the businessman from unlimited liability.   
 A One Person Company can be registered under the Companies
Act, 2013.
Characteristics of OPC
 Meaning: An OPC is a new type of business organisation that allows a single
entrepreneur to operate as corporate entity with limited liability protection. The One
Person Company is a hybrid   form of business organisation that combines features
of sole-proprietorship and a joint stock company.
 The Act Applicable: One Person Company can be registered under the Companies Act,

2013. With the implementation of the Companies Act, 2013, a single national person can
constitute a Company under the One Person Company (OPC) concept.
 Purpose: An OPC safeguards the businessman from unlimited liability. It enables

individual capabilities to contribute to economic growth and generate employment

opportunity.
 Mandatory Conditions: As per OPC (Rule 3), only a natural person, who is an Indian

citizen and resident of India, shall be eligible to incorporate a One Person Company.
 Only One Shareholder: As the name indicates, a single person can set up a company. A

natural person, with certain mandatory conditions, can create a One Person Company.
 Separate Entity: A One person Company (OPC) has a separate legal entity. It
can operate same as private company. It can own property,  can enter into the  
contract, and can incur debts.
 Limited Liability: A one person company is characterized by limited liability.
Liability is limited to company’s capital and wealth.
 Continuity or Stability: This Company has separate legal entity. Its existence
is not affected by the death or departure of any member. In case of death or
inability of the member, the nominee can take the charge of company.
 Owning Property: A company is legal person. It can acquire, own, enjoy, or
sell property on its own name. The shareholder cannot make any claim as long
as the company continues.
 Number of Director: This type of company has   only one director. The sole
shareholder can himself be the sole director. An OPC can employ necessary
managerial and operative staff to manage activities.