Meaning and concept
A company is an association of persons for economic gain having
incorporated according to law, a separate legal existence and common
seal.Capital of the company is raised by issuing transferable shares and
managed by the representatives of the shareholders .In Nepal ,a joint stock
company must be registered in accordance of provision of Nepal Company act
2063.The regular activities of company would not be affected due to change in
management ,shareholders, board of directors and other internal factors. It can
be dissolved only after completing legal procedures.
Characteristics/Features
of a company:
The common features of a joint stock company are as follows
1.Legal personality:
a joint stock company is an artificial person and enjoys the facility of
natural person in certain aspects. It has a separate legal entity independent
from its member. It can hold property, borrow debts, can carry on business and
enter into contract in its own name.
2.Perpetual succession:joint
stock company is corporate body. It is not affected by death, retirement or
insolvency of its shareholders. Similarly, it performs business without any
interruption even if change in management, change in members of BOD, change in
method of operation and internal system.
3.limited liability : company
is an artificial person and as such its members are not liable for the debts of
the company. The liability of shareholders of the company is limited upto their
capital investment.
4.Formation : public
ltd. Company can start business only after getting certificate of commencement,
along with registration certificate. for formation of a company , promoters
group of shareholders have played major role and later on its membership
increased by sale of shares.
5.Common seal : as
an artificial persons, a company can not act or sign itself in official
documents. Thus, it has common seal which is engraved name emblem of the
company.
6.Management by
representative : although all shareholders are the real owner of the
company. but in practice , it is not possible that all the shareholders should
involve in management of company. The management of the company is done by the
representative of shareholders, known as members of BOD.
7.Transferability of
shares :the shares of public ltdcompany are easily transferable from one
person to another without prior permission from company management.
