She has no body, no soul, no consciousness, no subject to the fools of the body. Because of these physical disabilities, a company is called an artificial person. Since the company has an independent legal entity and is recognized as an artificial person that exists in the eyes of the law, its debts are its own, for which the shareholders cannot be held liable under normal circumstances. A shareholder is only required to pay his own share in the company. As an artificial person, a public company has its own personality and existence that is independent of its investors. This means that a public limited company can own property, conclude contracts and carry out all legal transactions in its “own” name. He can sue and can be sued by others in court. Shareholders are “not” the owners of the property owned by the company. In addition, shareholders cannot be held responsible for any of the company`s shares. Salomon also received mortgage bonds as partial payment from the company for the company.
The validity of these obligations was challenged on the ground that a person could not owe anything to himself and that Solomon and society were one and the same person. The House of Lords ruled that Solomon`s own entity was distinct from that of the company in question. The liability of a partner in a company is limited. Limited liability means that a shareholder is liable for the debts of the company of which he is a member up to the nominal value of the shares subscribed by the shareholder. The management of the company is very similar to how the land is managed. All citizens of the country elect their representatives in the form of deputies/deputies. These elected officials debate various aspects of national importance. Decisions are taken on the basis of majority rule. A company has many stakeholders. There are shareholders who run the company. There are directors who are elected by the shareholders. There are people who work for the company.
This can lead to potential conflicts of interest between stakeholders. A business is a stable form of business organization. Its lifespan does not depend on the death, insolvency or retirement of one or all shareholders or directors. The provision relating to the transferability of shares to the successors of the testator in the event of the death of the shareholder helps to maintain the eternal existence of a company. The law does this and the law alone can dissolve it. Members can come and go, but the company can go on forever. Like natural persons, a company can own property, incur debts, borrow money, enter into contracts, sue and be sued, but unlike them, it cannot breathe, eat, run, talk and so on. He is therefore called an artificial person. Even if a shareholder owns substantially all of his or her shares, in the eyes of the law, the corporation is a separate legal entity that is different from such a shareholder. The principle was legally recognized by the House of Lords in the famous case of Solomon vs. Salomon & Co.
Ltd. In the individual and partnership form of the corporate organization, the owners must pay directly without income tax. There are progressive personal income tax rates. But in the case of a company that is an independent legal entity, and in the case of legal persons, there is a fixed tax rate called corporate tax. In addition, corporations benefit from numerous tax incentives that significantly reduce the actual tax base. Lord Macnaghten noted in this case: “The company is legally a very different person from the drafters of the memorandum, and so it may be that after incorporation, the company is exactly the same as before, and the same people are managers, and the same hands receive the profits, the company is not legally the agency of the underwriters or trustees for them. Subscribers are also not liable as members, in any form, except to the extent and in the manner provided by law. 25 Debt certificate Any document under lock and key that justifies an act whose essence is the admission of indebtedness. The Debenture includes the Debentures, Debentures and all other securities of a corporation, whether or not they constitute an expense on the assets of the Corporation.
19.11.2017 Dr. G. MAHESWARAN/AP The liability of a member of a joint-stock company is limited. For example, if a person has invested Rs. 10,000 then only this amount can be used to repay the company`s debts – in the event that the company is liquidated. A shareholder may not be required to pay more than he is entitled to for the shares allocated to him if the assets of a company are insufficient to satisfy the claims of all creditors. 22 2. Lack of secrecy Under the Companies Act: A corporation must provide information to the Office of the Registrar, which is open to the public, from time to time 21 Service of the prospectus is a call to the public to subscribe for shares or debentures offered to the public. The main purpose of the prospectus is to get people to buy shares and give all the necessary information to guide potential investors. Under section 142 of the Companies Act, 1994, “Document containing the offer of shares or debentures for sale to be considered a prospectus”.
A public company issues the prospectus to the public after its registration in order to attract their attention and create confidence in their mind for the subscription of shares or debt securities on behalf of its company. 19.11.2017 Dr G. MAHESWARAN/AP 17 2. Preparation of documents: At this stage, the promoters prepare two important documents which are as follows: a) Memorandum of Association: The memorandum of enterprise is a charter that contains the basic conditions in which the company is founded. It contains the name, address, amount of capital, objectives, rights and obligations of the shareholders. b) Articles of Association: The Articles of Association refer to the document containing the rules and regulations for the internal management of the company. 19.11.2017 Dr. G. MAHESWARAN/AP A company that is an artificial person does not have a body similar to a natural person and therefore cannot sign a document for itself. It acts through natural persons who are appointed to its directors. However, once it has legal personality, it may be bound only by the documents bearing its signature.
PROFITS OF THE JOINT-STOCK COMPANY ACCUMULATION OF LARGE RESOURCES: – A company can collect a large sum of money from a large number of shareholders. If there is a need for more funds, the number of shareholders can be increased. LIMITED LIABILITY:-The liability of the partners of a company is limited to the nominal valueThe shares CONTINUITY OF EXISTENCE:-The partner of a company may change from time to time, but this does not affect the continuity of a company. . . .