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Gopika Juneja, Lovely Professional University Unit 2: Meaning and Nature of a Company

Unit 2: Meaning and Nature of a Company Notes

CONTENTS
Objectives
Introduction

2.1 Definition of a Company
2.2 Characteristics of Company
2.2.1 Incorporated Association

2.2.2 Artificial Person
2.2.3 Separate Legal Entity
2.2.4 Limited Liability
2.2.5 Separate Property
2.2.6 Transferability of Shares

2.2.7 Perpetual Existence
2.2.8 Common Seal
2.2.9 Company may sue and be sued in its own name

2.3 Lifting of the Corporate Veil
2.4 Company Distinguished from Partnership
2.5 Summary
2.6 Keywords
2.7 Review Questions

2.8 Further Readings

Objectives

After studying this unit, you will be able to:
Define a company;

Describe various characteristics of a company;
Explain the corporate veil lifting process.

Introduction

A company, in its ordinary, non-technical sense, means a body of individuals associated for a
common objective, which may be to carry on business for gain or to engage in some human
activity for the benefit of the society. Accordingly, the word ‘company’ is employed to represent
associations formed to carry on some business for profit or to promote art, science, education or
to fulfill some charitable purpose. This body of individuals may be incorporated or
unincorporated.

LOVELY PROFESSIONAL UNIVERSITY 13