Where a number of individual forms an organization known as company within the Companies Act, then it is a company. The individuals in this respect are known as shareholders and by their joint contribution the capital of the firm is formed, so are the name joint stock company. Company names a company formed and registered under this Act or an existing company (Companies) Act. V11 of the 1913. Sec-2). “A company is meant associations of many persons who contribute money’s worth to a common stock and employ it to a common purpose. The common stock so contribute is whom it belongs are members. The proportion capital to which each members is entitled in this share.
Characteristics of a company
- Legal Formation: The Company is to be formed according to the procedure prescribed in Companies Act, (V11 of 1994) in Bangladesh. The registrar of companies on behalf of the Government should register the company.
- Artificial Entity: A company possesses independent and separate entity. Joint Stock Company is an artificial entity cratered by low that can sue and can be sued in the court. It has an independent entity separate from its owners.
- Capital: The capital of a company is collected thought joint contribution in the form of share capital.
- Perpetual Existence: company has a perpetual existence. It dissolution or liquidation is only possible by the court or joint decision of all or majority members.
- Number of Shareholders: If the company is a private company, then its maximum number of shareholder is fifty and minimum two: and if the company is a public company, than minimum number of shareholder is seven and maximum numbers is the number of shareholders.
- Limited Liability Company: The liability of the shareholder of a company is limited by the share value. Personal property of the shareholder is not liable for business debt. The word Limited should be with the name of the company as ‘private limited’ or public.
- Public Subscription and Transferability of Share: If the company is a public limited company, then it can call the public to subscribe its share capital and also its shares are freely transferable from one hand to another. The share capital of a private limited company is transferable among the shareholder.
- Separation of Ownership from Management: In a company, the Ownership is separated from management. The company is owned by the owner by the shareholder and managed.
- Democratic Management: The management of company is done in a democratic way. The directors are elected by the shareholder thought direct.
- Profit Distribution: The earning of a company are party distribute as dividend among shareholder and a portion is kept for future needs as reserves.
- Perpetual Succession: A company can survive for a longer period. The change death of shareholder does not harm the existence of the company.
- Owner Seal: The company has own seal as proof of its separate identity.
- Manufacturing Operation: A company usually operates as a manufacturing unit, Large-scale operation can only be possible by a company.
- Corporate Taxation: The tax authority taxes a company at a separates rate known as corporate tax rate.
- Dissolution: A company can dissolved by the government through the court or at the discretion of the court at the shareholders or creditors or by the unanimous decision of the shareholders.