Acompany, abbreviated asco., is alegal entity representing an association of legal people, whethernatural,juridical or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals.
Over time, companies have evolved to have the following features: "separate legal personality, limited liability, transferable shares, investor ownership, and a managerial hierarchy".[1] The company, as an entity, was created by thestate which granted the privilege of incorporation.[1]
A company can be created as a legal person so that the company itself haslimited liability as members perform or fail to discharge their duties according to the publicly declaredincorporation published policy. When a company closes, it may need to beliquidated to avoid further legal obligations. Companies may associate and collectively register themselves as new companies; the resulting entities are often known ascorporate groups, collections of parent and subsidiarycorporations.
A company can be defined as an "artificial person", invisible, intangible, created by or under law,[2] with a discretelegal capacity (or "personality"),perpetual succession, and acommon seal. Except for some senior positions, companies remain unaffected by the death, insanity, orinsolvency of an individual member.
The English word, "company", has its origins in theOld French termcompagnie (first recorded in 1150), meaning "society, friendship, intimacy; body of soldiers",[3] which came from theLate Latin wordcompanio ("one who eats bread with you"), first attested in theSalic law (c. AD 500) as acalque of theGermanic expressiongahlaibo (literally, "with bread"), related toOld High Germangaleipo ("companion") and toGothicgahlaiba ("messmate").
By 1303, the word company referred totrade guilds.[4] The usage of the termcompany to mean "business association" was first recorded in 1553,[5]and the abbreviation "co." dates from 1769.[6][7]
InEnglish law and in legal jurisdictions based upon it, a company is a body corporate or corporation company registered under theCompanies Acts or under similar legislation.[8] Common forms include:
Public limited companies - companies, usually large, which are permitted to (but do not have to) offer their shares to the public, for example on astock exchange
In the United Kingdom, apartnership is not legally a company, but may sometimes be referred to (informally) as a "company". It may be referred to as a"firm".
In theUnited States, a company is not necessarily a corporation. For example, a company may be a "corporation,partnership, association,joint-stock company,trust,fund, or organized group ofpersons, whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidatingagent, for any of the foregoing".[9][10]
Acompany limited by guarantee (CLG): Commonly used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal) amounts if the company goes intoinsolvent liquidation, but otherwise, they have no economic rights in relation to the company. This type of company is common inEngland. A company limited by guarantee may be with or without havingshare capital.
Acompany limited by shares: The most common form of the company used for business ventures. Specifically, a limited company is a "company in which the liability of each shareholder is limited to the amount individually invested" with corporations being "the most common example of a limited company".[10] This type of company is common in England and manyEnglish-speaking countries. A company limited by shares may be apublicly traded company or aprivately held company.
A company limited by guarantee with a share capital: A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return. This type of company may no longer be formed in the UK, although provisions still exist in law for them to exist.[8]
Alimited liability company: "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.[10] LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership orsole proprietorship". Like a corporation, it has limited liability for members of the company, and like a partnership it has "flow-through taxation to the members" and depending on local laws may have to be "dissolved upon the death or bankruptcy of a member".[11]
Anunlimited company with or without a share capital: A hybrid entity, a company where the liability of members or shareholders for the debts (if any) of the company are not limited. In this case, the doctrine of a veil of incorporation does not apply.[citation needed]
Less common types of companies are:
Companies formed by letters patent: Most corporations by letters patent arecorporations sole and not companies as the term is commonly understood today.
Royal charter corporations: In middle-ages Europe, before the passing of modern companies legislation, these were the only types of companies.[citation needed] Now they are relatively rare, except for very old companies that still survive (particularly many British banks), or modern societies that fulfill a quasi-regulatory function (for example, theBank of England is a corporation formed by a modern charter).
Statutory companies: Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction.
When "Ltd" is placed after the company's name, it signifies a limited company, and "PLC" (public limited company) indicates that its shares are widely held.[12]
In the legal context, the owners of a company are normally referred to as the "members". In a company limited or unlimited by shares (formed or incorporated with a share capital), this will be theshareholders. In acompany limited by guarantee, this will be the guarantors. Someoffshore jurisdictions have created special forms ofoffshore company in a bid to attract business for their jurisdictions. Examples includesegregated portfolio companies and restricted purpose companies.
However, there are many sub-categories of company types that can be formed in various jurisdictions in the world.
Companies are also sometimes distinguished for legal and regulatory purposes betweenpublic companies andprivate companies. Public companies are companies whose shares can be publicly traded, often (although not always) on astock exchange which imposeslisting requirements/Listing Rules as to the issued shares, the trading of shares and future issue of shares to help bolster the reputation of the exchange or particular market of an exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders.
Aparent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed a subsidiary of the parent company. The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction.
^Compare a definition of a corporation:"Perhaps the best definition of a corporation was given by Chief Justice John Marshall in a famous Supreme Court decision in 1819. A corporation, he said, 'is an artificial person, invisible, intangible, and existing only in contemplation of the law.' In other words, acorporation [...] is an artificial person, created by law, with most of the legal rights of a real person."Pride, William M.; Hughes, Robert J.; Kapoor, Jack R. (1985). "4: Choosing a form of business ownership".Business. CengageNOW Series (10 ed.). Mason, Ohio: Cengage Learning (published 2009). p. 116.ISBN9780324829556. RetrievedApril 20, 2019.
^Compare:Harper, Douglas."company".Online Etymology Dictionary. - 'From late 14c. as "a number of persons united to perform or carry out anything jointly," which developed a commercial sense of "business association" by 1550s, the word having been used in reference to trade guilds from late 14c.'
^Compare:Harper, Douglas."co".Online Etymology Dictionary. - 'by 1670's as an abbreviation of company in the business sense, indicating the partners in the firm whose names do not appear in its name. Hence and co. to indicate "the rest" of any group (1757)'.
^Garner, Bryan A., ed. (1891). "company".Black's Law Dictionary. Black's Law, 9th Edition. Vol. 1 (9 ed.). St. Paul, Minnesota: West Publishing, Inc (published 2009). p. 318.ISBN9780314199492. RetrievedApril 20, 2019.2. A corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidatingagent, for any of the foregoing. Investment Company Act 2(a)(8)(15 USCA 80a-2(a)(8)).{{cite book}}:ISBN / Date incompatibility (help)[permanent dead link]
"Labor and Employment".Government Information Library. University of Colorado at Boulder. Archived fromthe original on June 12, 2009. RetrievedAugust 5, 2009.
