According to Chief Justice Marshall, “a corporation is an artificial being, invisible, intangible, existing only in contemplation of law. Being a mere creation of law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as accidental to its very existence.
In the words of professor Haney“A company is an incorporated association, which is an artificial person created by law, having a separate entity, with perpetual succession and a common seal.” This definition sums up the meaning as well as the features of a company succinctly.
However, the Act defines Section 2(20) of the Companies Act, 2013 defines the term ‘company’. “Company means a company incorporated under this Act or under any previous company law”. As we shall progress under the chapter, the meaning of the term company will be understood by the students.
Features of Company :
1. Separate legal entity
2. Perpetual succession
3. Limited Liability
4. Artificial juridical person
Let’s discuss the Separate Legal Entity :
A company is capable of owning, enjoying and disposing of property in its own name. Although the capital and assets are contributed by the shareholders, the company becomes the owner of its capital and assets. The shareholders are not the private or joint owners of the company’s property.
A member does not even have an insurable interest in the property of the company.
The leading case on this point is of Macaura v. Northern Assurance Co. Limited (1925):
The fact of the case-
Macaura (M) was the holder of nearly all (except one) shares of a timber company. He was also a major creditor of the company. M Insured the company’s timber in his own name. The timber was lost in a fire. M claimed insurance compensation. Held, the insurance company was not liable to him as no shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest in them.
Reads are welcomed if they would like to ask any question on the above features.In the next knowledge article, we will discuss “Perpetual succession”.