What is Company in India ?
In corporate accounting , commerce students have to learn accounting treatment of issue of share capital , debenture and its redemption , bonus and right issue at graduation level . They also have to solve the problems of final accounts of different companies . For proper accounting treatment , learning of Indian Company Law 1956 is must . So , this topic is being discussed here. If you are starting to learn Company or Corporate Accounting , then this article will be useful for you because after reading this article , you will understand , the brief history , meaning , definition of Company and its six features .
First of All, in France this word was used for body of soldiers see [Fr. Term Compaignie].. After year 1500, this word became famous in business. Group of businessmen was called company.
I can explain the meaning of company with a simple example. Suppose, two persons want to do business at large scale but they have limited money. They are also not interested to make partnership due to its unlimited liability. They go to the office of registrar of companies and fill the form of creation of company and attaching required documents. They also pay the required fees. After this, registrar will register their company. This registered company will be independent Identity.
Definition of Company
Indian Company law 1956’s section 3(1) (i) define company, “Company is the organisation which is formed and registered under this law or any previous law”
Explanation of Company
From above example and definition, we can understand that company is voluntary and autonomous association of persons. This is made for achieving business objectives. It acts like human being. Company can purchase assets or sell it. It can take also debt. It can open bank account. It is fully free from its members. Company is operated through board of directors.