Company
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A company, abbreviated as co., is a legal entity representing an association of legal people, whether natural, 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 the state which granted the privilege of incorporation.[1]
Companies take various forms, such as:
- voluntary associations, which may include nonprofit organizations
- business entities, whose aim is to generate sales, revenue, and profit
- financial entities and banks
- programs or educational institutions
A company can be created as a legal person so that the company itself has limited liability as members perform or fail to discharge their duties according to the publicly declared incorporation published policy. When a company closes, it may need to be liquidated to avoid further legal obligations. Companies may associate and collectively register themselves as new companies; the resulting entities are often known as corporate groups, collections of parent and subsidiary corporations.
Meanings and definitions
A company can be defined as an "artificial person", invisible, intangible, created by or under law,[2] with a discrete legal capacity (or "personality"), perpetual succession, and a common seal. Except for some senior positions, companies remain unaffected by the death, insanity, or insolvency of an individual member.
Etymology
The English word, "company", has its origins in the Old French term Script error: No such module "Lang". (first recorded in 1150), meaning "society, friendship, intimacy; body of soldiers",[3] which came from the Late Latin word Script error: No such module "Lang". ("one who eats bread with you"), first attested in the Salic law (c.Script error: No such module "Check for unknown parameters". AD 500) as a calque of the Germanic expression Script error: No such module "Lang". (literally, "with bread"), related to Old High German Script error: No such module "Lang". ("companion") and to Gothic Script error: No such module "Lang". ("messmate").
Semantics and usage
By 1303, the word company referred to trade guilds.[4] The usage of the term company to mean "business association" was first recorded in 1553,[5] and the abbreviation "co." dates from 1769.[6][7]
Companies around the world
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China
According to the Company Law of the People's Republic of China, companies include limited liability companies and joint-stock limited companies which were founded in mainland China.
United Kingdom
Script error: No such module "Labelled list hatnote". In English law and in legal jurisdictions based upon it, a company is a body corporate or corporation company registered under the Companies Acts or under similar legislation.[8] Common forms include:
- Private companies limited by guarantee
- Community interest company
- Charitable incorporated organisation
- Private companies limited by shares - the most common form of company
- Public limited companies - companies, usually large, which are permitted to (but do not have to) offer their shares to the public, for example on a stock exchange
In the United Kingdom, a partnership is not legally a company, but may sometimes be referred to (informally) as a "company". It may be referred to as a "firm".
United States
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In the United 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 of persons, whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidating agent, for any of the foregoing".[9][10]
Types
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- A company 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 into insolvent liquidation, but otherwise, they have no economic rights in relation to the company. This type of company is common in England. A company limited by guarantee may be with or without having share capital.
- A company 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 many English-speaking countries. A company limited by shares may be a publicly traded company or a privately 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]
- A limited 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 or sole 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]
- An unlimited 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.Script error: No such module "Unsubst".
Less common types of companies are:
- Companies formed by letters patent: Most corporations by letters patent are corporations 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.Script error: No such module "Unsubst". 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, the Bank of England is a corporation formed by a modern charter).Script error: No such module "Unsubst".
- Statutory companies: Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction.Script error: No such module "Unsubst".
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]
See also
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- Corporate personhood
- List of company registers
- List of largest employers
- Lists of companies
- Types of business entity
References
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- ↑ a b Script error: No such module "Citation/CS1".
- ↑ 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, a corporation [...] is an artificial person, created by law, with most of the legal rights of a real person." Script error: No such module "citation/CS1".
- ↑ 12th century: Script error: No such module "citation/CS1".
- ↑ Compare: Script error: No such module "citation/CS1". - '[...] the word having been used in reference to trade guilds from late 14c.'
- ↑ Compare: Script error: No such module "citation/CS1". - '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: Template:OED - "1759 Compl. Let.-writer (ed. 6) London: Printed for Stanley Crowder, and Co."
- ↑ Compare: Script error: No such module "citation/CS1". - '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)'.
- ↑ a b Script error: No such module "citation/CS1".
- ↑ Script error: No such module "citation/CS1".Script error: No such module "Unsubst".
- ↑ a b c Black's Law Dictionary. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.
- ↑ Script error: No such module "citation/CS1".
- ↑ Script error: No such module "citation/CS1".
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Further reading
- Alan Dignam and John Lowry. Company Law. Oxford: Oxford University Press, 2020. Template:ISBN.
- John Micklethwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea. New York: Modern Library, 2003.
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External links
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