Company

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A modern corporate office building in Münster, North Rhine-Westphalia, Germany
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An office building of Nokia Corporation in Hervanta, Tampere, Finland

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.

Contents

Over time, companies have evolved to have 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:

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.

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 compagnie (first recorded in 1150), meaning "society, friendship, intimacy; body of soldiers", [3] which came from the Late Latin word companio ("one who eats bread with you"), first attested in the Salic law (c. AD 500) as a calque of the Germanic expression gahlaibo (literally, "with bread"), related to Old High German galeipo ("companion") and to Gothic gahlaiba ("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

China

In China, companies are often government run or government supported. Other companies may be foreign companies or export-based corporations. [ citation needed ]

According to the Company Law of the People's Republic of China, companies include the limited liability company and joint-stock limited company which founded in the mainland China.

United Kingdom

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:

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

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

Less common types of companies are:

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 the shareholders. In a company limited by guarantee, this will be the guarantors. Some offshore jurisdictions have created special forms of offshore company in a bid to attract business for their jurisdictions. Examples include segregated 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 between public companies and private companies . Public companies are companies whose shares can be publicly traded, often (although not always) on a stock exchange which imposes listing 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.

A parent 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.

See also

Related Research Articles

<span class="mw-page-title-main">Corporation</span> Legal entity incorporated through a legislative or registration process

A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity and recognized as such in law for certain purposes. Early incorporated entities were established by charter. Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects: whether they can issue stock, or whether they are formed to make a profit. Depending on the number of owners, a corporation can be classified as aggregate or sole.

Business is the practice of making one's living or making money by producing or buying and selling products. It is also "any activity or enterprise entered into for profit."

A shareholder of corporate stock refers to an individual or legal entity that is registered by the corporation as the legal owner of shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. A person or legal entity becomes a shareholder in a corporation when their name and other details are entered in the corporation's register of shareholders or members, and unless required by law the corporation is not required or permitted to enquire as to the beneficial ownership of the shares. A corporation generally cannot own shares of itself.

Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different parties.

In law, a legal person is any person or 'thing' that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for the term "legal person" is that some legal persons are not people: companies and corporations are "persons" legally speaking, but they are not people in a literal sense.

<span class="mw-page-title-main">Limited liability company</span> US form of a private limited company

A limited liability company is the United States-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is not a corporation under the laws of every state; it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs are well known for the flexibility that they provide to business owners; depending on the situation, an LLC may elect to use corporate tax rules instead of being treated as a partnership, and, under certain circumstances, LLCs may be organized as not-for-profit. In certain U.S. states, businesses that provide professional services requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but may be required to form a similar entity called a professional limited liability company (PLLC).

<span class="mw-page-title-main">Joint-stock company</span> Business entity owned by shareholders

A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.

<span class="mw-page-title-main">Incorporation (business)</span> Legal process to create a new corporation

Incorporation is the formation of a new corporation. The corporation may be a business, a nonprofit organization, sports club, or a local government of a new city or town.

<span class="mw-page-title-main">Limited company</span> Type of business entity

In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of shares. In a company limited by guarantee, the liability of owners is limited to such amount as the owners may undertake to contribute to the assets of the company, in the event of being wound up. The former may be further divided in public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast, anyone may buy shares in a public limited company.

A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging market; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.

<span class="mw-page-title-main">Private limited company</span> Type of company used in many jurisdictions

A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the LLC in the United States, private company limited by shares in the United Kingdom, GmbH in Germany and Austria, Besloten vennootschap in The Netherlands, société à responsabilité limitée in France, and sociedad de responsabilidad limitada in the Spanish-speaking world. The benefit of having a private limited company is that there is limited liability.

<span class="mw-page-title-main">Corporate law</span> Body of law that governs businesses

Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corporations, or to the theory of corporations. Corporate law often describes the law relating to matters which derive directly from the life-cycle of a corporation. It thus encompasses the formation, funding, governance, and death of a corporation.

<span class="mw-page-title-main">Limited liability</span> Business structure where shareholders cannot owe more than their stake in a venture

Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or joint venture. If a company that provides limited liability to its investors is sued, then the claimants are generally entitled to collect only against the assets of the company, not the assets of its shareholders or other investors. A shareholder in a corporation or limited liability company is not personally liable for any of the debts of the company, other than for the amount already invested in the company and for any unpaid amount on the shares in the company, if any, except under special and rare circumstances permitting "piercing the corporate veil." The same is true for the members of a limited liability partnership and the limited partners in a limited partnership. By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business.

A privately held company is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in their respective listed markets. Instead, the company's stock is offered, owned, traded or Exchange, also known as 'over-the-counter'. Related terms are unlisted company, unquoted company and private equity.

<span class="mw-page-title-main">Limited partnership</span> Form of partnership

A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner. Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability.

A for-profit corporation is an organization which aims to earn profit through its operations and is concerned with its own interests, rather than the interests of the public.

<span class="mw-page-title-main">Australian corporate law</span>

Australian corporations law has historically borrowed heavily from UK company law. Its legal structure now consists of a single, national statute, the Corporations Act 2001. The statute is administered by a single national regulatory authority, the Australian Securities & Investments Commission (ASIC).

<span class="mw-page-title-main">Stock</span> Shares into which ownership of the corporation is divided

Stocks consist of all the shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued, for example, without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

There are three types of business entity in Russia: private limited companies, joint-stock companies, which may either be public, open (OJSC) or private, closed (PJSC), and partnerships.

References

Specific
  1. 1 2 Turner, John D. (January 30, 2024). "Three centuries of corporate governance in the United Kingdom". The Economic History Review. doi: 10.1111/ehr.13326 . ISSN   0013-0117.
  2. 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."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. ISBN   9780324829556 . Retrieved April 20, 2019.
  3. 12th century: Harper, Douglas. "company". Online Etymology Dictionary .
  4. Compare: Harper, Douglas. "company". Online Etymology Dictionary . - '[...] the word having been used in reference to trade guilds from late 14c.'
  5. 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.'
  6. Compare: "co" . Oxford English Dictionary (Online ed.). Oxford University Press.(Subscription or participating institution membership required.) - "1759 Compl. Let.-writer (ed. 6) London: Printed for Stanley Crowder, and Co."
  7. 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)'.
  8. 1 2 "Companies Act 2006". www.legislation.gov.uk. Archived from the original on April 10, 2015. Retrieved March 15, 2020.
  9. 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. ISBN   9780314199492 . Retrieved April 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 liquidating agent, for any of the foregoing. Investment Company Act 2(a)(8)(15 USCA 80a-2(a)(8)).[ permanent dead link ]
  10. 1 2 3 Black's Law Dictionary. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.
  11. root. "Limited Liability Company (LLC) Definition - Investopedia". Investopedia. Archived from the original on November 27, 2012. Retrieved November 14, 2012.
  12. "BBC Bitesize - GCSE Business - Forms of business ownership - Revision 3". BBC Bitesize. Archived from the original on September 1, 2018. Retrieved August 31, 2018.
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