Company is an association of persons who contribute money to a common corpus (called stock or share capital) to carry on a business. Company has its origin in 1600 A.D. when the East India Company was established by way of a Royal Charter in England. The modern form of company has its genesis in the legislative developments in the mid- nineteenth century in the UK.
Company is traditionally called as ‘joint-stock company’. Stock refers to capital, joint-stock means where the capital is jointly owned and contributed by a body of individuals known as stockholders or shareholders. However, joint contribution of capital is not sufficient to describe a company as in partnership firm also the capital is brought jointly by the partners.
Company is not merely an association of persons who have contributed money for a common object. Company is an incorporated association of persons created by law to pursue the expressly laid down objects.
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Chief Justice Marshal of U.S.A. has defined a company as “a person, artificial, invisible, intangible and existing only in the eyes of the law. Being a mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence.”
The essential underpinning of company is an incorporated association created by the law. In India, the Companies Act of 1956 (known as the Indian Companies Act, 1956) is the law under which companies are formed.
Section 3(1) (i) of the Companies Act defines a company as “a company formed and registered under this Act or an existing company.” “An existing company” means a company formed and registered under any of the former companies Act.
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Company means ‘a company formed and registered under the Indian Companies Act 1956 or “an existing company”. “An existing company” means a company formed and registered under any of the former Companies Act’.
A company, thus, exists only in the contemplation of law. It has no physical existence. Right to act as an entity is granted to it by law. Law creates it and law alone can dissolve it.