Company

Definition:

A company is a legal entity that is owned and controlled by shareholders. It is a separate and distinct entity from its shareholders, with its own separate legal existence.

Types of Companies:

• Public Companies: Shares are traded on a public stock exchange.
• Private Companies: Shares are not traded publicly.
• Limited Liability Companies (LLCs): Owners have limited liability for their investment.
• Corporations: Separate legal entity from shareholders.
• Societies: Members have shared ownership and control.

Key Characteristics:

• Artificial Person: Companies are legal entities that exist separate from their shareholders.
• Ownership: Shareholders own shares in the company.
• Limited Liability: Shareholders have limited liability for their investment.
• Governance: Companies are governed by a board of directors and officers.
• Profit and Loss: Companies can generate profit or loss, which is distributed to shareholders.
• Common Stock: Publicly traded companies have common stock, which represents ownership.

Formation and Structure:

• Memorandum and Articles of Association: Required documents for company formation.
• Shareholders: Owners of company shares.
• Board of Directors: Elected by shareholders to oversee company management.
• Officers: Appointed by the board to carry out specific duties.
• Meetings: Regular meetings held by shareholders to approve decisions.

Examples:

• Ford Motor Company (public company)
• Tesla Inc. (public company)
• Apple Inc. (private company)
• Microsoft Corporation (public company)

Advantages:

• Limited liability for shareholders
• Ability to raise capital
• Ability to operate at a large scale
• Access to resources and markets

Disadvantages:

• Complex governance structure
• Potential for conflict between shareholders
• Limited ownership flexibility
• Cost of formation and maintenance
• Tax implications