A company, abbreviated as co., is a legal entity representing an association of legal people, whether Natural person, Juridical person 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".
Companies take various forms, such as:
-
voluntary associations, which may include nonprofit organizations
-
business entities, whose aim is to generate sales, revenue, and For-profit
-
financial entities and
-
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 Liquidation to avoid further legal obligations. Companies may associate and collectively register themselves as new companies; the resulting entities are often known as , 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,
[
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."
] with a discrete
legal capacity (or "personality"), perpetual succession, and a
Company 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",
[12th century: ] which came from the
Late Latin word companio ("one who eats bread with you"), first attested in the
Salic law ( AD 500) as a
calque of the Germanic expression gahlaibo (literally, "with bread"), related to Old High German galeipo ("companion") and to
Gothic language gahlaiba ("messmate").
Semantics and usage
By 1303, the word company referred to
Guild.
[
Compare:
]- '[...] the word having been used in reference to trade guilds from late 14c.'
The usage of the term
company to mean "business association" was first recorded in 1553,
[
Compare:
]- '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.'
and the abbreviation "co." dates from 1769.
[
Compare:
]- "1759 Compl. Let.-writer (ed. 6) London: Printed for Stanley Crowder, and Co."
[
Compare:
]- '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)'.
Companies around the world
Canada
Companies in Canada can be incorporated at the federal or provincial level under the Canada Business Corporations Act or equivalent provincial statutes.
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 China.
Germany
In Germany, the most common corporate forms include the
GmbH and the Aktiengesellschaft. The GmbH is a private limited liability company, widely used for small and medium-sized enterprises. The AG is a public limited company used by larger firms and those listed on stock exchanges. German corporate law is governed by the Handelsgesetzbuch. Companies must register with the local commercial register and comply with strict disclosure and accounting standards.
Japan
Japanese company law recognizes several types of companies, with the most common being the
Kabushiki gaisha, similar to a joint-stock company. Another popular form is the
Godo kaisha, which resembles a limited liability company. The Companies Act of 2005 established the legal framework for these and other business entities in Japan, regulating their formation, governance, and operation.
Russia
In Russia, companies are governed by the Civil Code and federal laws such as the Law on Joint-Stock Companies and the Law on Limited Liability Companies. Common types of corporate entities include the Open Joint-Stock Company, the Closed Joint-Stock Company, and the Limited Liability Company.
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.
Common forms include:
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Private companies limited by guarantee
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Community interest company
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Charitable incorporated organisation
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Private companies limited by shares - the most common form of company
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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 Business.
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,
Investment trust,
Mutual fund, or organized group of
, 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".
[Black's Law Dictionary. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.]
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 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.
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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".
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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.
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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.
-
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.
Less common types of companies are:
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Companies formed by letters patent: Most corporations by letters patent are corporation sole and not companies as the term is commonly understood today.
-
Royal charter: In middle-ages Europe, before the passing of modern companies legislation, these were the only types of companies. 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).
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Statutory companies: Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction.
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.
See also
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Corporate personhood
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List of company registers
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List of largest employers
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Lists of companies
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Types of business entity
Further reading
-
Alan Dignam and John Lowry. Company Law. Oxford: Oxford University Press, 2020. .
-
John Micklethwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea. New York: Modern Library, 2003.
External links
