A company is one of the most important forms of business organisation in modern commercial law. It is created by law, has a life of its own, and can own property, sue others, and be sued — all independent of its members.

• A company is an artificial legal person created by the process of law.
• It has a separate legal identity distinct from its shareholders/members.
• It has perpetual succession — it continues even if all its members die or change.
• Governed in India primarily by the Companies Act, 2013.
• The landmark case: Salomon v. Salomon & Co. Ltd. [1897] firmly established the principle of separate legal entity.

🔵 Section 2(20) – Companies Act, 2013

"Company means a company incorporated under this Act or under any previous company law."

🔵 Lord Justice Lindley's Definition

"A company is an association of many persons who contribute money or money's worth to a common stock and employ it in some trade or business, and who share the profit and loss arising therefrom."

🔵 Chief Justice Marshall (USA)

"A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law."

🟢 Key Takeaway

• A company is created by law, not by natural birth.
• It has rights and duties separate from its members.
• It can enter contracts, own property, and sue/be sued in its own name.

A. On Basis of Incorporation

• Chartered Companies: Formed by Royal Charter (e.g., East India Company). Historical, not used in India now.
• Statutory Companies: Formed by Special Act of Parliament (e.g., RBI, LIC, ONGC).
• Registered Companies: Formed under Companies Act by registration. Most common in India today.

B. On Basis of Liability

• Limited by Shares: Liability of members limited to amount unpaid on shares.
• Limited by Guarantee: Liability limited to guaranteed amount in case of winding up.
• Unlimited Company: No limit on members' liability. Rare in practice.

C. On Basis of Number of Members

• Private Company [Sec. 2(68)]: Minimum 2, maximum 200 members. Restricts transfer of shares. Cannot invite public for subscription.
• Public Company [Sec. 2(71)]: Minimum 7 members, no maximum. Can invite public to subscribe shares.
• One Person Company (OPC) [Sec. 2(62)]: Only 1 member. Special rules apply.

D. Other Types

• Holding & Subsidiary Companies [Sec. 2(46) & 2(87)]
• Government Companies [Sec. 2(45)]: ≥51% of paid-up capital held by Government.
• Foreign Companies [Sec. 2(42)]: Incorporated outside India but has business in India.
• Section 8 Companies: Non-profit companies (charitable objectives).
• Small Companies [Sec. 2(85)]: Paid-up capital ≤ ₹4 crore or turnover ≤ ₹40 crore.

Although a company is a separate legal entity, courts can sometimes "lift the corporate veil" — i.e., ignore the separate identity and hold members/directors personally liable.

🔷 When is Veil Lifted?

• Fraud or Improper Conduct: If the company is used as a tool for fraud.
• Evading Legal Obligations: To avoid tax or legal duties.
• Enemy Character: During war, if members/controllers are enemy aliens.
• Agency Relationship: Where a company is acting as an agent of another company.
• Sham / Façade: Company is a mere sham (front) for illegal activities.
• Statutory Provisions: Certain sections of Companies Act mandate it (e.g., Sec. 45 – reduction of members).

🔷 Important Cases

• Salomon v. Salomon [1897] AC 22 – Established separate legal entity. Salomon's company was different from Salomon himself.
• Daimler Co. Ltd v. Continental Tyre Co. [1916] – Enemy character; veil lifted during WWI.
• Gilford Motor Co. v. Horne [1933] – Company formed to evade covenant; veil lifted.
• Jones v. Lipman [1962] – Company used to avoid specific performance; veil lifted.