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According to lord Haney,
"A Co. is an incorporated association which is an artificial person created by law, having a separate legal entity, with a perpetual succession and a common seal.”
• It is an ARTIFICIAL PERSON CREATED BY LAW:
because it does not take birth like a natural person but comes into existence through law.
LIKE A NATURAL PERSON-
{1} the co. can enter into contracts.
{2} the co. can sue and can be sued.
{3} the co. can own and hold property in its own name.
{4} the co. has a nationality.
{5} Co. can hire and fire employees.
But UNLIKE A NATURAL PERSON:
(a) The co. can’t marry.
(b)The co. can't smile or weep.
(c)The co. can't take oath.
(d)The co. can’t be sent to jail.
• SEPERATE LEGAL ENTITY-
From the day of its registration, a company acquires an identity distinct from its members. Company’s assets and liabilities are different from its owners. It shows that law recognizes the business and owners to be different persons. Effects: as a consequence of separate legal entity-
(a) the co. may enter into contracts with its members & vice-versa.
(b)Its members can' be held liable for the acts of the company.
(c)Its members can't claim ownership rights in co.'s assets.
(d)Its creditors can claim the recovery of their debts only from the co. & not from it's members.
• PERPETUAL SUCCESSION-
The term "PERPETUAL SUCCESSION" means the continued existence. The Co. can't be affected by death, retirement, insolvency, permanent incapacity & lunacy of its members. Members may come & members may go but the Co. goes forever. Even a hydrogen bomb can't destroy a Co. It can be brought to an end by the process of law.
• COMMON SEAL-
Te term "COMMON SEAL" means the official signature of the Co. Any document bearing the common seal of the co. will be binding on the company.
Combined Answer submitted by Ashish Jain and Kanika Jain of XI H
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