A company, abbreviated as co., is a
legal entity representing an association of people, whether
natural,
legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals. Companies take various forms, such as:
*
voluntary associations, which may include
nonprofit organization
A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
s
*
business entities, whose aim is generating profit
* financial entities and
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Becau ...
s
* programs or
educational institutions
A company can be created as a legal person so that the company itself has
limited liability
Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
as members perform or fail to discharge their duty according to the publicly declared
incorporation
Incorporation may refer to:
* Incorporation (business), the creation of a corporation
* Incorporation of a place, creation of municipal corporation such as a city or county
* Incorporation (academic), awarding a degree based on the student having ...
, or published policy. When a company closes, it may need to be
liquidated to avoid further legal obligations.
Companies may associate and collectively register themselves as new companies; the resulting entities are often known as
corporate groups.
Meanings and definitions
A company can be defined as an "artificial person", invisible, intangible, created by or under law, with a discrete
legal personality
Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural pers ...
,
perpetual succession, and a
common seal. Except for some senior positions, companies remain unaffected by the death, insanity, or
insolvency
In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet in ...
of an individual member.
Etymology
The English word, ''company'', has its origins in the
Old French
Old French (, , ; Modern French: ) was the language spoken in most of the northern half of France from approximately the 8th to the 14th centuries. Rather than a unified language, Old French was a linkage of Romance dialects, mutually intelligi ...
term (first recorded in 1150), meaning a "society, friendship, intimacy; body of soldiers", which came from the
Late Latin
Late Latin ( la, Latinitas serior) is the scholarly name for the form of Literary Latin of late antiquity.Roberts (1996), p. 537. English dictionary definitions of Late Latin date this period from the , and continuing into the 7th century in the ...
word ("one who eats bread with you"), first attested in the
Salic law ( 500 AD) as a
calque
In linguistics, a calque () or loan translation is a word or phrase borrowed from another language by literal word-for-word or root-for-root translation. When used as a verb, "to calque" means to borrow a word or phrase from another language ...
of the
Germanic expression (literally, "with bread"), related to
Old High German
Old High German (OHG; german: Althochdeutsch (Ahd.)) is the earliest stage of the German language, conventionally covering the period from around 750 to 1050.
There is no standardised or supra-regional form of German at this period, and Old High ...
("companion") and to
Gothic
Gothic or Gothics may refer to:
People and languages
*Goths or Gothic people, the ethnonym of a group of East Germanic tribes
**Gothic language, an extinct East Germanic language spoken by the Goths
**Crimean Gothic, the Gothic language spoken b ...
("messmate").
Semantics and usage
By 1303, the word referred to
trade guilds. Usage of the term ''company'' to mean "business association" was first recorded in 1553,
and the abbreviation "co." dates from 1769.
Companies around the world
China
In
China, companies are often
government
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government ...
run or government supported. Other companies may be foreign companies or
export
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...
-based
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
s. However, many of these companies are government
regulated
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. F ...
.
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
Companies Act (with its variations) is a stock short title used for legislation in Botswana, Hong Kong, India, Kenya, Malaysia, New Zealand, South Africa and the United Kingdom in relation to company law. The Bill for an Act with this short title ...
or under similar legislation.
Common forms include:
*
Private companies limited by guarantee
*
Community interest company
*
Charitable incorporated organisation
*
Private companies limited by shares - the most common form of company
*
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
"firm".
United States
In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...
, a company is not necessarily a corporation. For example, a company may be a "
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
,
partnership, association,
joint-stock company
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders a ...
,
trust,
fund Fund may refer to:
* Funding is the act of providing resources, usually in form of money, or other values such as effort or time, for a project, a person, a business, or any other private or public institution
** The process of soliciting and gath ...
, or organized group of
persons, 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 and lee Dictionary. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.]
Types
* 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
insolvent liquidation, but otherwise, they have no economic rights in relation to the company. This type of company is common in
England
England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe ...
. A company limited by guarantee may be with or without having
share capital.
* 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".
This type of company is common in England and many
English-speaking countries. A company limited by shares may be a
publicly traded company or a
privately held company
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
.
* 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.
* A
limited liability company
A limited liability company (LLC for short) is the United States of America, US-specific form of a private limited company. It is a business structure that can combine the Flow-through entity, pass-through taxation of a partnership or sole p ...
: "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.
LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership or
sole proprietorship
A sole proprietorship, also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole ...
". Like a corporation, it has limited liability for members of the company, and like a partnership it has "flow-through taxation to the members" and must be "dissolved upon the death or bankruptcy of a member".
* 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:
* Companies formed by letters patent: Most corporations by letters patent are
corporations sole and not companies as the term is commonly understood today.
*
Charter corporations: 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 (of which there are still many, 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).
* 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
A public limited company (legally abbreviated to PLC or plc) is a type of public company under United Kingdom company law, some Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company whose shares may be fre ...
) indicates that its shares are widely held.
In the legal context, the owners of a company are normally referred to as the "members". In a company limited or unlimited by shares (formed or incorporated with a share capital), this will be the
shareholders. In a
company limited by guarantee, this will be the guarantors. Some
offshore jurisdictions
An offshore financial centre (OFC) is defined as a "country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy."
"Offshore" does not refer ...
have created special forms of
offshore company in a bid to attract business for their jurisdictions. Examples include
segregated portfolio companies and restricted purpose companies.
However, there are many sub-categories of company types that can be formed in various jurisdictions in the world.
Companies are also sometimes distinguished for legal and regulatory purposes between
public companies and
private companies. Public companies are companies whose shares can be publicly traded, often (although not always) on a
stock exchange which imposes
listing requirements
In corporate finance, a listing refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange. Some stock exchanges allow shares of a foreign company to be listed and may allow dual listing, ...
/
Listing Rules as to the issued shares, the trading of shares and future issue of shares to help bolster the reputation of the exchange or particular market of an exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders.
A
parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed a subsidiary of the parent company. The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction.
See also
*
Corporate personhood
Corporate personhood or juridical personality is the legal notion that a juridical person such as a corporation, separately from its associated human beings (like owners, managers, or employees), has at least some of the legal rights and respon ...
*
List of company registers
*
List of largest employers
*
Lists of companies
*
Stewardship
*
Types of business entity
References
Further reading
* Alan Dignam and John Lowry. ''Company Law''. Oxford:
Oxford University Press
Oxford University Press (OUP) is the university press of the University of Oxford. It is the largest university press in the world, and its printing history dates back to the 1480s. Having been officially granted the legal right to print book ...
, 2020. .
*
John Micklethwait and
Adrian Wooldridge, ''The Company: A Short History of a Revolutionary Idea''. New York: Modern Library, 2003.
*
External links
*
* Gov.UK
{{Authority control
Legal entities
Corporations