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 organizations
*
business entities, whose aim is generating profit
* financial entities and
banks
* 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 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,
perpetual succession, and a
common 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 (first recorded in 1150), meaning a "society, friendship, intimacy; body of soldiers", which came from the
Late Latin word ("one who eats bread with you"), first attested in the
Salic law
The Salic law ( or ; la, Lex salica), also called the was the ancient Frankish civil law code compiled around AD 500 by the first Frankish King, Clovis. The written text is in Latin and contains some of the earliest known instances of Old Du ...
( 500 AD) as a
calque of the
Germanic expression (literally, "with bread"), related to
Old High German ("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
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, companies are often
government run or government supported. Other companies may be foreign companies or
export-based
corporations. However, many of these companies are government
regulated.
United Kingdom
In
English law
English law is the common law legal system of England and Wales, comprising mainly criminal law and civil law, each branch having its own courts and procedures.
Principal elements of English law
Although the common law has, historically, be ...
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
A community interest company (CIC, colloquially pronounced "kick") is a type of company introduced by the United Kingdom government in 2005 under the Companies (Audit, Investigations and Community Enterprise) Act 2004, designed for social ente ...
*
Charitable incorporated organisation
*
Private companies limited by shares - the most common form of company
*
Public limited companies
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 free ...
- companies, usually large, which are permitted to (but do not have to) offer their shares to the public, for example on a
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
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, a company is not necessarily a corporation. For example, a company may be a "
corporation,
partnership, association,
joint-stock company
A joint-stock company is a business entity in which shares of the company's capital stock, stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their share (finance), shares (certificates ...
,
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
In British, Australian, Bermudian, Hong Kong and Irish company law (and previously New Zealand), a company limited by guarantee (CLG) is a type of corporation used primarily (but not exclusively) for non-profit organisations that require legal pe ...
(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. A company limited by guarantee may be with or without having
share capital
A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. "Share capita ...
.
* 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 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 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". 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
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...
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) 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
shareholder
A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...
s. In a
company limited by guarantee
In British, Australian, Bermudian, Hong Kong and Irish company law (and previously New Zealand), a company limited by guarantee (CLG) is a type of corporation used primarily (but not exclusively) for non-profit organisations that require legal pe ...
, 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
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
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
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
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
*
List of company registers
*
List of largest employers
*
Lists of companies
*
Stewardship
Stewardship is an ethical value that embodies the responsible planning and management of resources. The concepts of stewardship can be applied to the environment and nature, economics, health, property, information, theology, cultural resources e ...
*
Types of business entity
A business entity is an entity that is formed and administered as per corporate law in order to engage in business activities, charitable work, or other activities allowable. Most often, business entities are formed to sell a product or a servi ...
References
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
*
* Gov.UK
{{Authority control
Legal entities
Corporations