BUSINESS LAW

FEATURES OF
INCORPORATED
COMPANY

Presented by -
MANDITA DEY
PGDM 2022-24
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Registration Perpetual Succession
A company must be regis­tered under the
Perpetual succession is the continuation

Companies Act. After registration, the

of arganization's existence despite the

Registrar of Companies issue a Certificate

death, bankruptcy, insanity, change in

of Incorporation. membership or an exit from the business

of any owner or member, or any transfer of

stock, etc.

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Common Seal

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Legal Personality
The law requires every com­pany to have a

seal with its name engraved on it. As the

A company is a crea­tion of law and is

company has no physical form, it cannot

called an artificial person; it implies that a

sign its name on a contract. company has an entity of its own

recognized by law quite dis­tinct from that

of the natural persons forming it.

5 Limited liability
In the context of a private company,

becoming incorporated can provide its

owners with limited liability since an

7 Enhances Business’ Credibility

If a company is incorporated, it is

considered more reliable which builds

trust and therefore enhances business

incorporated company is treated as a

credibility.
separate and independent legal entity.

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Easier Access to Capital Savings of tax
When a company obtains capital via
Incorporating company gives company the

equity, which means raising funds through

ability to spread out its losses over a larger

the public and debt referring to bank loans

period of time also provides ability to

or other forms of credit and if a company

deduct startup and operational expenses,

is incorporated, by all means it is

and also ability to deduct employee

considered more reliable; hence it shall be

benefits.
easy to obtain capital.
9 Corporate Veil
Incorporation effectively creates a

protective sphere of limited liability known

as Corporate Veil, which protects the

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Management
A company is managed by the Board of

Directors, whole time Directors, Managing

Director or Manager. These persons are

interest of the company’s shareholders selected in the manner provided by the Act

and directors. and the Articles of the Association of the

company.

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Easy transfer of ownership Transferability
Ability to transfer ownership makes it
The shareholder of a company can transfer

easier to attract investments. Venture

its shares easily once it is incorporated

capital firms and angel investors get more

and ordinarily the transferee becomes a

reliability for investing in future. member of the company.

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Capacity to Sue Residence
As a separate legal entity, an incorporated
A company has a residence for taxation

company has the right to sue other people

and other purpose.
in addition to companies.

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Registered Office Illegality
A company must have a registered office. If a company is formed for an improper or

unlawful object, the Court can lift the veil

of the corporate entity so that the guilty

person can be punished.