Corporate World - An Inside Story

TechNews Writer
Mon Nov 23, 2020

The company form of business is created to carry out business at a large scale and avail financial help through various sources including funding from the large public which in turn provides economies of scale. It is the association of people who aim to carry out a common objective.

When a company is formed there is the creation of an artificial person which is a separate entity altogether. Although a company is composed of living individuals who own and manage the affairs of the company, however, the company is considered separate from these individuals who are capable of holding property in its name. With this separate personality, the company has a perpetual life that goes on irrespective of the life of its owners. Even when all the owners die, the company still exists. It can come to an end only by the operation of law.

Since the company is a separate person, it has its name through which it enters into various contracts and all the properties of the business are held in its name. This special character of the company enables its owners to limit their liability to the extent of their share in the company and eliminate the risk of personal insolvency. But sometimes this attribute of the company is misused by its owners for using it as a means of evading tax.

A company is sometimes incorporated as an agency for carrying out the desired illegal object. Under such circumstances, the separate personality of the company is ignored and the court breaks this corporate shield to catch the evil mind working behind the veil and in that case the person involved in the scandal shall be personally liable which means their personal property is now at stake.

One more peculiar character of the company is that the owners of the company are different from the managers of the company. Owners of the company invest capital while managers use that money for the best interest of the company.

This distinction is made mainly because the company has several owners and to carry out business without any the intention of undue personal gains, a separate body of managers is set up who are entrusted with the management of the company to utilize its money unbiasedly.



Appears in
2020 - Fall - Issue 10