A company is an independent legal entity. A company can be disbanded either voluntarily by members or by court order.
Practice these free CBSE Class 11 Business Studies multiple choice questions and answers on Company Law that meet the latest exam pattern to ace your business studies exam.
Finding the appropriate corporate structure is one of the most crucial decisions a business must make, as it will have an enormous impact on how business is conducted and on future expansion plans. Furthermore, selecting an ideal structure ensures compliance with the local laws in which your operations occur.
There are three primary business structures, including sole proprietorships, partnerships, and corporations. Of these structures, sole proprietorships are typically the easiest for small businesses. Their owner assumes full responsibility and liability.
A partnership is an arrangement in which two or more individuals join forces to form a joint venture for professional or trade businesses, offering greater flexibility and freedom than sole proprietorship but making management of multiple partners challenging.
A corporation is a legal entity owned by shareholders, each type offering different advantages and disadvantages; some have different ownership structures, while others are taxed differently.
Johnson & Johnson is one of many large companies with a divisional structure, which allows each division to customize its systems specifically to each market it covers. Such structures are particularly efficient because they enable each division to tailor itself according to market needs.
Company Secretarial Functions
The company refers to a legal entity formed when multiple people establish themselves as a business and enjoy limited liability as it’s distinct from its members, and therefore, no assets belonging to the members are held personally in case the company fails. Companies can be established for various purposes and must file certain information with the registrar on a regular basis.
Not all companies appoint a company secretary; if required by their articles of incorporation, this must happen. Company secretary duties (commonly referred to as cosec) can be quite varied and complex, though laws impose some basic administrative tasks and obligations on all businesses that codecs must fulfill; these tasks may be delegated internally or outsourced to third-party services like Elemental CoSec; however, ultimately their fulfillment lies with directors themselves.
The Company Secretary plays an essential role in supporting the chair and board in ensuring that the board and its committees operate efficiently, in line with best governance practices, including providing high-quality information ahead of meetings and facilitating practical discussion and debate. Furthermore, she informs them about their legal responsibilities under corporate governance requirements while keeping abreast of new developments related to corporate governance practices and requirements.
As soon as a business becomes an incorporated legal entity, its liability and tax liabilities become separate from its owners, and incorporation can offer numerous advantages over operating directly as an LLC or sole proprietorship. Furthermore, incorporation enables property ownership under its name while conducting business more professionally – as well as helping protect shareholders/owners’ assets from being used to pay debts incurred through business operations.
To form a legal entity, firms must file articles of incorporation with the state in which they operate. These documents contain information such as their legal name and purpose as well as details on public or private shares held and registered office addresses. Furthermore, articles of incorporation serve to lay out guidelines that specify internal operations – for instance, rules concerning shareholder meetings, compensation packages, or how the board of directors operates.
Once a company’s articles of incorporation have been approved, they must be filed with the registrar of companies for registration and receipt of a Certificate of Incorporation from them – this document allows businesses to begin operating.
Company dissolution is the act of officially closing your business, including ceasing operations, but also settling all assets, debts, and affairs incurred as part of its existence. Before applying for its dissolution, all applicable procedures outlined by your governing documents must be followed precisely.
Before dissolving a company, its final federal and state payroll and corporate tax forms must be submitted. You should also settle any outstanding liabilities, such as goods/services paid for but yet to be delivered or short-term debts that remain outstanding, paying employees as required, and meeting with creditors as necessary. If these steps don’t resolve all outstanding debts/liabilities completely you may wish to consider selling off accounts receivable (ARs) through factoring companies to reduce debt levels prior to applying to have your company dissolved.
As there can be various reasons for dissolving a company, all involved must understand the possible repercussions. Failing to follow proper processes when dissolving, you could face legal charges and be barred from holding future directorships for 15 years if your decision goes against established procedures.
When your company dissolves, its registration must be removed from Companies House’s register of companies. To do this, complete and submit an Application to Strike Off form (DS1) to Companies House along with copies for anyone affected by it and send copies to anyone directly affected by it.