CORPORATE LAW

MODULE -1
INTRODUCTION TO COMPANY

Meaning of Companies Act 2013

The Companies Act, 2013 was introduced to provide an overall framework and
a set of rules for companies in India. The Act is comprehensive and inclusive
legislation covering all aspects of company operations.
The Companies Act, 2013 has been enacted to promote the economic development
and welfare of the country by making it easier for Indian companies to start and
operate their businesses. The Act also aims at improving corporate governance in
India.
The objectives behind the enactment of this legislation are as follows:
1) To provide a comprehensive framework for regulating companies in India
2) To make it easier for Indian companies to start and operate their
businesses;
3) To promote corporate governance in India;
4) To improve economic development in the country by promoting
entrepreneurship.
The Companies Act, 2013 is a law that regulates the governance of companies in
India. It was enacted by the Government of India on April 1, 2013 and came into
force on April 1, 2014.
The Companies Act, 2013 has been criticised for its clarity in certain areas. One
such place is what constitutes a company under this Act. The law does not define
what constitutes a company and leaves it to be decided by the courts.
The Companies Act, 2013 also does not provide any specific penalties or sanctions
for violations of this Act. It led to inconsistent rulings from different courts, which have
confused the interpretation and implementation of this Act.
The Companies Act, 2013 was passed by the Parliament of India to provide a strong
and effective regulatory framework for companies in India.
The Companies Act, 2013 has introduced a new concept of board meeting minutes.
The minutes must be approved by all members who attended the meeting. It also
introduced a new idea of a company secretary who is responsible for administering
the affairs of the company.
Definition
Section 2(20) of the companies Act 2013, defines that "a company means a
company formed and registered under this Act or an existing company". This
definition does not clarify the position.
Lord Justice Lindley defined company as "an association of many persons who
contribute money or money's worth to a common stock and employ it in some trade or
business and who share the profit and loss arising there from".
Henry defines a company as incorporated association which is an artificial person
created by law, having separate entity with a perpetual succession and common seal".
For our discussion in this work, we consider the given in 2013 Act [under Sec. 2(20)].

Features of the Company

Following features can be observed in a company registered under the Companies
Act.
1. Registration
2. Separate legal entity
3. Common seal
4. Perpetuity
5. Limited liability
6. Separation of ownership and management
7. Transferability of share
8. Separate property.
1. Registration
The company is created only when registered under the Companies Act, 2013. It
comes into existence from the date mentioned in the certificate of incorporation. But
for the formation of a public company at least seven persons and for private company
at least two persons are necessary. These persons agree to come together and lend
their names to the Memorandum of Association and other legal requirements of
registration for the incorporation of a company, with or without limited liability.
2. Legal Entity
Legal entity can be divided into (i) Artificial legal entity, and (ii) Separate legal entity.
(i) Artificial legal entity: A company is an artificial person with a legal entity of its own.
It acts through the board of directors, by the shareholders. It is regarded as an entity
separate from its shareholders or members. Hence, a shareholder can sue the
company and be sued by it.
The company can acquire and dispose of property, can enter into contract with third
parties in its own name, and can sue and be sued in its name. This is borne out in
Batas V. Standard and Land Co. case.
(ii) Separate legal entity: A company as a legal entity distinct from and independent of
its member. This establishes a claim for its independent corporate existence.
The property of the company is to be used for the benefit of the company and not for
its members or shareholders as individuals. The creditors can recover their money
only from the property of the company. They cannot sue individual member. Similarly,
the company is not liable for the debts of the individual members. This separate legal
entity is also recognised by the Income Tax Act, whenever a company is required to
pay tax on its profits and the shareholders have to pay the tax in their individual
capacity when they receive the dividend This establishes a claim that a company and
the shareholders are two separate legal entities, claiming their own rights.
3. Common Seal
The company being an artificial legal entity, or person, it cannot act on its own. So, it
acts through natural persons like the directors or the Secretary who is authorised.
Hence, the need for a common seal of the company for all contracts entered into by
the Directors or the Secretary. The common seal is like the signature of a company.
The seal bears the name of the company engraved on it. Every document issued by
the company, say a debenture or a bond must bear the seal of the company duly
witnessed by two directors of the company.
The Companies (Amendment) Act, 2015 states that the common seal is no more
mandatory. It has been made optional. All such documents which required affixing the
common seal may now instead be signed by two directors or one director and a
company secretary of the company.
4. Perpetuity
The company created by law lives in perpetuity unlike a human being. It never dies
with retirement or death of its members as is the case with partnership. It is created
by law and an end to it can be put by the process of law only. This establishes in law
the perpetual succession which means that once a company is established it exists
irrespective of the variation or the composition of its members. This lends stability and
long life to a company form of organisation.
5. Limited Liability
Limited liability of the members is a distinct advantage of the company form of
organisation. A company may be (i) Limited by shares, or (ii) Limited by guarantee.
(i) In a company limited by shares, the liability of members is limited to the nominal
value of the shares held by them. In respect of partly paid shares, the liability extends
up to the balance of the nominal value of the shares. But if he has paid the full nominal
value of the shares held by him, his liability is nil.
(ii) In case of a company whose liability is limited by guarantee, the liability of the
members is limited to such amount as the members may decide to contribute to the
assets of the company, in the event of its being wound up.
Thus, we find that limited liability has enabled the companies to collect the small
savings of the people into huge share capital for the formation of capital and utilisation
for further production without affecting the fortunes of the investors in the event of the
failure of the company, but given a fair and continuous return in the event of company
running smoothly and profitably.
The importance of limited liability is pointed out in the case of London and Globe
Finance Corporation, Rc (1903) 1 Ch. 728. Where it is said "The statutes relating to
limited liability have probably done more than any legislation of the last fifty years to
further the commercial prosperity of the country. They have, to the advantage of the
investor as well as of the public, allowed and encouraged the aggregation of small or
comparatively small sums into great capitals, which have been employed in
undertaking of great public utility, largely increasing the wealth of the country".
6. Separation of Ownership and Management
In company, shareholders are the owners but the management is entrusted to aboard
of directors who are separate from the body of the shareholders. Further, a
shareholder a is not an agent of the company or of the other shareholders and he
cannot bind them by his acts, in a company form of organisation management is
divorced from ownership.
7. Transferability of Shares
Sec. 44 of the Companies Act, 2013, provides that "the shares or other interest of any
member shall be movable property, transferable in a manner provided for in the articles
of the company. Therefore, a member may:
(i) sell his shares in the open market, or
(ii) transfer his shares to anybody he likes in a public limited company as per laid
down in the articles of the company. However, there are certain restrictions the transfer
of shares in respect of private limited companies as the very nature of the company
indicates, namely, private.
8. Separate Property
A company has a right to own and transfer property since it is a legal entity. A
shareholder has no right in the property of the company but merely to their shares.
Therefore, the claims of the company's creditors will be against the company's
property and not that of the shareholders. A company can sue and be sued for
enforcement or breach of legal rights as the case may be. This was decided in the
case of Gramophone & Typewriter Co. Ltd. V. Stanley, (1908) 2 K.b. 89.

Salient Features of the Companies Act 2013

 It has introduced the concept of ‘Dormant Companies’. Dormant companies are
those that have not engaged in business for two years consecutively.
 It introduced the National Company Law Tribunal. It is a quasi-judicial body in
India adjudicating issues concerning companies. It replaced the Company Law
Board.
 It provides for self-regulation concerning disclosures and transparency rather
than having a government-approval-based regime.
 Documents have to be maintained in electronic form.
 Official liquidators have adjudicatory powers for companies having net assets
of up to Rs.1 crore.
 The procedure for mergers and amalgamations has been made faster and
simpler.
 Cross-border mergers are allowed by this Act (foreign company merging with
an Indian company and reverse) but with the permission of the Reserve Bank
of India.
 The concept of a one-person company has been introduced. This is a new type
of private company which may have only one director and one shareholder. The
1956 Act required at least two directors and two shareholders for a private
company.
 Having independent directors has been made a statutory requirement for public
companies.
 For a prescribed class of companies, women directors are mandatory.
 All companies should have at least one director who has been a resident of
India for not less than 182 days in the last calendar year.
 The Act provides for entrenchment (applying extra-legal safeguards) of the
articles of association.
 The Act mandates at least 7 days of notice for calling board meetings.
 In this Act, the duties of a Director have been defined. It has also defined the
duties of ‘Key Managerial Personnel’ and ‘Promoter’.
 For public companies, there should be a rotation of audit firms and auditors.
The Act also prevents auditors from performing non-audit services to the
company. In case of non-compliance, there is substantial criminal and civil
liability for an auditor.
 The whole process of rehabilitation and liquidation of the companies in the case
of the financial crisis has been made time-bound.
 The Act makes it mandatory for companies to form CSR committees, and
formulate CSR policies. For certain companies, mandatory disclosures have
been made with regard to CSR.
 Listed companies ought to have one director to represent small shareholders
as well.
  There is provision for the search and seizure of documents, during the
investigation, without an order from a magistrate.
 Norms have been made stringent for accepting deposits from the public.
 The setting up of the National Financial Reporting Authority (NFRA) has been
provided for. It engages in the establishment and enforcement of accounting
and auditing standards and oversight of the work of auditors. (Due to the
notification of NFRA, India is now eligible for membership in the International
Forum of Independent Audit Regulators (IFIAR).)
 The Act bans key managerial personnel and directors from purchasing call and
put options of shares of the company if such person is reasonably expected to
have access to price-sensitive information.
 The Act offers more power to shareholders in that it provides for shareholders’
approval for many major transactions.

Kinds of Companies
One-Person Company
Under Section 2(62) of Companies Act, 2013, "One Person Company" means a
company which has one person as a member.
Definition of One Person Company
Section 2(62) of Companies Act defines a one-person company as a company that
has only one person as to its member. Furthermore, members of a company are
nothing but subscribers to its memorandum of association, or its shareholders. So, an
OPC is effectively a company that has only one shareholder as its member.
Such companies are generally created when there is only one founder/promoter for
the business. Entrepreneurs whose businesses lie in early stages prefer to create
OPCs instead of sole proprietorship business because of the several advantages that
OPCs offer.
1. One Person Company
 One Person Company (OPC) is a type of private company that has only one
member. OPC was introduced with the main aim of promoting entrepreneurship
and corporatization of business.
 However, it is to be noted that an OPC is different from a sole proprietership,
as an OPC is a separate legal entity and the member of the OPC has limited
liability, whereas in the case of a sole proprietership the liability of the owner is
not limited. There is no minimum paid-up capital required for constituting OPC.
 However, only a natural person who is an Indian citizen resident or otherwise
stayed in India for not less than 120 days during the immediately preceding
financial year shall be eligible to incorporate an OPC or to be a nominee for the
sole member of an OPC. No minor can become a member or a nominee in
 OPC. Also, OPC cannot be converted into a company registered under section
8 of the Act.
Features of a One Person Company
Here are some general features of a one-person company:
a. Private company: Section 3(1)(c) of the Companies Act says that a single
person can form a company for any lawful purpose. It further describes OPCs
as private companies.
b. Single-member: OPCs can have only one member or shareholder, unlike
other private companies.
c. Nominee: A unique feature of OPCs that separates it from other kinds of
companies is that the sole member of the company has to mention a nominee
while registering the company.
d. No perpetual succession: Since there is only one member in an OPC, his
death will result in the nominee choosing or rejecting to become its sole
member. This does not happen in other companies as they follow the concept
of perpetual succession.
e. Minimum one director: OPCs need to have minimum one person (the
member) as director. They can have a maximum of 15 directors.
f. No minimum paid-up share capital: Companies Act, 2013 has not prescribed
any amount as minimum paid-up capital for OPCs.
g. Special privileges: OPCs enjoy several privileges and exemptions under the
Companies Act that other kinds of companies do not possess.

Private Company
A private company is owned by either a small number of shareholders, company
members, or a non-governmental organization, and it does not offer its stocks for sale
to the general public. Instead, its stock is offered, owned, or exchanged privately
among a small number of shareholders – or even held by a single individual. Private
companies are also referred to as privately-held companies, limited companies, limited
liability companies, or private corporations, depending on the country they’re
incorporated and how they are structured.
 A Private Company as mentioned under Section 2(68) of the Companies Act
2013, has a minimum of 2 members and a maximum of 200 members, however,
this figure shall exclude employees and ex-employees who are also the
shareholders in the company.
 A Private Company cannot invite the general public to subscribe to
their shares/debentures. Shares of private companies are not freely
transferable and these shares can’t be transferred. A private company should
have Private Limited as a suffix in its name.
Definition of Private Company
Section 2(68) of Companies Act, 2013 defines private companies. According to that,
private companies are those companies whose articles of association restrict the
transferability of shares and prevent the public at large from subscribing to them. This
is the basic criterion that differentiates private companies from public companies.
The Section further says private companies can have a maximum of 200 members
(except for One Person Companies). This number does not include present and former
employees who are also members. Moreover, more than two persons who own shares
jointly are treated as a single member.
This definition had previously prescribed a minimum paid-up share capital of Rs. 1
lakh for private companies, but an amendment in 2005 removed this requirement.
Private companies can now have a minimum paid-up capital of any amount.
Features of Private Companies
These are some features that distinguish private companies from other types of
companies:
i. No minimum capital required: There was a minimum paid-up share capital
requirement of Rs. 1 lakh previously, but that is omitted now.
ii. Minimum 2 and maximum 200 members: A private company can have a
minimum of just two members (but just one is enough if it a One Person
Company), and a maximum of up to 200 members.
iii. Transferability of shares restricted: Private companies cannot
freely transfer their shares to the public like public companies. This is why stock
exchanges never list private companies.
iv. “Private Limited”: All private companies must include the words “Private
Limited” or “Pvt. Ltd.” in their names.
v. Privileges and exemptions: Since private companies do not freely transfer
their shares and involve limited interest by members, the law has granted them
several exemptions that public companies do not enjoy.
Public Company
A public company is a corporation wherein the ownership is dispensed to general
public shareholders through the free trade of shares of stock over-the-counter
at markets or on exchanges. Even though a minute percentage of shares are initially
given to the public, the daily trading which happens in the market will determine the
worth of an entire company. It is termed as ""public"" as the shareholders, who
become equity owners of the firm, may be composed of any individual who buys stock
in the firm.
Public companies are traded publicly within an open market. Various investors buy
shares. Mostly, public companies were initially private companies who became public
companies to raise capital post complying with all of the regulatory requirements.
In the case of a public company the minimum number of persons required to form a
company is seven and there is no maximum limit. It can invite the public to subscribe
to its shares and it does not impose any of the conditions necessary in the case of a
private company and any person competent to contract can become a member. To
commence its business, it must have at least three directors and also it should obtain
a certificate to commence business from the Registrar of Companies.
 A Public Company is defined in Section 2(71) of the Companies Act, 2013. To
establish a Public company, a minimum of seven members is required and
there is no ceiling limit on the number of maximum members. In the case of a
Public company, there are no restrictions on the buying and selling of shares.
 Any subsidiary of a public company shall be deemed to be a Public company.
The shares of a Public company can be freely transferred. A Public company
that has limited liability is required to add the word ‘limited’ at the end of the
name. A Public company should have limited; as a suffix in its name.
 In case a company does not comply with the specified provisions of the
Companies Act, it will renounce the status of a Private company. To transform
a Public company into a Private company, the company is required to adopt a
special resolution at the general meeting; i.e., 75% majority.
Definition of Public Company under Companies Act, 2013
Under Sec 2(71) a "Public Company" means a company which -
(a) is not a private company;
(b) has a minimum share capital of five lakh rupees or such higher paid-up capital as
may be prescribed.
Features of Public Company
Here are some features of a public company:
 Separate legal entity: A public company is distinct from its members.
 Perpetual succession: A public company can continue to exist even if its
membership changes.
 Trade on stock exchanges: Public companies can sell shares to the public and
trade them on stock exchanges. Shareholders can transfer their shares without
many restrictions.
 Transparent management: Public companies must regularly disclose their
business operations to shareholders. They must also disclose their financial
information to the public.
 Strict regulatory oversight: Public companies are governed by the Companies
Act and SEBI.
 Paid-up capital: Public companies must have a minimum amount of paid capital
to be established.
  Suffix: Public companies must add "Limited" to their name.
 Prospectus: Public companies must issue a prospectus.
 Limited liability: Shareholders in a public company are only responsible for
losses up to the amount of money they invested.
 Board of directors: Public companies have boards of directors that represent
shareholders and oversee the company. Directors are especially important to
investors in individual stocks.
 Director Identification Number (DIN): All directors of a public company must
have a DIN, which is an 8-digit unique ID number that is valid for life.

Difference between A Public Company and A Private Company

The difference between public and private companies is shown in the following Table.
Public Company Private Company
Formation In the case of a public In the case of a private
company, formation is company, the formation is
difficult. Certificate of not difficult. The company
Incorporation and the can commence business
Certificate to Commence immediately after its
Business will have to be incorporation and there is
obtained from the no need to obtain a
Registrar of Joint Stock Certificate to Commence
Companies. Further, Business. There is also no
consent of the directors need to file documents
and a copy of their relating to directors.
contract to purchase
qualification shares must
also be filed with the
Registrar.
End-words of the Name A public company must A private company must
have only the word have the words Private
'Limited' in its name. Limited' in its name.

Membership In the case of a public In the case of private

company, the minimum company, the minimum is
number of members two and the maximum is
required is seven and 200.
there is no maximum limit.
Prospectus A public company must file In the case of a private
a prospectus or a company, there is no need
statement in lieu of to file a prospectus or
prospects with the statement in lieu of the
Registrar before allotting prospectus.
shares.
Allotment of Shares In the case of a public There are no restrictions
company, there are precedent to allotment of
number of legal shares in a private
restrictions on the company.
allotment of shares.

Memorandum and Articles In the case of a public In the case of a private

of Association company seven members company it is enough if
have to sign the two members sign.
memorandum and articles
of association.

Preparation of Articles A public company need A private company cannot

not prepare articles and it have Table "A' because,
can choose to adopt Table by definition, it must
'A' of the Companies Act, impose certain restrictions
which contains model upon itself through
rules and regulations. relevant provisions in the
articles. Hence, in the
case of a private company,
compulsorily, articles will
have to be prepared.

Public Issue of Capital A public company can A private company is

invite the public through its prohibited from inviting the
prospectus to contribute to public to subscribe to its
its shares and debentures. capital.

Transfer of Shares Shares of a public In the case of a private

company are freely company transfer of
transferable from one shares is restricted by its
person to another and articles and its shares
they can be quoted on the cannot be quoted on the
stock exchange. stock exchange.

Directors Every public company No loans to directors can

must have at least three be sanctioned without the
directors and they are approval of the Central
subject to retirement by Government. In the case
rotation. There is a limit on of a private company,
directorships in a public there should be at least
company, and there are two directors and they not
legal restrictions on the retire rotation every year.
remuneration of directors There are no limits on the
of a public company. directorships of a private
and there are no
restrictions on the
remuneration of directors.
Further, directors of
private companies can
 borrow from their
company without the
approval of the Central
Government.

Statutory Meeting A public company must A private is neither

hold a statutory meeting required to hold the
and file a statutory report statutory meeting nor file
with the Registrar within the statutory report with
six months from the date the Registrar.
of obtaining the certificate
to commence business.

Share Warrant A public company is A private company is

allowed to issue share prohibited from the issue
warrants per bearer. of share warrants per
bearer.

Shares A public company cannot There is no such

issue deferred shares and restriction on an
it issues only equity and independent private
preference shares. company and it can issue
deferred shares even with
disproportionate voting
rights.

Privileges of a Private Because of the Private companies enjoy

Company advantages of limited certain privileges which
liability, privacy in are not allowed to a public
business and simplicity in company and this is also
formation, many people to one of the reasons for its
start private companies popularity.
rather than public
companies.

Companies Limited by Guarantee

In the case of these companies, each member gives a guarantee for the debts of the
company up to a certain extent. Trade associations, clubs, and societies which are
formed to promote social and cultural activities, are examples of this type.
Company limited by guarantee is also termed as Guarantee Company. In a simpler
term, it’s a company without any shareholders but it is owned by members called
guarantors who agrees to pay a nominal amount in the event of company’s being
wound up. It’s a specific form used for non-profit organisation. Under this form, profits
earned by the company are re invested again in the company to use it for different
purposes.
Definition
Section 2(21) company limited by guarantee, “company limited by guarantee”
means a company having the liability of its members limited by the
memorandum to such amount as the members may respectively undertake to
contribute to the assets of the company in the event of its being wound up.

Features of Company Limited By Guarantee

1. It has members and not shareholders-
In the case of a company limited by guarantee, there are no shareholders but members
as they contribute only at the time of winding up of the company. But just like
shareholders, members are supposed to attend meetings, take up major decisions,
and vote accordingly.
Companies limited by guarantee are usually not-for-profit companies and thus
members have to be available, take the general meetings, and decide on the important
matters related to the club or organization.
Also, just like other companies have different classes of shareholders, companies
limited by guarantees can have different slabs of members. Some may be voting while
others may not.
2. Number of Directors-
The companies limited by guarantee must have at least one director directing and
supervising the club and its members. The directors may even be called a committee,
management committee, trustees, and many more.
But, whatever their name is they will still have to manage the affairs of the organization
and if any day-to-day activities.
3. Zero share capital-
The company limited by guarantee is a hybrid form suitable for both non-profit
organizations and businesses. The members are thus not general shareholders but
guarantors, who accept liability in the event that the company is wound up with debts
outstanding.
The most common arrangement is to require each member to guarantee a nominal
amount (usually a small sum like £1) upon winding up but without any right to
participate in the profits of the company (which would make it a profit-sharing
guarantee company). This type of limited liability is often used by clubs, associations,
and sporting bodies (such as cricket clubs), as well as charities.
Because a company limited by guarantee can’t have a share capital, it can’t offer
shares to those who sponsor it and join it, its fund-raising capacity is limited. As a
result, some projects that are not primarily profit-driven are established.
4. Not-for-profit-
 A company limited by guarantee cannot share its profits among its members the sole
reason being it might be used for not-for-profit organizations.
The main reason for limiting profit distribution is that it prevents the members of a
company from benefiting directly from its activities, at least until its debts have been
paid in full. This is important where there are third parties who may have a claim
against the company, such as creditors who have supplied goods or services to it.
As long as they remain unpaid, they would be in a much worse position than members
if the latter were allowed to benefit from its activities. The principle underlying this is
that members should not benefit at the expense of creditors; rather, creditors should
be paid first in priority to members.
Companies Limited by Shares
In the case of these companies, liability being limited by shares, the member is called
upon to pay only the unpaid amount on shares held by him. Most of the companies
formed today are of this type and in the following discussion we will deal mainly with
this type of company on the basis of holding of shares.
Company Limited by Shares

Definition
According to the provisions of Section 2(22) of the Companies Act, 2013, when the
liability of the members of a company is limited by its MOA to the amount of unpaid
shares (if any) held by them, in such case it is known as a Company Limited by Shares.
 In this case, the shareholder may be called upon to contribute only to the extent
of the amount due on his shareholding, for meeting the debts of the company.
However, the separate property of shareholders cannot be encompassed to
meet the company’s debt.
 As the company is a legal person in the eyes of the law, ownership of assets
remains with the company only. Although, a shareholder is a co-owner of the
company, but he is not a co-owner of the company’s assets. The rights and
duties of a shareholder as co-owner are considered by his shareholdings.
Features Of Company Limited By Shares
 The controlled corporation is considered to be formally independent. As a result,
the organization has the benefit of surviving further than the lives of its founders.
 A corporation’s joint-stock will prove to be very helpful in raising funds and
protecting their firm’s name by trading stocks to all the other people.
 The owners will only be responsible for paying that the business will incur based
on their amount of funding, and nothing more. The above are among the major
remarkably and precedence of running a business as a limited company.
 Unless the corporation is faced with economic difficulties, the individual money
and retirement investments of the investors are safeguarded. The personal
 partnership is especially crucial for businesses that wish to ensure superior
offerings that may result in complaints and obligations in the streetscape.
 A stakeholder in such a corporation has a benefit since the profit earned from
the assets are not chargeable. Furthermore, restricted firms are only charged
on their earnings, hence they are not subject to the tax increases that apply to
general partnerships.

Difference between Company Limited by Shares and Company

Limited by Guarantee

Feature Company Limited by Shares Company Limited by Guarantee

A legal entity where the company’s capital

A legal entity where members agree to
is divided into shares owned by
contribute a nominal amount towards
Definition shareholders. The liability of each
the company’s debts in the event of
shareholder is limited to the amount unpaid
winding up. Does not have share capital.
on their shares.

Typically established for non-profit

Primarily established for profit-making
purposes, such as clubs, charities and
Purpose purposes. Aims to generate profits and
societies. Profits are reinvested to
distribute dividends to shareholders.
further the organisation’s objectives.

Limited to the amount members have

Limited to the amount unpaid on their
Liability agreed to contribute if the company is
shares.
wound up.

Does not issue shares; relies on

Capital
Can issue new shares to raise capital. membership fees, grants, donations or
Raising
borrowing.

Profit Profits can be distributed as dividends to Profits are not distributed to members
Distribution shareholders. but are reinvested in the company.

Members do not own shares.

Governance Ownership is determined by the number of Governance is defined by the
and shares held. Control is often related to memorandum and articles of
Ownership shareholding percentage. association, with members usually
having equal say.
 Suited for organisations aiming to
Suited for businesses looking to make a
support a cause, provide services or
Use Cases profit and potentially offer returns on
promote membership benefits without
investment.
intending to make a profit.

Legal and Subject to corporate tax on profits, financial May have additional regulations if
Regulatory reporting and other regulations under classified as a charity, including specific
Requirements corporate laws. reporting and operational guidelines.

Holding Company
A holding company is a type of corporation or entity that owns a significant portion of
the shares or voting rights in other companies, known as subsidiaries. The primary
purpose of a holding company is to hold and manage investments in other businesses
rather than to engage in the day-to-day operations of those subsidiaries.
Features of a Holding Company:
 Ownership of Subsidiaries: A holding company holds a controlling interest
(usually more than 50%) in its subsidiaries, either through ownership of their
voting stock or through contractual agreements.
 Control and Governance: While a holding company may exert control over its
subsidiaries through its ownership stake, it typically does not involve itself in the
day-to-day management or operational activities of those subsidiaries. Instead,
it may provide strategic direction, financial support, and governance oversight
to its subsidiaries.
 Investment Strategy: Holding Companies often have a diversified portfolio of
investments across different industries and sectors. They may acquire
subsidiaries for strategic reasons such as expanding into new markets,
diversifying their revenue streams, or leveraging synergies between
businesses.
 Financial Reporting: Holding Companies typically consolidate the financial
statements of their subsidiaries into their own financial reports. This
consolidation provides a comprehensive view of the overall group’s financial
performance and helps stakeholders assess the holding company’s investment
portfolio.

Subsidiary Company
A subsidiary company is a distinct legal entity that is controlled by another company,
known as the parent company or holding company. The parent company holds a
majority of the subsidiary’s voting stock or shares, giving it control over the subsidiary’s
operations and management.
Features of a Subsidiary Company:
 Ownership: A subsidiary company is owned, either wholly or partially, by
another company, known as the parent company. The parent company typically
holds a majority stake (usually more than 50%) in the subsidiary, giving it control
over the subsidiary’s decision-making processes.
 Control and Management: While a subsidiary operates as a separate legal
entity, it is ultimately subject to the control and influence of the parent company.
The parent company may appoint members to the subsidiary’s board of
directors and exercise control over major decisions, such as strategic direction,
financial policies, and significant investments.
 Operational Independence: Subsidiary Companies maintain a degree of
operational autonomy and independence from the parent company. They have
their own management teams, employees, operational structures, and
business strategies. However, major decisions may require approval from the
parent company.
 Financial Reporting: Subsidiaries maintain their own financial records and
produce separate financial statements, including income statements, balance
sheets, and cash flow statements. However, these financial statements may be
consolidated into the financial reports of the parent company to provide a
comprehensive view of the overall group’s financial performance.

Difference between Holding Company and Subsidiary Company

Basis Holding Company Subsidiary Company

A holding company is a A subsidiary company is a

corporation or entity that owns separate legal entity that is
Meaning a controlling interest in one or controlled by another company,
more other companies, known as the parent or holding
known as subsidiaries. company.

A holding company is an A subsidiary company is a

entity that owns a significant separate legal entity that is
portion of the shares or voting controlled by another company,
Ownership rights in other companies. It known as the parent or holding
typically holds controlling company. The parent company
interest (usually more than holds the majority of voting rights
50%) in its subsidiaries. or shares in the subsidiary.
Basis Holding Company Subsidiary Company

A holding company exercises Subsidiaries operate

control over its subsidiaries autonomously to some extent
Control through ownership of their but are ultimately subject to the
voting stock or through control and influence of the
contractual agreements. parent company.

It may provide strategic

They have their own
direction and governance
management teams and
oversight but typically does
Management operational structures, but major
not involve itself in the day-to-
decisions may require approval
day management of its
from the parent company.
subsidiaries.

Holding Companies do not Subsidiaries are independent

engage in the operational legal entities that engage in
activities of their subsidiaries. operational activities within their
Business
Instead, they primarily focus respective industries. They may
Operations
on holding and managing have their own products,
investments in other services, customers, and
businesses. revenue streams.

Holding Companies typically

consolidate the financial Subsidiary Companies maintain
statements of their their own financial records and
subsidiaries into their own produce separate financial
Financial
financial reports. This statements. However, these
Reports
consolidation provides a financial statements may be
comprehensive view of the consolidated into the financial
overall group’s financial reports of the parent company.
performance.

Holding Companies are

generally not liable for the Subsidiaries have limited liability,
debts and obligations of their meaning their obligations are
Liability
subsidiaries. Each subsidiary generally separate from those of
maintains its own legal and the parent company.
financial independence.
Basis Holding Company Subsidiary Company

WhatsApp Inc. (owned by Meta

Berkshire Hathaway, led by
Platforms, Inc.) WhatsApp is a
renowned investor Warren
popular messaging application
Buffett, is a multinational
Example used by billions of people
conglomerate and holding
worldwide for communication,
company based in the United
sharing media, and staying
States.
connected.

Government Company
A Government company is established under the Indian Companies Act and is
registered and governed by the provisions of the Indian Companies Act. The basic
purpose behind the establishment of a Government Company is to run an industrial or
commercial undertaking. Government is the major shareholder of a Government
Company and hence exercises major control over its management. One can form a
Government Company as a Private Limited Company or a Public Limited Company.
All the provisions mentioned in the Companies Act are applicable to Government
companies unless something else is specified. Also, some of the provisions of the Act
are applicable to the retirement or appointment of directors and other managerial
personnel of the company. Some examples of Government Company are BHEL
(Bharat Heavy Electricals Ltd.), ONGC (Oil and Natural Gas Corporation), Indian Oil
Corporation Limited, State Bank of India, etc.
Definition
Under Section 2(45) of the Companies Act, 2013 a company in which not less than
51% of the share capital is held by the Central Government and/or by any State
Government or Governments is called a Government Company. It may be a public
company or a corporation or a company directly managed by the Governments. Some
of the prominent Government Companies are: Bharat Electronics Limited and
Hindustan Aeronautics Limited.
Features of Government Company
1. Separate Legal Entity: A Government Company has a separate legal entity
independent of the Government. It means that the company can acquire property,
enter into a contract, can sue another company by filing a suit against them in a court
of law, or can be sued by other companies.
2. Incorporation: A Government Company is registered under the Companies Act,
2013 or any previous Company Law, and is governed by its provisions. It is formed by
an executive decision, instead of a legislative decision.
3. Management: The Government nominates the Board of Directors who manage the
company and its activities. Also, like any other Public Limited Company, a Government
Company’s management is regulated by the provisions of the Companies Act, 2013.
4. Governed by Provisions of Memorandum and Articles of Association: The
main documents of a Government Company includes the Memorandum of Association
and Articles of Association. These documents contain information like rules and
regulations of the company related to the appointment of employees, objects of the
company, etc.
5. Accounting and Audit Procedures: Unlike Departmental Undertakings, a
Government Company is free from audit, budgetary, and accounting controls.
However, the auditor appointed by the Central Government has to present an Annual
Report in front of the State Legislature or Parliament.
6. Finance: The State or the Central Government contributes at least 51% of the
capital of a Government Company, and it can raise the rest of the capital from the
capital market.
Government and Non-Government Companies - Difference
The difference between a government company and a non-government company is
as follows:
Government Companies Non-Government
Companies
Capital The capital of a government In the case of non-
Subscription company is subscribed wholly or government
to the extent of at least 51% by companies, capital is
the Central Government and / or subscribed by the
one or more State Governments. promoters and investing
public.

Appointment of The auditors of a government In the case of a non-

Auditors company are appointed or re- government company, an
appointed by the Central auditor is appointed or re-
Government on the advice of the appointed by the
Comptroller and Auditor-General shareholders in the general
of India. meeting.

Auditing of The accounts of government In the case of non-

Accounts and companies are audited by government companies,
Annual Reports auditors appointed by the accounts are audited by an
government. Annual reports on auditor appointed by the
the working and affairs of the shareholders and audit and
government companies together annual reports are placed
with a copy of the audit report are before the shareholders for
required to be placed in discussion and there is no
parliament or the concerned need to submit them to
State Legislature for discussion.
 Parliament or State
Legislatures.

Application of The application of the provisions The Central Government

the Provisions of of Companies Act to government cannot issue any such order
the Companies companies may be restricted or in respect of non- government
Act modified by notification in the companies.
Official Gazette by the Central
Government. For example,
government companies have
been exempted from the use of
word 'Private' in their names
even though they may be private
companies under the Act.

Associate Company
An associate company, also known as an affiliate company, is a company in which a
notable portion of shares is owned by a parent company. The portion usually lies
between 20% and 50%. Ownership of higher than 50% of the stock legally turns it into
a subsidiary of the parent company.
Because the minority interest (less than 50%) does not include the right to control the
affiliate company’s board decisions, the parent company does not have full authority
over the policies and business decision-making aspects of the associate company.
Definition
Under Sec 2(6) of Companies Act, 2013 "associate company in relation to another
company, means a company in which that other company has a significant influence,
but is not a subsidiary company of the company having such influence and includes a
Joint Venture Company. The influencing power is secured by acquiring 20 per cent or
more of share capital in that company and having an agreement to influence business
decisions.
Features
1. Significant Influence:
The defining characteristic of an associate company is the ability of the investing
company (referred to as the "holding company" in this context) to exert significant
influence over the financial and operating policies of the associate company.
This influence is typically evidenced by holding at least 20% of the voting power of the
associate company.
2. Control vs. Significant Influence:
Control: If a company holds more than 50% of the voting rights in another company, it
has control over that company, and the latter is termed a subsidiary.
Significant Influence: When a company holds between 20% to 50% of the voting rights
in another company, it generally indicates significant influence, making the latter an
associate company.
3. Financial and Operating Policies:
The holding company's influence is primarily through its representation on the board
of directors or through other strategic decisions that affect the associate company's
policies and operations.
Small Company
The Companies Act, 2013 (‘Act’) introduced the concept of small companies to provide
advantages for small businesses operating as private limited companies. Small
companies have less annual revenue compared to regular-sized companies. In a
developing country like India, small companies play a significant role in generating
profits and boosting employment. Thus, they are the backbone of the economy.
Small companies do not have any separate procedure to obtain registration under the
Act. It is registered as a private limited company. But the Act differentiates a private
company as a small company based on its less amount of investment and turnover.
Definition
Under Sec 2(85) of Companies Act, 2013 "Small Company" means a company, other
than a public company-
(i) the paid-up share capital of which does not exceed INR 2 crores (From 2021) or
such higher amount as may be prescribed which shall not be more than five crore
rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed INR 20
crores (From 2021) or such higher amount as may be prescribed which shall not be
more than twenty crore rupees;
Provided that nothing in this clause shall apply to-
(a) a holding company or a subsidiary company;
(b) a company registered under section 8; or
(c) a company or body corporate governed by any special Act.
Features of a Small Company
Low Profitability and Revenue
A small company has less revenue compared to medium and large companies. The
revenue depends on the type of business and the capability to generate revenue.
However, lower revenue cannot be considered as lower profitability of the company.
Fewer Employees
Since small companies have less paid-up capital and turnover, they onboard a small
team of employees than large companies. Sometimes, small companies may even be
handled by a single person or one team.
Smaller Market Area
Small companies serve the smaller sections of the community or society, like
convenience shops in a rural township. Thus, they have a small market area for
operating business activities.
Fewer locations
Generally, small companies have a limited area instead of several branches. They are
usually not established in other countries and several states. The sales of small
companies are confined to a single area.
Foreign Company
Under Section 2(42) of the Companies Act, 2013 a Foreign Company is that company
which is incorporated in a foreign country, but which has established a place of
business in wether by itself or through an agent, physically or through electronic mode.
Although foreign companies are not registered or incorporated in India, some of the
provisions of the Companies Act, are applicable to them. The Companies Act has
made several sections of the Act applicable to foreign companies in order to bring into
the ambit of the provisions applicable to Indian companies.
Under Section 380 of the Companies Act, 2013 every foreign company must, within
30 days of the establishment of its business, file with the registrar the following
documents:
(a) A certified copy of its charter, statutes, memorandum and articles or other
instruments defining its constitution.
(b) The full address of the registered or principal office of the company.
(c) List of the directors and secretary of the company with the required particulars.
(d) The name and address of the person authorised to receive any notice or document
etc., required to be served on the company in India.
(e) The full address of the office of the company which is to be deemed its principal
office of business in India.
In case of any alteration in any of the above particulars, Section 380 of the Act requires
the company to file with a return of such alteration within the prescribed time.
Features
 Foreign company should file their registered documents in form FC-1, duly
signed by authorized representative of foreign company including the
Memorandum and Articles of main incorporated company in the place outside
India with ROC. (Translated in English should be filed)
  Full address and list of directors and secretary of the Principal office of the
Company
 Particulars of the authorized person of the Indian company to whom further
correspondence to be made (for the purpose of effective service of notice or
document in future by the Registrar)
 Procedure for issuance of prospectus of the foreign company should comply
Section 34 to 36 of Acts
 Balance sheet, profit and loss account and other necessary documents of the
foreign company should be filed with ROC wherein the list of all its Indian
companies to be furnished.
 Books of accounts to be maintained in Indian office especially related to the
transactions that are made in India.
 Name of the foreign company should be displayed outside the office in English
and in local language
Listed Company
Under Sec 2(52) of Companies Act, 2013 Listed Company which has any of its
securities listed on any recognised stock exchange.
 According to the definition provided in Section 2(52) of the Companies Act,
2013, a listed company is a company that has any of its securities listed on any
recognised stock exchange within India or outside India. It is to be noted that
such class of companies, which have listed or intend to list a prescribed class
of securities, as may be prescribed in consultation with the SEBI, shall not be
considered as listed companies.
 The shares of listed companies can be traded freely on the stock exchanges.
Listed companies are strictly regulated by the Securities Exchange Board of
India (SEBI). A company that wishes to list its shares on stock exchanges can
issue a prospectus to the general public for subscribing to its securities.
 A company can also list its shares via an Initial Public Offer (IPO), whereas a
company that is already listed company can make a Further Public Offer (FPO).
Only public companies can be listed. For example, TATA technologies, Adani
Ports, Titan, MRF, etc. are listed companies.
Listed companies have many features, including:
 Ownership
Listed companies are owned by many shareholders because their shares are publicly
traded.
 Regulatory compliance
Listed companies must comply with regulations set by the exchange they are listed on
and by governmental authorities.
  Transparency
Listed companies are required to provide regular financial reporting to ensure
transparency and accountability.
 Liquidity
Because their shares are publicly traded, investors can usually buy or sell shares of
listed companies with ease, which offers them liquidity.
 Limited liability
This feature of a public limited company means that the company's debt is not imposed
on its members. This means that company members are not liable to pay the
company's debts or losses by selling their personal assets for more than their invested
capital.
 Access to capital
Going public can help companies overcome constraints by increasing their
shareholder base and giving them access to capital for growth and expansion plans.
 Board of directors
The board of directors has many roles, including setting strategy, approving the annual
budget, appointing project teams, and monitoring the performance of the management
team. Many public companies have boards that are made up of independent directors
who are usually elected by the shareholders.
Dormant Company
A dormant company is a registered entity recognized under the law but remains
inactive for an extended period. This inactivity is not indicative of wrongdoing or
financial distress; it is a strategic choice made by the company’s management or
shareholders. A dormant company does not engage in regular business activities,
trade, or significant accounting transactions, existing in a state of hibernation.
The concept of a dormant company provides a legal framework for businesses that
are currently inactive but may commence operations in the future. Dormant companies
maintain their legal status while minimising compliance and operational costs
associated with active companies. Being dormant does not mean a company is
defunct; it simply implies a hiatus from active business and financial transactions.
Definition of a Dormant Company
A company can be declared dormant if it is formed and registered for a future project
or to hold an asset or intellectual property and has not had any significant accounting
transactions since its inception. The Section 455 of Companies Act, 2013, provides
detailed criteria for a company to be classified as dormant and the procedure to
obtain this status. Significant accounting transactions exclude transactions like
payment of fees to the Registrar, payments made to fulfil legal requirements,
allotments of shares, and payments for maintaining offices and records. Any company
not performing activities other than these can be declared dormant.
Features
A dormant company is a company that is legally allowed to temporarily stop doing
business activities, but remains registered. Some features of a dormant company
include:
 No business operations: The company doesn't engage in any business
operations or significant transactions during its financial year.
 No outstanding loans: The company doesn't have any outstanding loans, public
deposits, or payment defaults.
 No statutory dues: The company doesn't have any workmen dues or statutory
dues.
 No listed securities: The company doesn't have any listed securities.
 No prosecution proceedings: The company isn't involved in any prosecution
proceedings, inquiries, or investigations.
 No dispute certificate: The company doesn't have a dispute certificate.
 Statutory audit: The company must undergo a statutory audit of its financial
statements, even though it's exempt from auditor rotation requirements.
 Protection of company name: The company's intellectual property includes its
trademark, which protects the company's name so that competitors can't use
it.
A dormant company can be a good way to keep a business in the public domain
without actively running it. For example, a company might choose to become dormant
while taking a break from trading.
Body corporate
As per Sec. 2 (11), "body corporate" or "corporation" includes a company incorporated
outside India but does not include-
(i) A co-operating society registered under any law relating to co-operative societies;
and
(ii) Any other corporate (not being a company as defined in this Act), which Central
Government may, by notification, specify in this behalf.
This definition implies the following.
(a) The term "corporation" is most commonly used to describe what the Act defines as
"body corporate". Thus, both terms are used as alternatives or synonyms.
(b) Corporation or body corporate includes companies that are formed either inside or
outside India.
(c) Body corporate does not include the following
 Co-operative societies
  Sole corporations
 Other companies that are not defined in the Indian Companies Act, 2013, that
the government of India chooses to specify. (Corporations officially in the official
Gazette of the central government).
(d) This can include, private companies, one person company, small companies,
limited liability partnerships and foreign companies.
Purpose of a Body Corporate
A body corporate exists to manage the issues of necessary and mutual interest to all
the owners. These matters are:

 Physical property issues

 Issues related to people living together
Physical property includes gardens, common building structures and shared assets
such as recreation clubs and tennis courts.
When people live together issues may include behaviour, noise, and parking. Anything
where the actions of one particular resident may impact on another.
Legislatively, bodies corporate performs only a limited purpose. They must:
• Administer the common property and the body corporate assets for the benefit of the
owners of lots included in the scheme.
• Maintain common property to the extent it is in structurally sound condition.
• Enforce the community management statement (including by-laws affecting the
common property).
• Carry out other functions given to the body corporate under legislation, such as
keeping records about its operations, meetings and owners.
The body corporate is not legally able to do anything other than fulfil these mandatory
responsibilities. In performing these duties, the body corporate can enter into
contracts, employ staff and generally deal with property. Unlike a commercial
company, it cannot conduct businesses, such as a letting agency, tour operation or
restaurant.
However, the body corporate may engage in any business activities necessary to
properly carry out is functions (e.g., investing funds).
Financing of Body Corporate Financed
Contributions (otherwise known as levies) are received from every lot owner of the
body corporate and are pooled to maintain the community and common areas. The
size and frequency of the contributions required to properly run the body corporate are
decided by all owners at the annual general meeting.
There are two types of contributions set by the body corporate:

 The contributions to the administration fund.

  The contribution to the sinking fund.
Body Corporate Make Decisions
Decisions are made by owners in two ways:

 At a meeting of all the owners (a general meeting)

 At a meeting of the committee for the body corporate
No individual acting in isolation can make a decision.
Common property
Most bodies corporate have "common property". This usually includes the driveway,
facilities such as a laundry, gym, or pool and the open space on the property. This
common property must be managed and have liability insurance so that it serves only
the purposes intended and does not expose the body corporate to unnecessary legal
risks.
Insurance - the critical aspect of body corporate management
The body corporate normally pays for one insurance policy that covers full
replacement insurance for all the buildings and adequate public liability insurance for
the common property. When you own a unit in a property with a body corporate, you
need to be absolutely certain that all building and liability risks are covered for the
property particularly when walls, facilities and services are shared. In the event of an
insurance claim there is only one company to deal with and no doubt as to who will
pay a claim. As a member of a body corporate you do not have to have a separate
policy for building insurance if the Body Corporate has a policy. This arrangement is
normally more economical than a member buying their own insurance and you are
assured of adequate public liability insurance for the common property. Having
adequate public liability cover for the common property is critical as a wide range of
people have access to it and accidents often result in significant claims not to mention
the legal expenses. Members are still required to have insurance for their own contents
and also public liability cover for car spaces and for visitors on their property.
Operate of body corporate operate
Bodies Corporate managed by Ace Body Corporate Management have an individual
bank account for each body corporate. The manager is normally the sole signatory to
that account under delegation from the members of the body corporate. An annual
general meeting is held at the beginning of each financial year of the body corporate.
This meeting sets the budget and addresses any concerns of the members. This sets
the "contributions" which the members have to pay each year. The amount contributed
by each member is worked out based on a table included in the plan. Other meetings
may be held if required by the members. The main component of the budget is usually
the insurance premium that covers the buildings and public liability risks. Other
components are the caretaking, grounds maintenance, repairs, common lighting,
maintenance of essential services and the manager's fees. Bodies corporate vary in
the extent to which funds are accumulated in body corporate account. Many operate
on a small margin over the normal annual operating costs while others plan ahead and
accumulate some funds for major works such as painting, guttering replacements,
fencing, paving etc. Should a major unbudgeted cost occur without sufficient funds in
the bank, it is normal practice to establish a special levy to pay for that particular works.
The Body Corporate is responsible for ensuring full reinstatement insurance is in place
for buildings together with insurance for public liability. It is also responsible for the
maintenance of services that connect into the building and to ensure there is adequate
public lighting and for the general upkeep of the exterior of the buildings and the
common grounds. It is responsible for the upkeep of all common items such as car
and pedestrian security gates, intercoms, and public lighting
The Body Corporate insurance covers damage and consequential damage to the
building itself and all fixtures within the units. The insurance is for reinstatement of
buildings but does not cover normal wear and tear, but it does cover legal liability on
the common property. Damage to carpets within a unit is specifically excluded. It is
highly recommended that Landlord's insurance be taken out to cover carpets and legal
liability within tenanted units and car park lots. Owners and tenants must have their
own contents and public liability insurance for their own units.
Provides continuity of management processes and record keeping for the body
corporate. Without a professional manager. problems can arise with frequent changes
in voluntary members who undertake the duties, resulting in different standards of
record keeping and potentially inadequate or missing records.
Ensures body corporate legislative matters are being adhered to
Resolves disputes and provides an objective approach to dealing with members'
concerns or disputes. While disputes are rare, some situations can cause conflict;
including tenanted units, parking, noise, adjacent developments etc. An objective,
professional body corporate manager can assist in these situations.
Looks after body corporate administration and handles day-to-day paperwork and
requests from solicitors etc. Organises annual and special general meetings including
minutes, facilitates setting of budgets, collects members' contributions and maintains
a complete set of financial statements.
Administers insurance and deals with brokers and directly with insurance companies
as necessary to obtain the most effective and economical coverage for the body
corporate. Submits claims, schedules repair work and processes claim paperwork.
Provides advice and options to members in relation to public liability issues. This
ensures that necessary processes are undertaken for insurance cover and record
keeping against possible future claims for public liability.
Administers the maintenance of body corporate facilities and essential services
obtains quotes and schedules works as required to ensure that the body corporate is
maintained in good condition and presents no dangers to visitors or members.
Schedules essential services reports as necessary and reviews compliance with
current legislation.
Corporate Body
A corporate body is a group of people or an organization that acts as a single entity
and has a distinct name. Corporate bodies have a separate legal identity from their
individual members, and they have legal rights and responsibilities similar to a
person. They keep records of their business transactions and activities in corporate
books, and they have a corporate charter that outlines rule they must follow.
Examples of corporate bodies include:
associations, institutions, business firms, nonprofit enterprises, governments,
government agencies, religious bodies, local churches, and conferences.
A corporate body is a legal entity that is created by law and has its own separate
existence from its owners or members. It can enter into contracts, own property, and
sue or be sued in its own name.
 Corporation: A company like Apple or Microsoft is a corporate body. It is a
separate legal entity from its shareholders and can conduct business on its
own.
 Corporate Books: These are written records of a corporation's activities and
business transactions. They include financial statements, meeting minutes, and
other important documents.
 Corporate Charter: This is a legal document that establishes a corporation and
outlines its purpose, structure, and governance.
 Corporate Citizenship: This refers to a corporation's status in the state where
it is incorporated. It is not the same as being a constitutional citizen, but it does
give the corporation certain legal rights and protections.