Attributes of a Company and the Concept of Corporate Veil

Running head: BUSINESS LAW
Business Law
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1BUSINESS LAW
Explain the attributes of a company once it comes into being
There are various features which a company gets when it has been registered or incorporated.
A company is a form of business structure which is selected for the purpose of carrying out
business activities. The attributes which a company gets after being incorporated are as
follows:
1. Separate legal entity
Through the term spate legal entity a company becomes an artificial legal person. This
means that it has its own existence which is not the same as that of the owners. The
company has the right to sue and get sued in its own name. The company also has the
right to own property in its own name. It is a considered as a corporate person in the
society.
2. Perpetual existence
This signifies that the existence of a company is ongoing. A company does not come to
an end when any of its owners have died unlike that in a partnership. Even if all owners
of a company are dead it would not make the company come to an end. As it is a
personality which has been created by law it will only come to an end when it has been
done so by law. The process of bringing a company to an end is called winding up of the
company.
3. Common seal
A company is provided with a common seal. A common seal is an instrument which is
used by the company to give consent to documents. The document can be anything such
as contract. As the company is not a natural person it cannot sign documents in a
conventional manner and thus the directors on behalf of the company execute a document

2BUSINESS LAW
by affixing a common seal to them. The document is considered to be passed when it has
a common seal attached to it.
4. Limited Liability
One of the main and most distinct features of a company is that of a limited liability. As
the word suggest limited liability means limiting the liability of the owners of the
company. Under the notion of limited liability the shareholders of the company are not
liable to all the losses which have been incurred by the company. This means that their
personal assets cannot be attached when the company is making losses. Only the amount
which the shareholders of the company have invested in it would be considered as their
liability. However in case of fraud they may also be made liable personally by the courts.
5. Transfer of ownership
This feature signifies that the shareholders of the company can transfer their ownership to
any other person by selling or gifting them their shares. Shares are part ownerships in a
company which can be freely transferred and thus causing the transfer of ownership as
well.
6. Separation of management and ownership
The management and ownership of a company is different. This means that a set of
managers known as the directors are appointed to manage the affairs of the company. The
shareholders of the company may be numerous so they will not be able to manage the
affairs of the company together as there will be chaos. Thus they appoint the directors
who are the employees and officers of the company who make decisions on behalf of it
keeping in mind the interest of the shareholders (Beatty Samuelson and Abril 2018).