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Generally, a company is a form of business organization. The precise definition varies.
In the United States, a company is a corporation—or, less commonly, an association, partnership, or union—that carries on an industrial enterprise."[1] Generally, a company may be a "corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidating agent, for any of the foregoing."[1]
In English law, and therefore in the Commonwealth realms, a company is a form of body corporate or corporation, generally registered under the Companies Acts or similar legislation. It does not include a partnership or any other unincorporated group of persons.
Etymology
The word company is traced from a 1150 A.D.(CE) O.Fr. term compaignie or "body of soldiers" and from L.L. companio (companion). The word's meaning of "subdivision of an infantry regiment" is from 1590. The use of the word in a sense of "business association" was first recorded 1553, having earlier been used in reference to trade guilds (1303). The abbreviation co. dates from 1769.[2]
History
According to one source, "it may be formed by Act of Parliament, by Royal Charter, or by registration under company law (referred to as a limited liability or joint-stock company)."[3] In the United Kingdom, the main regulating laws are the Companies Act 1985 and the Companies Act 2006.[3] Reportedly, "a company registered under this Act has limited liability: its owners (the shareholders) have no financial liability in the event of winding up the affairs of the company, but they might lose the money already invested in it".[3] In the USA, companies are registered in a particular state—Delaware being especially favoured—and become Incorporated (Inc). [3]
In North America, two of the earliest companies were The London Company (also called the Charter of the Virginia Company of London)—a English joint stock company established by royal charter by James I of England on April 10, 1606 with the purpose of establishing colonial settlements in North America—and Plymouth Company that was granted an identical charter as part of the Virginia Company. The London Company was responsible for establishing the Jamestown Settlement, the first permanent English settlement in the present United States in 1607, and in the process of sending additional supplies, inadvertently settled the Somers Isles, alias Bermuda, the oldest-remaining English colony, in 1609.
Types
- For a country-by-country listing, see Types of business entity.
There are various types of company that can be formed in different jurisdictions, but the most common forms of company (generally formed by registration under applicable companies legislation) are:
- A company limited by guarantee. Commonly used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal) amounts if the company goes into insolvent liquidation, but otherwise they have no economic rights in relation to the company. This type of company is common in England.
- A company limited by shares. The most common form of company used for business ventures. Specifically, a limited company is a "company in which the liability of each shareholder is limited to the amount individually invested" with corporations being "the most common example of a limited company."[1] This type of company is common in England.
- A company limited by guarantee with a share capital. A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return. This type of company may no longer be formed in the UK, although provisions still exist in law for them to exist.[4]
- A limited-liability company. "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.[1]
- An unlimited liability company. A company where the liability of members for the debts of the company are unlimited. Today these are only seen in rare and unusual circumstances.
Less commonly seen types of companies are:
- Companies formed by letters patent. Most corporations by letters patent are corporations sole and not companies as the term is commonly understood today.
- charter corporations. Before the passing of modern companies legislation, these were the only types of companies. Now they are relatively rare, except for very old companies that still survive (of which there are still many, particularly many British banks), or modern societies that fulfil a quasi regulatory function (for example, the Bank of England is a corporation formed by a modern charter).
- Statutory Companies. Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction.
Note that "Ltd after the company's name signifies limited, and PLC (public limited company) indicates that its shares are widely held."[3]
In legal parlance, the owners of a company are normally referred to as the "members". In a company limited by shares, this will be the shareholders. In a company limited by guarantee, this will be the guarantors. Some offshore jurisdictions have created special forms of offshore company in a bid to attract business for their jurisdictions. Examples include "segregated portfolio companies" and restricted purpose companies.
There are however, many, many sub-categories of types of company that can be formed in various jurisdictions in the world.
Companies are also sometimes distinguished for legal and regulatory purposes between public companies and private companies. Public companies are companies whose shares can be publicly traded, often (although not always) on a regulated stock exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders.
See also
References
- ^ a b c d Black's Law and lee Dictionary. Second Pocket Edition. Bryan A. Garner, editor. West. 2001.
- ^ Online Etymology Dictionary. 2001 Douglas Harper. [1]
- ^ a b c d e "Company." Crystal Reference Encyclopedia. Crystal Reference Systems Limited. 27 Nov. 2007. Reference.com
- ^ Companies Act 2006
Further reading
- Dignam, A and Lowry, J (2006) Company Law, Oxford University Press ISBN-13: 978-0-19-928936-3.
- John Micklethwait and Adrian Wooldridge, The Company: a Short History of a Revolutionary Idea (New York: Modern Library, 2003)
External links
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