Business, Legal & Accounting Glossary
A company is a commercial organization with the primary objective of increasing shareholder’s value. A company can be either public or private.
n. any formal business entity for profit, which may be a corporation, a partnership, association or individual proprietorship. Often people think the term “company” means the business is incorporated, but that is not true. In fact, a corporation usually must use some term in its name such as “corporation,” “incorporated,” “corp.” or “inc.” to show it is a corporation.
A company is a form of business. It can take the form of a partnership, proprietorship or a corporation. The legal definition of a company varies from one country to another. For example, in the United States of America, a company can include entities like a partnership, association, corporation, trust, fund and joint-stock company. According to US law, the term company may also be applied to an organized group of persons, whether incorporated or not. The Commonwealth countries, on the other hand, does not include a partnership and unincorporated group of individuals in the company fold.
The terms ‘company’ and ‘corporation’ are often confused. Not all companies are corporations, and not all corporations are companies in the sense which the term usually has. For a company to be a corporation it must have an independent legal identity; typically this means that it will be a registered company under the terms of the Companies act (1985) ( see: Registered company). On the other hand, the monarchy is a corporation, but not a company. The institution of monarchy has a legal identity distinct from the person of the Queen. A company that is not registered is not legally distinct from its members, and it cannot take part in legal actions as a separate entity. A registered company, on the other hand, can sue and be sued in its own right. An important meta of an unregistered company is the partnership (see: Partnership).
A Holding company or parent company is a company that possesses adequate voting stock in another commercial entity to take control of that company’s operations and management. This is done by selecting the target company’s board of directors. The holding company may also influence the other company’s board to make decisions in its favour.
A going concern is a company that is supposed to do business for a long period of time and is not expected to close down and pay off its assets. A going concern is expected to produce enough wealth to be in business.
A company combining features of both a partnership business concern and a corporation. The company is authorized to sell fully transferable stock keeping in mind that the shareholders of a joint-stock company accept unlimited liability.
A limited liability company or LLC is a specially registered business concern where the company’s managers and owners are entitled to enjoy tax benefits and limited liability. The tax benefits are akin to S corporation norms. A limited liability company, however, does to have to adhere to S corporation restrictions.
A speculative company is one that has a number of its assets bound up in projects with unsure returns. These companies carry a high probability of business failure. Conversely, the success of a project may bring an immense amount of profits. A prime example of this type of companies is the oil exploration companies.
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This glossary post was last updated: 27th April, 2020 | 16 Views.