Company Formation

The outstanding feature of a company is its independent corporate existence. By registration under the Companies Act, a company becomes vested with corporate personality, which is independent of, and distinct from its members. A company is a legal person.

Limitation of liability is another major advantage of incorporation. The company, being a separate entity, leading its own business life, the members are not liable for its debts. The liability of members is limited by shares; each member is bound to pay the nominal value of shares held by them and his liability ends there.

An incorporated company never dies. Members may come and go, but the company will go on forever.

The property of an incorporated company is vested in the corporate body. The company is capable of holding and enjoying property in its own name. No members, not even all the members, can claim ownership of any asset of company’s assets.

Because companies are taxed separately from their owners, and the corporate tax rate is generally lower than the individual tax rate, incorporation may offer some fiscal advantages. Recently because of reduction in Corporate Tax rates, the Company is preferred as format of business over other formats.

It is often easier for companies to raise money than it is for other forms of business. For example, while corporations have the option of issuing bonds or share certificates to investors, other types of businesses must rely solely on their own money and loans for capital. This can limit the ability of a business to expand.
Companies are also often able to borrow money at lower rates than those paid by other types of businesses, simply because financial institutions and others tend to see loans to companies as less risky than those given to other forms of enterprise.

Branding consists of the name, symbol, term, sign, design or any combination of these that identify the goods and services of your company and differentiate you from another. Branding is the visual voice of your company.

The activities of the company must be carried out by individuals who have an interest in the corporation and are entitled to act on its behalf. These individuals can be divided into three categories:

1. Shareholders — These are the people who own the company. They make decisions by voting and passing resolutions, generally at a shareholder's meeting. Most importantly, they elect the directors of the company.

2. Directors — They supervise the management of the company’s business. A company must have at least two director. They are also responsible for appointing the company’s officers. A director cannot be another corporation.

3. Officers (Key Managerial Personnel) — A company’s officers hold positions such as president, chief executive officer, secretary and chief financial officer. Although company’s officers are appointed by the directors, their duties are normally set out in the articles. In general, officers are responsible for managing and executing the corporation’s day-to-day business.

An individual may hold more than one of these positions in a company. For example, the same individual may be a shareholder, a director and an officer, or even the sole shareholder, sole director and sole officer.