Reviewed by Aug 27, 2020| Updated on
What is a Corporation?
A business organisation having a separate legal entity, i.e. an identity distinct from its owners, is called a corporation or a company in India. Any corporation can sue or be sued in its own name. It refers to an association of people incorporated to undertake the business activities having a separate legal identity, a perpetual existence and a common seal.
These organisations generally have limited liability, i.e. the liability of the members is limited to the unpaid amount on shares held by the members. The members are not required to contribute anything to the company's debt in case of bankruptcy or insolvency.
How Does a Corporation Come into Existence?
A corporation comes into existence when a group of shareholders invest money in exchange for the shares of an organisation to pursue a common goal. These shareholders are the owners of such corporation. The goals can be both profit-oriented or non-profit. However, a significant number of corporations aims to provide the best possible returns to their owners.
All corporations are governed and regulated under the Companies Act, 2013 and its returns are taxed according to the Income Tax Act of India, 1961.
Types of Corporations in India
Here are the types of corporations that exist in the present scenarios:
- Based on ownership:
- One person company
- Private limited company
- Public limited company
- Based on liability:
- Company limited by shares
- Company limited by guarantee
- Unlimited Company
- Based on special status:
- Government-owned corporation
- Foreign company
- Section 8 company
- Public financial institution
- Based on control:
- Holding company
- Subsidiary company
- Associate company
Apart from the list above, corporations are classified into listed, unlisted, and dormant corporations as well.
Who Manages the Operations of a Corporation?
All the owners or shareholders annually elect a board of directors who look after the day-to-day activities of a corporation. They execute the business plan of the corporation and take all the means to do so. They are bound to take due care of the corporation's assets and liabilities.