Defining What is a Company According to Corporate Governance ?

Defining What is a Company According to Corporate Governance ?

A Company is a form of business ownership according to the following characteristics :

1. Its capital consists of several Units ,called Share, each of a small nominal value, which are sold to a large number of people. People holding shares in the company are its members and are called shareholders. They are part owners of the Company. In USA it is not uncommon for shares to have a zero nominal value. A company may sell its shares at nominal value, or above or below it, Depending on the demand for such shares.
2. The Shares of a Company are generally freely transferable ( through there may be some formalities involved in case of certain types of companies ). Transfer of shares from one person to another has no effect on the company. The Company Receives the share proceeds only when it sell shares to the shareholder. if the shareholder subsequently sell these shares to another person the transaction is strictly between these two persons and usually no part of sale proceeds goes to the company . Free and unrestricted transferability of shares is one of the prime causes of popularity of this form of business ownership.