Companies as defined under Companies Act of 2013 are known as body corporates. They are none other than the companies which got registered under Companies Act. Both the foreign as well as domestic companies are included in the definition of body corporates. There are different types of corporate bodies in India like Private Limited Company, One Person Company, Limited Liability Partnership Firm etc. They are registered and have their separate legal identity. They are called artificial person in the legal language. They have all the rights and liabilities just like a human. The present write-up will discuss them in detail.
Meaning of Body Corporates
As given under section 2(11) of the Companies Act of 2013, body corporate or corporation includes a company incorporated outside India as well as within India. In the definition of corporate bodies cooperative societies which are supposed to be formed under the Co-operative Societies Act of 1912 or eleven formed under any other law are not included. As per the company law any other body corporate or corporation that is not a company as per the definition of company under the company law, which the Central Government may, by notification, specify on this behalf. Partnership firms are also not included under the definition of corporate bodies. Some of the important things regarding body corporates are:
Examples of Body Corporates
Some of the types of body corporations are given below:
- Private Limited Companies which can be formed with a minimum two directors.
- Limited Liability Partnership firms which are commonly known as LLP among the laymen.
- In case you want to start a body corporation as a single person, One person company will be the best option for you
- Public Limited Company is another form of the body corporation one can opt for.
- Companies which are limited by guarantee also the part of the corporate bodies
- Companies which are limited by shares come under this category too
Advantages of Body Corporations
Some of the common advantages or benefits of the body corporates are mentioned below:
- Incorporated Association
- Legal Entities
- Separate or Distinct Identity
- Artificial or Juristic Person
- Transferability of Shares
- Liability is Limited
- Perpetual Succession
- Common Seal
Disadvantages of Body Corporations
Some of the common disadvantages of the body corporates are mentioned below:
- Lifting up the Corporate Veil
- Determination of the enemy character of the company
- Protection of revenue
- Prevention of fraud or improper conduct of the company
- Incorporation or formation of subsidiaries who can act as an agent
- Corporate bodies cannot become citizens as they do not have right to citizenship
- Lot of formalities as well as expenses
Difference between Body Corporates and Partnership Firm
Partnership firms do not come under the definition of body corporations. There are certain key differences between body corporations and partnership firms which are mentioned below:
| Point of Distinction | Body Corporate | Partnership Firm |
| Mode of Creation | It is created online | It is created offline |
| Members | In body corporations it depends on the corporation to corporation like in OPC only one person is required on the other hand in private limited company minimum 2 and maximum up to 200 members are allowed | For the partnership minimum two partners are required and there is no bar on maximum members |
| Legal Status | It has separate legal identity and not associated with its member | Partners are not distinct from the partnership firm |
| Governing Law | Govern by the Companies Act of 2013 | Govern by the Partnership Act of 1932 |
| Liability | They are liable for their acts and their liability is distinct from their members | Their partners are liable for their acts and their liability is not distinct from their members |
| Transfer of Shares | In case of public companies shares can be easily transferred whereas in private companies their is restriction on them | Shares of partners cannot be transferred freely. |
| Agency | There is no agent principal relationship here | Partners are the agent of the partnership firm as well as one another |
| Management | Directors manages the company | Management is done by all the partners |
| Perpetual Succession | They are having perpetual succession and cannot wipe off even after the death of all its members | Partners can dissolve it |
| Powers | Powers of such corporates lies in the objective clause of the company | Here all the powers are in the hands of the partners of the partnership firm |
| Dissolution | Companies can be dissolved after following the proper procedure. There are two types of dissolution processes for a company. Voluntary wind up and wind up through tribunal | There is no such obligation for the partnership firms. They can be dissolve with the agreement among the partners |
| Legal Obligation | There are lot of legal and financial compliances of the corporate bodies | There are no such compliances for the partnership firms |
Governing Law of Corporate Bodies
Body corporations are governed by the Companies Act of 2013. Some of the key provisions of the this law are:
- Formation of company and its memorandum and articles of association
- Incorporation of companies as well as the formation of companies with charitable objects
- Effect of registration, memorandum and articles
- Registered office of the body corporates
- Alteration of memorandum and articles of association.
- Rectification of name of body corporations or companies.
- Copies of each MOA and AOA whose full forms are memorandum of association and articles of association respectively must be given to members of the respective body corporations
- Conversion of companies or entities which are already registered.
- It is not allowed as per the governing laws that a subsidiary company will hold the shares in its holding company.
- Service with respect to its documents, authentication of documents, proceedings and contracts.
- Execution of bills of exchange
- Public offer
- Private placement
- Power of Securities and Exchange Board
- Prospectus of the companies and the matters to be stated in the prospectus.
- Variation in terms and conditions of the contract as well as the objects which has been given under the prospectus of the company
- As the shares of the company can be sale, hence there is a provision in the company law which talks about sale of shares by certain members of the company
- Public offering of the securities to be in dematerialised form.
- Advertisement of prospectus
- Shelf prospectus
- Red herring prospectus
- Issue of application forms for securities
- Criminal liability for mis-statements in prospectus
- Civil liability for mis-statements in prospectus
- Punishment in case somebody involves somebody fraudulently to invest money
- Action by affected persons
- Punishment for personation for acquisition, etc., of securities
- Allotment of securities by company
- Securities are suppose to be dealt with in the stock exchanges
- Global depository receipt
Conclusion
Body corporates, as defined by the Companies Act of 2013, encompass various types of registered entities in India, including Private Limited Companies, Limited Liability Partnership firms, One Person Companies, Public Limited Companies, and others, each with its own legal identity and distinct advantages such as limited liability and perpetual succession. These entities are regulated by the Companies Act, 2013, and they differ significantly from partnership firms in terms of legal status, liability, transferability of shares, management, and dissolution procedures. Understanding the nuances between body corporates and partnership firms is crucial for individuals and businesses operating within the Indian legal framework, ensuring compliance and informed decision-making.
