Generally, a company will have different definitions based on the country it is operating. In Nigeria, a company can be loosely defined as a sole or voluntary association formed and organized under one control to carry on a business to make money. It can also be recognized as an entity that engages in business that adds value to the customer for money.
In Nigeria, a company comes into existence when it is registered under the Companies and Allied Act 2004 and is able to fulfill requirements in terms of documentations such as Memorandum of Association, Article of Association, shareholders, directors, and share capital to be deemed as a legal association.
In the eyes of the law, a company is an artificial legal person that has the right to acquire or dispose of any property, to enter into contracts in its own name, and to sue and be sued by others. The individual members may not be sued for actions performed by the company. As a separate legal entity, it implies that the company is responsible to repay creditors and to get sued for its deeds. On the other hand, the company is not liable to pay the personal debts of the members. Therefore, the company as a distinct entity is independent of its shareholders or people controlling it.
As an artificial legal person, a company uses its common seal (with the name of the company engraved on it) as a substitute for its signature. Any document bearing the common seal of the company will be legally binding on the company.
Nevertheless, unlike non-registered business entities, the life of a company does not depend on the life of its shareholders, directors, or employees, it is rather a stable business organization. Shareholders may come and go but the company remains and thrives as long as it follows the rules of engagement and has a stable business model.
Companies can be structured in different ways depending on the country it operates. However, the general structure in Nigeria is as follows; Sole proprietorship, Partnership, private limited liability, public limited company, and corporation.
It is significant to note that all corporations are companies, but not all companies are corporations. The company is a much broader term than a corporation, and it encompasses a lot of different types of businesses. The key differences between a company and a corporation have to do with the complexity of the firm, so, for example, a sole proprietorship is a company, but it is not a corporation. In the same vein, Partnerships, Limited Liability, and public companies could all be considered companies, but not corporations. Corporations are indeed entities unto themselves, separate and apart from the owners. The owners of a corporation are usually numerous stockholders and could divest themselves of stock in the corporation, without notice of their absence.
However, in all of the above scenarios, the business entity is connected to its owners and the way the Liability of companies is assumed by the owners and these can either be limited or unlimited depending on the type of company-operated and the country.
Consequently, a company may be limited by guarantee or limited by shares. In a company limited by shares, the liability of the shareholders is limited to the unpaid value of their shares. In a company limited by guarantee, the liability of the members is limited to the amount shareholders had agreed upon to contribute to the assets of the company in the event of it being wound up.
In all the key functions of these types of companies are to collect and remit the tax to the government, employ people and pay a dividend to shareholders.