Company

For other uses, see Company (disambiguation).

A company (short for co.) is a legal group made up of people who work together to reach a goal. These people can be real people (called natural persons), other companies (called juridical persons), or both.

Companies usually have the following features: they are treated like their own person in the eyes of the law, they have limited liability (which means the people in the company are not fully responsible for its debts), they can sell or give away parts of the company (called shares), they are owned by investors, and they are run by managers.^[1] Companies are created when the government gives them legal permission to start.^[1]

Companies can be different kinds, such as:

• voluntary associations, like nonprofit organizations that don’t try to make money
• businesses that try to make sales, earn revenue, and get a profit
• banks and other money-related companies
• educational institutions like schools and programs

When a company is created, it becomes its own legal "person." This means the company—not the people in it—is responsible if something goes wrong, as long as the company follows its rules written in its incorporation papers. If a company closes, it might go through a process called liquidation to take care of its final duties. Sometimes, companies join together and make a group. These are called corporate groups and often include one big company and smaller ones it owns.

Meanings and definitions

A company can be called an "artificial person". This means it is not a real human, but it is treated like a person by the law. It is invisible, cannot be touched, and is created by laws made by the government.^[2]

A company has its own legal rights and can continue to exist even if some of its members die, become unable to work, or go bankrupt. This is called perpetual succession. A company also has a special stamp called a common seal that it can use to sign documents.

Etymology

The word company comes from the Old French word compagnie, which was first used around the year 1150. It meant things like "friendship", "group", or "a group of soldiers".^[3] That word came from Late Latin companio, which means "someone who eats bread with you". This idea came from an old Germanic expression meaning the same thing—basically, a companion is someone you share food with.

The word is related to other old words like Old High German galeipo and Gothic gahlaiba, which also mean "companion" or "friend you eat with".

Semantics and usage

By the year 1303, the word company was being used to describe trade guilds—groups of people who worked in the same job, like blacksmiths or merchants.^[4]

By 1553, it started to mean a "business group"—a group of people working together to run a business.^[5] The short form "co." (used in names like “Smith & Co.”) started to appear by 1769.^[6][7]

Types

There are many different kinds of companies. Here are some of the main types:

• Company limited by guarantee: This type is usually for clubs, charities, or other groups that aren’t trying to make money. The members agree to pay a small amount if the company runs out of money, but they don’t own any part of the company or get profits. These are common in England.
• Company limited by shares: This is the most common type of company for businesses. Each owner (called a shareholder) only risks the amount of money they put in. These companies can be public (with shares sold to the public) or private (owned by just a few people).^[8]
• Company limited by guarantee with share capital: This is a mix of the first two types. It’s for non-money-making goals but also has investors who expect some return. This type is no longer used in the UK for new companies, but some still exist.^[9]
• Limited liability company (LLC): This company type is allowed in some countries (like the U.S.). It gives limited risk to owners, like a corporation, but is often taxed like a small business. Owners can manage it themselves or choose managers. If an owner dies or goes bankrupt, the company might have to close, depending on local laws.^[8][10]
• Unlimited company: In this type, owners or shareholders may have to pay all company debts, even beyond what they invested.^[11] This kind is rare and riskier.^[11][12]

Less common types

• Companies formed by letters patent: These are mostly very old or special legal companies, like some religious or government roles (corporations sole).
• Royal charter corporations: In the past (especially in Europe), some companies were created by the king or queen.^[13][14] These are rare today but they still exist—like the Bank of England.^[15][16]
• Statutory companies: These are companies created by a special law.^[17] They are less common today.^[18][19]

If a company’s name ends in "Ltd", it means it is a limited company. If it ends in "PLC", it is a public limited company, meaning its shares are sold to the public.^[20]