There are two terms COMPANY and CORPORATION, which are mostly used by us interchangeably. All of us have hundreds and hundreds of doubts regarding these two as we don’t know their real meanings. We often use them freely without knowing them. So come, let’s start the understanding the meaning and difference between the Company and Corporation.
Content: Company Vs Corporation
|Basis for Comparison||Company||Corporation|
|Meaning||A company which is created and registered under the Indian Companies Act, 1956 is known as a Company.||The company which is formed and registered in or outside India is known as a Corporation.|
|Defined in which section of Indian Companies Act 1956||Section 3||Section 2 (7)|
|Incorporated||In India||In and Outside India|
|Minimum Authorized Capital||As per the rules||5 crores|
Definition of Corporation
The term Corporation as defined in section 2 (7) of the Indian Companies Act, 1956 as a body corporate, which is incorporated inside or outside the country, but excludes co-operative society, corporation sole and any corporation which is formed by the notification in the Official Gazette by the Central Government.
A corporation is a business organization having a separate legal entity, i.e. its identity is distinct from its owners. It can sue or be sued in its name, with limited liability i.e. the liability of the members is limited up to amount unpaid on shares held by them, having authorized capital of at least five crores, and continued existence. Corporate Tax is levied on the income of the corporation under the Income Tax Act, 1961.
Definition of Company
The term Company is defined in section 3 of the Indian Companies Act, 1956 as a company formed and registered under this Act or any other previous acts. A company is a voluntary association of two or more than two persons joined for a common objective, treated as a distinct legal personality and perpetual succession.
The company is considered as an artificial person having a common seal and registered head office. As similar to a Corporation, the company has a right to sue or be sued in its own name.
The company can be of the following types:
- A company limited by shares
- Limited Liability Company (LLC)
- A company limited by guarantee.
- A company limited by both share and guarantee.
- Unlimited Company.
Key Differences Between Corporation and Company
- The word Corporation is defined in section 2 (7) of the Companies Act while the term Company is defined in section 3 of the Companies Act.
- The corporation came into existence if it is incorporated in or outside India whereas a company came into existence when it is incorporated under the Indian Companies Act, 1956.
- The Corporation should have a minimum authorized capital of Rs. 5,00,00,000. Conversely, the Company should have a minimum authorized capital of Rs 1,00,000 in the case of private company and Rs. 5,00,000 in the case of public company.
- The Corporation is a larger term as compared to the Company.
- Separate Legal Entity
- Perpetual Succession
- Right to sue and be sued
- Limited Liability
- Artificial Legal Person
The difference between Company and Corporation is subtle but still the scope of the word Corporation is larger than the Company. Corporate Tax is levied on both the entities as per the Income Tax Act, 1961. Hence, we can say that the terms cannot be used synonymously.