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Corporate Entities are organizations like companies that have their own legal identity, separate from the owners.
Why is the Corporate Entities chapter important for CS Executive exams?
It is important because it is part of the SBIL Companies chapter CS Executive syllabus and helps in understanding company structures.
What is the difference between a Private and a Public Company?
A private company has limited members and restricted share transfers, while a public company has no member limit and free share trading.
Corporate Entities for CS Executive December 2025 and June 2026
Corporate Entities is a key topic in the SBIL Companies section of the CS Executive syllabus. It explains company types, features, the incorporation process, and legal structure under the Companies Act, 2013. Understanding concepts like private/public companies, OPCs, and Section 8 companies helps aspirants simplify their preparation. Focused revision using Companies Act notes and one-shot lectures can boost your CS Executive exam score.
Muskan Verma31 Jul, 2025
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Corporate Entities is a crucial subject in the SBIL Companies sections of the CS Executive Syllabus. It aids students in understanding the structure, categories, and legal aspects of companies as outlined in the Companies Act, 2013. Below, we’ve clarified Corporate Entities in simple terms to ease your preparation for the CS Executive Dec 2025 or June 2026 exams.
Corporate Entities
Corporate Entities are legal organizations established by a group of individuals for commercial or non-commercial purposes. These entities possess a distinct legal identity independent of their owners. Corporate entities play a crucial role in overseeing business operations, distributing earnings, and managing risks.
The SBIL Companies sections of the CS Executive include Corporate Entities as a scoring category. Thoroughly exploring this subject enables students to effectively review and retain essential concepts for their tests. Utilizing the Companies Act notes for the CS Executive streamlines and clarifies the revision process.
What is a Company?
A company is a form of Corporate Entity. The term” company” is derived from the Latin words “com” and “panis”, meaning “to share bread together”. It demonstrates that individuals unite to operate a company. As per Section 2(20) of the Companies Act, 2013, a company refers to an entity that is registered under this act or prior company legislation.
Key Features of Corporate Entities
Corporate Entities have special features that make them different from other forms of business:
Separate Legal Entity: A company is like a person in the eyes of the law. It can own assets, make deals, and act independently of its owners.
Perpetual Succession: Even if a member leaves, dies, or sells shares, the company continues to exist without any break. This gives stability to the business.
Separate Property: The property belongs to the company, not to the owners personally. Members cannot claim company property as their own.
Transferability of Shares: Members can transfer or sell their shares to others, which allows new people to join without affecting the company’s life
Capacity to Sue and Be Sued: A company can file a case in court or face legal actions in its own name, just like a real person.
Types of Corporate Entities
Corporate Entities can be divided into several types:
Based on the Incorporation
Before examining the classification, it is useful to understand that businesses can be categorized according to their formation and the liability of their members for debts:
Statutory Company: This type of company is created through a specific law enacted by either the Parliament or a State Legislature. For example, companies such as LIC or RBI were established through such legislation.
Registered Company: These are entities that are formed in compliance with the Companies Act, 2013, or previous company legislations. A registered company is established only after it finishes all registration formalities, submits necessary documents to the Registrar of Companies, and obtains a certificate of incorporation.
Based on Liabilities
When we talk about liability, we mean how much a member is responsible for the company’s debts or losses. This classification shows how risk is shared among members.
Unlimited Company: Members have unlimited liability, meaning they may have to pay company debts using personal assets if required. Such companies are rare because of the high risk.
Company Limited by Guarantee: Members promise to pay a fixed sum if the company winds up. This is common in non-profit organizations where profits are not distributed.
Company Limited by Shares: Liability is limited to the unpaid amount on the shares owned by members. This means personal property is safe, and only the remaining share amount is at risk.
Private and Public Companies
This classification emphasizes the main difference between private and public companies. It aids students in understanding membership regulations, share transfers, and additional distinctive aspects:
Private Company
A limit of 200 members
Unable to invite the public to purchase shares
Name concludes with Private Limited
Shares cannot be transferred freely
Public Company
At least 7 members
No maximum limit on members
Name concludes with limited
Shares are tradable without restriction
One Person Company (OPC)
An OPC is a private company consisting of a single member. It enables small business proprietors to experience the advantages of a corporation. The individual must be a citizen of India and must not be underage. An OPC is not required to prepare a cash flow statement and may conduct fewer board meetings.
Nidhi Company
Nidhi companies are formed to encourage savings among members. They take deposits and give loans only to members. These companies follow special rules under the Companies Act, 2013. For example, they must have a minimum of 200 members and keep 10% of deposits in a safe account.
Producer Company
A producer company is established by individuals engaged in framing or associated tasks. It emphasizes production, packaging, education, welfare, and insurance for its members. Stocks are issued in digital format
Foreign Company
A Foreign Company is established outside India but operates its business within India. If at least 50% of its capital is held by Indian Citizens, it is required to adhere to Indian Company Regulations
Section 8 Company
A Section 8 Company is established for non-profit purposes such as education or social welfare. It does not share earnings as dividends. A government license is required to begin.
Incorporation Documents
Corporate Entities require two main documents:
Memorandum of Association(MOA): This document explains the company’s purpose and company’s structure
Articles of Association(AOA): This document contains the rules of a company during registration.
Procedure of Incorporation
The SPICe+ form facilitates the electronic registration of Corporate Entities. It encompasses name reservation, PAN, TAN, and various other registrations. Upon approval, the registrar provides the certificate of incorporation
Why Study Corporate Entities?
The Syllabus for the Corporate Entities CS Executive Dec 2025 and Corporate Entities CS Executive June 2026 provides students with knowledge of legal business practices. With adequate Companies Act notes for CS Executive and consistent review, this chapter can aid in achieving higher marks.
Corporate Entities are an essential component of CS Executive June 2026 preparation. It is thoroughly discussed in the SBIL Companies section of the CS Executive Syllabus. Understanding the varieties, characteristics, and paperwork of businesses simplifies the review of this subject. Consistent study and review of Corporate Entities will aid you in establishing a solid foundation for exams.
