Company: legal definition and example

Definition

A company is a legal entity separate from its owners, which may be created to carry out business activities and which has rights and obligations distinct from those of its owners.

Example

A concrete example of this definition would be a family business that decides to incorporate. The family members then become shareholders in the company, but the company itself is considered a separate legal entity from its owners. This means that the company can buy and sell goods, hire employees, sign contracts and sue or be sued, just like a natural person. The company’s owners are not personally liable for the company’s debts or obligations, except in certain specific circumstances. In short, setting up a company separates the owners’ personal affairs from those of the business, offering legal and financial protection for both parties.

Citation and reference

Here are a few quotations from Canadian law concerning the legal term “company”:

– Canada Business Corporations Act: “A company is a legal person created under this Act or any other federal or provincial statute that authorizes the creation of companies.”

– Canada Cooperatives Act: “A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. It may be incorporated under the name ‘cooperative’ or ‘cooperative company’.”

– Canada Corporations Act: “The term ‘company’ means a legal person created under this Act or any other federal or provincial statute that authorizes the creation of companies.”

– Canada Associations Act: “The term ‘company’ means a body corporate created under this Act or any other Act of Parliament or of the legislature of a province that authorizes the creation of companies.”

These quotations show that the term “company” is used in various Canadian statutes to designate a legal entity created under these statutes.