Give the meaning of 'Company' form of business organisation. Explain the following features of a company : (i) Seperate Legal Entity (ii) Limited Liability (iii) Transferability of Shares (iv) Diffusion of Ownership and Management 'Sensitivity to environmental factors is crucial for an entrepreneur.' In the light of this statement, explain any five benefits of understanding the relevant environment of business.

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**Meaning of Company:** A company is an artificial person created by law, having a distinct legal personality separate from its members. It is formed by a group of persons who subscribe to a memorandum of association and register the company under the Companies Act.

**(i) Separate Legal Entity:** A company has an independent legal status separate from its members. It can own property, enter into contracts, sue and be sued in its own name. The members are not personally liable for the company's debts. In Salomon v. Salomon & Co., the House of Lords held that a company is a legal entity distinct from its members.

**(ii) Limited Liability:** The liability of shareholders is limited to the amount unpaid on their shares. Members' personal assets cannot be used to pay company debts. This encourages investment as shareholders know the maximum they can lose is the amount they invested.

**(iii) Transferability of Shares:** In a public company, shares are freely transferable without the consent of other shareholders. This provides liquidity to investors who can exit their investment by selling shares on the stock exchange.

**(iv) Diffused Ownership:** Ownership in a company is spread among a large number of shareholders. No single shareholder can exercise complete control. The separation of ownership and management means shareholders elect a Board of Directors to manage the company.

**(v) Perpetual Succession:** A company has perpetual succession, meaning it continues to exist regardless of death, insanity, or insolvency of its members. The company's existence is not affected by changes in membership.

**(vi) Common Seal:** Being an artificial person, a company cannot sign documents. It therefore uses a common seal as its official signature on all legal documents and contracts.