The important features of a joint stock company are the following an artificial person created by law, with a distinctive name, a common seal, a common capital. It means that a joint stock company can own property, enter into contracts and conduct any lawful business in its own name. A company as an entity has many distinct features which together make it a unique organization. A company is created when it is registered under the companies act. The loss of the company is distributed over a large number of shareholder. A joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership. A joint stock company is voluntary association in which people contributes with capital in the forms of shares to carry on a certain type of. A joint stock company is a body corporate with a common seal and perpetual succession owned by a large number of persons known as. With the technological improvements, the scale of operations has increased. The important characteristics of a joint stock company are as follows. A joint stock company has right to use the liquidity and fiscal funds of stock markets but also is restricted like a partnership.
The prototype of a personal company type is the public trade company. Being an artificial person, a joint stock company has its own separate existence independent of its members. So the life of a company is in no way related to the life of its members. Learn joint stock company with free interactive flashcards. Characteristics of a joint stock company brainkart. So each shareholder bears a very little amount of loss. What are the characteristics of joint stock company. A shareholder owns one or more shares and is not responsible for the obligations of the joint stock company and of the limited partnership joint stock company. The joint stock company type of organization has become very popular throughout the world because of many advantages.
Hence the company form of organization has risk bearing capacity. The companies act 1956 defines a joint stock company as an artificial person created by law, having separate legal entity from its owner with perpetual. A company is called an incorporated association because it comes into existence only after registration. It comes into being from the date mentioned in the certificate of incorporation. It may be noted in this connection that section 11 provides that an. The joint stock company can raise a large amount of capital by issuing shares and debentures to the public. Members or shareholders of a company keep changing, but this does not affect the company s life. A joint stock company has, solely, the characteristics of a company of capital. When you think of all the largest companies in the world, these are not proprietorships or partnerships. It can sue and can be sued by others in the court of law. The simplest way to describe a joint stock company is that it is a business organisation that is owned jointly by all its shareholders.
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