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Definition of Joint Stock Company:-
A joint stock company is an artificial person recognized by law with a distinctive name, a common seal a common capital comprising transferable carrying limited liability and having a perpetual succession.
It is formed and controlled under the company ordinance of the state. It is a very popular form of organization.
Features or Characteristics of Joint Stock Company
Following are the important feature of Joint Stock Company:
1. Separate Legal Existence:-
Joint Stock Company has separated entity from its members. It can sue in a court of law in its own name. Everybody knows only the name of the company and its address. Nobody knows about the shareholders.
2. Long Life:-
A joint stock company has a long life as compared to the other forms of business organization. If any share holder dies or withdraws his capital there is no effect on the continuity of company life.
3. Distribution of Profit:-
The basic aim of the joint stock company is to earn profit. Some portion of the whole profit is transferred to Reserve Fund, while the remaining is distributed among the shareholders.
4. Limited Liability:-
The liability of the shareholders is limited to the extent to the face value of the shares they hold. There is no liability on the private property of the shareholder.
5. Number of the Members:-
In case of private company minimum members should be two and maximum fifty. While in a public company minimum member should be seven but there is no restriction on the maximum members.
6. Management:-
The shareholder select the Board of Directors in the annual general meeting. So all the management is conducted by the Board of Directors. Shareholders are not allowed to participate directly in the management.
7. Transferability of Shares:-
A shareholder holder of the company can transfer his shares easily to other persons, there is no restriction on the purchase and sale.
8. Capital Borrowing:-
Joint Stock Company can borrow capital in its own name and can expand the business.
9. Changing in Business:-
A joint stock company may not change the nature of business except the sanction of court.
10. Trade Agreement:-
A joint stock company may join the trade agreement with other firms in its own name. Because it has a separate existence.
11. Common Seal:-
A company cannot sign itself. So the common seal with the name of the company is used as a substitute for its signature.
12. Payment of Double Taxes:-
First of all a company pays the tax on the whole dividend. Secondly shareholders pay tax on their individual income. So a joint stock company pays double taxes to the government.
13. Government Control:-
A joint stock company has to comply the rules of the Govt. It has also to submit the various reports to Registrar. A company has also to audit its accounts.
14. Purchase and Sale of Property:-
A joint stock company can also purchase and sale the property in its name.
A joint-stock company is a business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company's shares (certificates of ownership). This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.
In modern corporate law, the existence of a joint-stock company is often synonymous with incorporation (i.e. possession of legal personality separate from shareholders) and limited liability (meaning that the shareholders are only liable for the company's debts to the value of the money they invested in the company). And as a consequence joint-stock companies are commonly known as corporations or limited companies.
Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and other countries which have adopted their model of company law, these are known as unlimited companies. In the United States, they are known simply as "joint-stock companies".
