Joint Stock Company. 1. Meaning. In this form of business organization two or more persons come together to undertake a business activity and share profits.
What do you understand by joint stock company how it is different from partnership form and how it is formed?
Unlike a proprietorship or partnership, the legal identity of a company and its members are separate. As soon as the joint stock company is incorporated it has its own distinct legal identity. And similarly, the company will not depend on any of its members for any business activities.
What do you mean by partnership?
A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits. In particular, in a partnership business, all partners share liabilities and profits equally, while in others, partners may have limited liability.
What are the features of joint stock company?
Features of a Joint Stock Company – Artificial Person, Separate Legal Existence, Legal Formation, Voluntary Organisation, Perpetual Succession, Large Capital and a Few Others.
What was the main benefit of joint stock companies?
As compared to sole proprietorships and partnership firm, a joint stock company can accumulate huge amount of funds. It facilitates the mobilization of savings of millions for the productive purposes. Since its capital is divided into share of small value, even an ordinary investor can contribute to its capital.
How is a joint stock company different from a proprietorship?
Unlike a proprietorship or partnership, the legal identity of a company and its members are separate. As soon as the joint stock company is incorporated it has its own distinct legal identity. So a member of the company is not liable for the company.
How does a joint stock company affect the life of the company?
Without incorporation, a company simply does not exist. The joint stock company is born out of the law, so the only way for the company to end is by the functioning of law. So the life of a company is in no way related to the life of its members. Members or shareholders of a company keep changing, but this does not affect the company’s life.
Can a joint stock company issue debentures?
Issue of Debentures Joint stock company is the only business organization which is authorized to borrow money through the issue of debentures. A partnership firm cannot issue debentures. 16. Restrictions The outsiders who deal with a company should be aware of the provisions of its Articles of Association.
How are shares divided in a joint stock company?
So no document is legally binding on the company until and unless it has a common seal along with the signatures of the directors. In a joint stock company, the ownership is divided into transferable units known as shares. In case of a public company the shares can be transferred freely, there are almost no restrictions.
