What are the Characteristics of Joint Stock Company?
Vivek chowdhury Member Level: It also states the advantages of a joint stock company along with the disadvantages of a joint stock company and other company form of organization. Meaning and definition of a joint stock company According to Prof. Haney,"Joint stock company is a voluntary association of individuals for profit, having their capital divided into transferable shares, the ownership of which is the condition for membership".
Thus, a joint stock company is an incorporated association of persons having a separate legal existence, with a perpetual succession and common seal. Characteristics and features of a joint stock company Separate legal existence: A company has a distinct and separate legal entity, independent of its members.
It means that the company can own property, make contracts, and file suits in it own name. A shareholder cannot be held liable for the acts of the company. A creditor of th company is not the creditor of its members. This is one of the important characteristics of joint stock companies that has made it very popular form of business.
Perpetual succession means continuous existence. A company is creation of the law and only law can bring it to an end.
Its life does not depend on the life of its members. The death, insolvency or lunacy of a member does not affect the life of the company.
It continues to exist even if all its members dies. Members may come and go but the company goes on till it is wound up. As a separate legal entity, its members cannot be held liable for the debts of the company. The liability of every member is limited to nominal value of the shares bought by him or the amount of the guarantee given by him.
For instance, if a member has 50 shares of Rs 10 each, hi liability is limited to Rs.
Even if the assets of the company are found to be insufficient to satisfy the claims of the creditors, no member can be called to pay anything more than what is due to him. The capital of a company is divided into parts each part called a share.
These share are generally transferable. A shareholder is free to withdraw his membership from the company by transferring his shares.
Being an artificial entity, a company cannot act and sign itself. Therefore, it acts through human beings. All the acts of the company are authorized through its common seal.
The common seal is an official signature of the company. This common seal is valid only if signed by at least two members of the Board of Directors. Without these features of joint stock companies, it would have been better to call it a firm rather than a company form of organization.
Merits of a joint stock company Large capital resources: A joint stock company has widespread appeal to the investors of all the types. Its capital is divided into shares of small value so that the people with limited means can also buy them.
A public company can have unlimited number of members in the form of shareholders. The credit standing of the company is also very high which means that the banks and other financial institutions shall readily give loans and advances to them. Hence, a company can accumulate large financial resources for large-scale enterprises and projects.
The liability of a member of a company is limited to the value of the shares of the company held by him, if unpaid. Thus, the risk is known and estimated.
This principle encourages the member to invest in a joint stock company. The risk of loss id divided among am large number of persons.Our transparent, low commissions and financing rates, and best price executions minimize traders' and investors' costs to help maximize returns.
Studying the features of a joint stock company will clarify its structure. Features of a Joint Stock Company 1] Artificial Legal Person. A company is a legal entity that has been created by the statues of law.
Like a natural person, it can do certain things, like own property in its name, enter into a contract, borrow and lend money, sue or be. The online broker comparison tool allows you to review and compare all stock brokerages side by side. Research our ratings from the Review, assess commissions data, fees, margin rates, account features, banking features, as well as mobile trading support for every stock broker.
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