SlideShare a Scribd company logo
1 of 14
Download to read offline
Company is meant an association of many persons who
contribute money or money’s worth to a common stock and
employ it in some trade or business,and who share the profit
and loss (as the case may be) arising there from.
The persons who contribute it, or to whom it belongs, are
members.
The proportion of capital to which each member is entitled is
his share.
“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”.
Meaning
• Joint stock Company is a type of corporation or partnership
involving two or more individuals that own shares of stock in the
company.
• Certificates of ownership("shares") are issued by the company in
return for each financial contribution.
• The shareholders are free to transfer their ownership interest at
any time by selling their share holding to others.
• The companies are governed by the Indian Companies Act,
1956. The Act defines a company as an artificial person created
by law, having separate entity,with perpetual succession and a
common seal.
CHARACTERISTICS OF A COMPANY

Artificial Person
A Joint Stock Company is an artificial person in the
sense that it is created by law and does not possess physical
attributes of a natural person. However, it has a legal status.
Separate Legal Entity
Being an artificial person, a company has an
existence independent of its members.
It can own property, enter into contract and conduct any lawful
business in its own name.
It can sue and can be sued in the court of law.
Common Seal
Every company has a common seal by which it is
represented while dealing with outsiders.
Any document with the common seal and duly signed by an
officer of the company is binding on the
company.
Perpetual Existence
A company once formed continues to exist as long as it fulfils
the requirements of law.
It is not affected by the death, lunacy, insolvency or
retirement of any of its members
Limited Liability
The liability of a member of a Joint Stock Company is limited by
guarantee or the shares he owns. In other words, in case of
payment of debts by the company, a shareholder is held liable
only to the extent of his share.
Transferability of Shares
The members of a company are free to transfer the shares held
by them to anyone else
Formation
A company comes into existence only when it has been
registered after completing the formalities prescribed under the
Indian Companies Act 1956.
A company is formed by the initiative of a group of persons
known as promoters.
Membership
A company having a minimum membership of two persons
and maximum fifty is known as a Private Limited Company. But
in case of a Public Limited Company, the minimum is seven and
the maximum membership is unlimited.
Management

Joint Stock Companies have democratic
management and control.
Even though the shareholders are the
owners of the company, all of the them cannot participate in the
management process.
The company is managed by the elected representatives of
shareholders known as Directors.
Capital
A Joint Stock Company generally raises a large amount of
capital
through issue of shares.
Advantages of Joint Stock Company
Limited Liability
In a Joint Stock Company the liability of its members is limit to
the extent of shares held by them. This attracts a large number of
small investors to invest in the company. It helps the company to
raise huge capital.
Because of limited liability, a company is also able to take
larger risks.
Continuity of existence
A company is an artificial person created by
law and possesses independent legal status. It is not affected
but the death, insolvency etc. of its members. Thus it has a
perpetual existence.
Benefits of large scale operation
It is only the company form of organisation which can provide
capital for large scale operations. It results in large scale
production consequently leading to increase in efficiency and
reduction in the cost of operation.
It further opens the scope for expansion.
Professional Management
Companies, because of complex nature of activities and
operations and large volume of business, requireprofessional
managers at every level of organisation.
And because of their financial strength they can afford to appoint
such managers.
This leads to efficiency.
Social Benefit
A joint stock company offers employment to a large number
of people. It facilitates promotion of various ancillary
industries,
trade and auxiliaries to trade.
Sometimes it also donates money for education, health,
community service and renders help to charitable and
social institutions.
Research and Development
A company generally invests a lot of
money on research and development for improved processes
of production,
designing and innovating new products, improving quality of
product, new
ways of training its staff, etc.
Limitations of Joint Stock Company
Formation is not easy: The formation of a company involves
compliance with a number of legal formalities under the
companies Act and compliance
with several other Laws.
Control by a Group
Companies are controlled by a group of personsknown as the
Board of Directors.
This may be due to lack of interest on the part of the
shareholders who are widely dispersed; ignorance, indifference
and lack of proper and timely information.
Thus, the democratic virtues of a company do not really exist in
practice.
Speculation and Manipulation
The shares of a company are purchased and sold in the stock
exchanges.
The value or price of a share is determined
in terms of the dividend expected and the reputation of the company.
These can be manipulated. Besides there is excessive speculation
which is
regarded as a social evil.
Excessive government control
A company is expected to comply with
the provisions of several Acts. Non-compliance of these invites heavy
penalty. This affects the smooth functioning of the companies
Delay in Policy Decisions
A company has to fulfill certain procedural formalities before
making a policy decision.
These formalities are time consuming and, therefore,
policy decisions may be delayed.
Social abuses
A joint stock company is a large scale business organisation
having huge resources.
This provides a lot of power to them. Any misuse of
such power creates unhealthy conditions in the society e.g.
having
monopoly of a particular business, industry or product;
influencing politicians and government in getting their work
done; exploiting workers, consumers and investors.

More Related Content

What's hot

Company and its features
Company and its featuresCompany and its features
Company and its featuresParveen Kumar
 
Types of companies
Types of companiesTypes of companies
Types of companiesRehaman M
 
Types of-shares
Types of-sharesTypes of-shares
Types of-shareskamal ega
 
Lifting the Corporate Veil
Lifting the Corporate Veil Lifting the Corporate Veil
Lifting the Corporate Veil Radhika Gohel
 
Joint stock company2
Joint stock company2Joint stock company2
Joint stock company2Alok Kumar
 
Amalgamation of companies
Amalgamation of companiesAmalgamation of companies
Amalgamation of companiesVikram g b
 
Formation of a company
Formation of a companyFormation of a company
Formation of a companyPriyanka31085
 
Classification of Company
Classification of CompanyClassification of Company
Classification of Companygndu
 
Types of company
Types of companyTypes of company
Types of companyjosealphin
 
Kinds of partners
Kinds of partnersKinds of partners
Kinds of partnersBilal riaz
 
Shares and its types
Shares and its typesShares and its types
Shares and its typesVishnu NK
 

What's hot (20)

Debentures
DebenturesDebentures
Debentures
 
Company and its features
Company and its featuresCompany and its features
Company and its features
 
Joint stock company
Joint stock companyJoint stock company
Joint stock company
 
Issue of Shares
Issue of SharesIssue of Shares
Issue of Shares
 
Indian partnership act
Indian partnership actIndian partnership act
Indian partnership act
 
Types of companies
Types of companiesTypes of companies
Types of companies
 
Types of-shares
Types of-sharesTypes of-shares
Types of-shares
 
Companies act 1956-ppt
Companies act 1956-pptCompanies act 1956-ppt
Companies act 1956-ppt
 
Lifting the Corporate Veil
Lifting the Corporate Veil Lifting the Corporate Veil
Lifting the Corporate Veil
 
Joint stock company2
Joint stock company2Joint stock company2
Joint stock company2
 
Amalgamation of companies
Amalgamation of companiesAmalgamation of companies
Amalgamation of companies
 
Formation of a company
Formation of a companyFormation of a company
Formation of a company
 
Classification of Company
Classification of CompanyClassification of Company
Classification of Company
 
Types of company
Types of companyTypes of company
Types of company
 
Directors
DirectorsDirectors
Directors
 
Kinds of partners
Kinds of partnersKinds of partners
Kinds of partners
 
Company law introduction
Company law introductionCompany law introduction
Company law introduction
 
Shares and its types
Shares and its typesShares and its types
Shares and its types
 
Issue of capital
Issue of capitalIssue of capital
Issue of capital
 
Amalgamation
AmalgamationAmalgamation
Amalgamation
 

Similar to Joint Stock Company

Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectus
Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectusBba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectus
Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectusRai University
 
Companies act 2013 (1)
Companies act 2013 (1)Companies act 2013 (1)
Companies act 2013 (1)priya rana
 
DR J KUMAR.COMPANY LAW PPT NOTES
DR J KUMAR.COMPANY LAW PPT NOTESDR J KUMAR.COMPANY LAW PPT NOTES
DR J KUMAR.COMPANY LAW PPT NOTESKumarJayaraman3
 
Company Law Introduction.pptx
Company Law Introduction.pptxCompany Law Introduction.pptx
Company Law Introduction.pptxSeemaPandey50
 
What is corporation and its types
What is corporation and its typesWhat is corporation and its types
What is corporation and its typesmian mani
 
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdf
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdfLegal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdf
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdfSanjanaWadhankar1
 
Types of Companies under Company Law
Types of Companies under Company LawTypes of Companies under Company Law
Types of Companies under Company Lawseemamahajan11
 
UGC NET Commerce Companies Act 2013 Study Notes
UGC NET Commerce  Companies  Act 2013  Study Notes UGC NET Commerce  Companies  Act 2013  Study Notes
UGC NET Commerce Companies Act 2013 Study Notes DIwakar Rajput
 
Company Law.pptx
Company Law.pptxCompany Law.pptx
Company Law.pptxKrishi49
 

Similar to Joint Stock Company (20)

Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectus
Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectusBba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectus
Bba 1 ibo u 2.1 co. act, incorporation, moa, aoa, prospectus
 
Companies act 2013 (1)
Companies act 2013 (1)Companies act 2013 (1)
Companies act 2013 (1)
 
DR J KUMAR.COMPANY LAW PPT NOTES
DR J KUMAR.COMPANY LAW PPT NOTESDR J KUMAR.COMPANY LAW PPT NOTES
DR J KUMAR.COMPANY LAW PPT NOTES
 
P.Pratices week 4.pptx
P.Pratices week 4.pptxP.Pratices week 4.pptx
P.Pratices week 4.pptx
 
Companies Act, 2013
Companies Act, 2013Companies Act, 2013
Companies Act, 2013
 
Company Law Introduction.pptx
Company Law Introduction.pptxCompany Law Introduction.pptx
Company Law Introduction.pptx
 
What is corporation and its types
What is corporation and its typesWhat is corporation and its types
What is corporation and its types
 
Cc08
Cc08Cc08
Cc08
 
The company law
The company lawThe company law
The company law
 
company act 1956
company act 1956company act 1956
company act 1956
 
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdf
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdfLegal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdf
Legal-Aspects-of-Business-Unit-4-Ms-Neha-Rani.pdf
 
Types of Companies under Company Law
Types of Companies under Company LawTypes of Companies under Company Law
Types of Companies under Company Law
 
Joint stock company
Joint stock companyJoint stock company
Joint stock company
 
UGC NET Commerce Companies Act 2013 Study Notes
UGC NET Commerce  Companies  Act 2013  Study Notes UGC NET Commerce  Companies  Act 2013  Study Notes
UGC NET Commerce Companies Act 2013 Study Notes
 
Companies Act 1956.pptx
Companies Act 1956.pptxCompanies Act 1956.pptx
Companies Act 1956.pptx
 
Company.ppt
Company.pptCompany.ppt
Company.ppt
 
Legal & Business Environment- Module 2
Legal & Business Environment- Module 2Legal & Business Environment- Module 2
Legal & Business Environment- Module 2
 
company act
company act company act
company act
 
Business Law 2
Business Law 2Business Law 2
Business Law 2
 
Company Law.pptx
Company Law.pptxCompany Law.pptx
Company Law.pptx
 

More from Nishit Upadhyay

Questionnaire on Post graduate student perception towards branded Clothes
Questionnaire on Post graduate student perception towards branded Clothes Questionnaire on Post graduate student perception towards branded Clothes
Questionnaire on Post graduate student perception towards branded Clothes Nishit Upadhyay
 
Comprehensive study on Vaccination and Parents behaviour
Comprehensive study on Vaccination and Parents behaviour Comprehensive study on Vaccination and Parents behaviour
Comprehensive study on Vaccination and Parents behaviour Nishit Upadhyay
 
Verizon communication project report
Verizon communication project reportVerizon communication project report
Verizon communication project reportNishit Upadhyay
 

More from Nishit Upadhyay (6)

Questionnaire on Post graduate student perception towards branded Clothes
Questionnaire on Post graduate student perception towards branded Clothes Questionnaire on Post graduate student perception towards branded Clothes
Questionnaire on Post graduate student perception towards branded Clothes
 
Comprehensive study on Vaccination and Parents behaviour
Comprehensive study on Vaccination and Parents behaviour Comprehensive study on Vaccination and Parents behaviour
Comprehensive study on Vaccination and Parents behaviour
 
Project contracts
Project contractsProject contracts
Project contracts
 
Project contracts
Project contractsProject contracts
Project contracts
 
Group and teams,
Group and teams,Group and teams,
Group and teams,
 
Verizon communication project report
Verizon communication project reportVerizon communication project report
Verizon communication project report
 

Recently uploaded

Employablity presentation and Future Career Plan.pptx
Employablity presentation and Future Career Plan.pptxEmployablity presentation and Future Career Plan.pptx
Employablity presentation and Future Career Plan.pptxryandux83rd
 
DBMSArchitecture_QueryProcessingandOptimization.pdf
DBMSArchitecture_QueryProcessingandOptimization.pdfDBMSArchitecture_QueryProcessingandOptimization.pdf
DBMSArchitecture_QueryProcessingandOptimization.pdfChristalin Nelson
 
4.4.24 Economic Precarity and Global Economic Forces.pptx
4.4.24 Economic Precarity and Global Economic Forces.pptx4.4.24 Economic Precarity and Global Economic Forces.pptx
4.4.24 Economic Precarity and Global Economic Forces.pptxmary850239
 
18. Training and prunning of horicultural crops.pptx
18. Training and prunning of horicultural crops.pptx18. Training and prunning of horicultural crops.pptx
18. Training and prunning of horicultural crops.pptxUmeshTimilsina1
 
4.9.24 School Desegregation in Boston.pptx
4.9.24 School Desegregation in Boston.pptx4.9.24 School Desegregation in Boston.pptx
4.9.24 School Desegregation in Boston.pptxmary850239
 
Sulphonamides, mechanisms and their uses
Sulphonamides, mechanisms and their usesSulphonamides, mechanisms and their uses
Sulphonamides, mechanisms and their usesVijayaLaxmi84
 
Views in Odoo 17 - Kanban View in odoo 17
Views in Odoo 17 - Kanban View  in odoo 17Views in Odoo 17 - Kanban View  in odoo 17
Views in Odoo 17 - Kanban View in odoo 17Celine George
 
Jason Potel In Media Res Media Component
Jason Potel In Media Res Media ComponentJason Potel In Media Res Media Component
Jason Potel In Media Res Media ComponentInMediaRes1
 
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...Nguyen Thanh Tu Collection
 
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptx
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptxTransdisciplinary Pathways for Urban Resilience [Work in Progress].pptx
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptxinfo924062
 
ICS 2208 Lecture Slide Notes for Topic 6
ICS 2208 Lecture Slide Notes for Topic 6ICS 2208 Lecture Slide Notes for Topic 6
ICS 2208 Lecture Slide Notes for Topic 6Vanessa Camilleri
 
DiskStorage_BasicFileStructuresandHashing.pdf
DiskStorage_BasicFileStructuresandHashing.pdfDiskStorage_BasicFileStructuresandHashing.pdf
DiskStorage_BasicFileStructuresandHashing.pdfChristalin Nelson
 
How to create _name_search function in odoo 17
How to create _name_search function in odoo 17How to create _name_search function in odoo 17
How to create _name_search function in odoo 17Celine George
 
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptx
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptxBBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptx
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptxProf. Kanchan Kumari
 
How to Uninstall a Module in Odoo 17 Using Command Line
How to Uninstall a Module in Odoo 17 Using Command LineHow to Uninstall a Module in Odoo 17 Using Command Line
How to Uninstall a Module in Odoo 17 Using Command LineCeline George
 
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF NAT...
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF  NAT...LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF  NAT...
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF NAT...pragatimahajan3
 
16. Discovery, function and commercial uses of different PGRS.pptx
16. Discovery, function and commercial uses of different PGRS.pptx16. Discovery, function and commercial uses of different PGRS.pptx
16. Discovery, function and commercial uses of different PGRS.pptxUmeshTimilsina1
 
Paul Dobryden In Media Res Media Component
Paul Dobryden In Media Res Media ComponentPaul Dobryden In Media Res Media Component
Paul Dobryden In Media Res Media ComponentInMediaRes1
 

Recently uploaded (20)

Employablity presentation and Future Career Plan.pptx
Employablity presentation and Future Career Plan.pptxEmployablity presentation and Future Career Plan.pptx
Employablity presentation and Future Career Plan.pptx
 
DBMSArchitecture_QueryProcessingandOptimization.pdf
DBMSArchitecture_QueryProcessingandOptimization.pdfDBMSArchitecture_QueryProcessingandOptimization.pdf
DBMSArchitecture_QueryProcessingandOptimization.pdf
 
4.4.24 Economic Precarity and Global Economic Forces.pptx
4.4.24 Economic Precarity and Global Economic Forces.pptx4.4.24 Economic Precarity and Global Economic Forces.pptx
4.4.24 Economic Precarity and Global Economic Forces.pptx
 
18. Training and prunning of horicultural crops.pptx
18. Training and prunning of horicultural crops.pptx18. Training and prunning of horicultural crops.pptx
18. Training and prunning of horicultural crops.pptx
 
4.9.24 School Desegregation in Boston.pptx
4.9.24 School Desegregation in Boston.pptx4.9.24 School Desegregation in Boston.pptx
4.9.24 School Desegregation in Boston.pptx
 
Sulphonamides, mechanisms and their uses
Sulphonamides, mechanisms and their usesSulphonamides, mechanisms and their uses
Sulphonamides, mechanisms and their uses
 
Views in Odoo 17 - Kanban View in odoo 17
Views in Odoo 17 - Kanban View  in odoo 17Views in Odoo 17 - Kanban View  in odoo 17
Views in Odoo 17 - Kanban View in odoo 17
 
Jason Potel In Media Res Media Component
Jason Potel In Media Res Media ComponentJason Potel In Media Res Media Component
Jason Potel In Media Res Media Component
 
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 - I-LEARN SMART WORLD - CẢ NĂM - CÓ FILE NGHE (BẢN...
 
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptx
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptxTransdisciplinary Pathways for Urban Resilience [Work in Progress].pptx
Transdisciplinary Pathways for Urban Resilience [Work in Progress].pptx
 
ICS 2208 Lecture Slide Notes for Topic 6
ICS 2208 Lecture Slide Notes for Topic 6ICS 2208 Lecture Slide Notes for Topic 6
ICS 2208 Lecture Slide Notes for Topic 6
 
Spearman's correlation,Formula,Advantages,
Spearman's correlation,Formula,Advantages,Spearman's correlation,Formula,Advantages,
Spearman's correlation,Formula,Advantages,
 
DiskStorage_BasicFileStructuresandHashing.pdf
DiskStorage_BasicFileStructuresandHashing.pdfDiskStorage_BasicFileStructuresandHashing.pdf
DiskStorage_BasicFileStructuresandHashing.pdf
 
How to create _name_search function in odoo 17
How to create _name_search function in odoo 17How to create _name_search function in odoo 17
How to create _name_search function in odoo 17
 
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptx
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptxBBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptx
BBA 205 UNIT 3 INDUSTRIAL POLICY dr kanchan.pptx
 
How to Uninstall a Module in Odoo 17 Using Command Line
How to Uninstall a Module in Odoo 17 Using Command LineHow to Uninstall a Module in Odoo 17 Using Command Line
How to Uninstall a Module in Odoo 17 Using Command Line
 
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF NAT...
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF  NAT...LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF  NAT...
LEVERAGING SYNERGISM INDUSTRY-ACADEMIA PARTNERSHIP FOR IMPLEMENTATION OF NAT...
 
CARNAVAL COM MAGIA E EUFORIA _
CARNAVAL COM MAGIA E EUFORIA            _CARNAVAL COM MAGIA E EUFORIA            _
CARNAVAL COM MAGIA E EUFORIA _
 
16. Discovery, function and commercial uses of different PGRS.pptx
16. Discovery, function and commercial uses of different PGRS.pptx16. Discovery, function and commercial uses of different PGRS.pptx
16. Discovery, function and commercial uses of different PGRS.pptx
 
Paul Dobryden In Media Res Media Component
Paul Dobryden In Media Res Media ComponentPaul Dobryden In Media Res Media Component
Paul Dobryden In Media Res Media Component
 

Joint Stock Company

  • 1.
  • 2. Company is meant an association of many persons who contribute money or money’s worth to a common stock and employ it in some trade or business,and who share the profit and loss (as the case may be) arising there from. The persons who contribute it, or to whom it belongs, are members. The proportion of capital to which each member is entitled is his share. “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”.
  • 3. Meaning • Joint stock Company is a type of corporation or partnership involving two or more individuals that own shares of stock in the company. • Certificates of ownership("shares") are issued by the company in return for each financial contribution. • The shareholders are free to transfer their ownership interest at any time by selling their share holding to others. • The companies are governed by the Indian Companies Act, 1956. The Act defines a company as an artificial person created by law, having separate entity,with perpetual succession and a common seal.
  • 4. CHARACTERISTICS OF A COMPANY Artificial Person A Joint Stock Company is an artificial person in the sense that it is created by law and does not possess physical attributes of a natural person. However, it has a legal status. Separate Legal Entity Being an artificial person, a company has an existence independent of its members. It can own property, enter into contract and conduct any lawful business in its own name. It can sue and can be sued in the court of law.
  • 5. Common Seal Every company has a common seal by which it is represented while dealing with outsiders. Any document with the common seal and duly signed by an officer of the company is binding on the company. Perpetual Existence A company once formed continues to exist as long as it fulfils the requirements of law. It is not affected by the death, lunacy, insolvency or retirement of any of its members
  • 6. Limited Liability The liability of a member of a Joint Stock Company is limited by guarantee or the shares he owns. In other words, in case of payment of debts by the company, a shareholder is held liable only to the extent of his share. Transferability of Shares The members of a company are free to transfer the shares held by them to anyone else
  • 7. Formation A company comes into existence only when it has been registered after completing the formalities prescribed under the Indian Companies Act 1956. A company is formed by the initiative of a group of persons known as promoters. Membership A company having a minimum membership of two persons and maximum fifty is known as a Private Limited Company. But in case of a Public Limited Company, the minimum is seven and the maximum membership is unlimited.
  • 8. Management Joint Stock Companies have democratic management and control. Even though the shareholders are the owners of the company, all of the them cannot participate in the management process. The company is managed by the elected representatives of shareholders known as Directors. Capital A Joint Stock Company generally raises a large amount of capital through issue of shares.
  • 9. Advantages of Joint Stock Company Limited Liability In a Joint Stock Company the liability of its members is limit to the extent of shares held by them. This attracts a large number of small investors to invest in the company. It helps the company to raise huge capital. Because of limited liability, a company is also able to take larger risks. Continuity of existence A company is an artificial person created by law and possesses independent legal status. It is not affected but the death, insolvency etc. of its members. Thus it has a perpetual existence.
  • 10. Benefits of large scale operation It is only the company form of organisation which can provide capital for large scale operations. It results in large scale production consequently leading to increase in efficiency and reduction in the cost of operation. It further opens the scope for expansion. Professional Management Companies, because of complex nature of activities and operations and large volume of business, requireprofessional managers at every level of organisation. And because of their financial strength they can afford to appoint such managers. This leads to efficiency.
  • 11. Social Benefit A joint stock company offers employment to a large number of people. It facilitates promotion of various ancillary industries, trade and auxiliaries to trade. Sometimes it also donates money for education, health, community service and renders help to charitable and social institutions. Research and Development A company generally invests a lot of money on research and development for improved processes of production, designing and innovating new products, improving quality of product, new ways of training its staff, etc.
  • 12. Limitations of Joint Stock Company Formation is not easy: The formation of a company involves compliance with a number of legal formalities under the companies Act and compliance with several other Laws. Control by a Group Companies are controlled by a group of personsknown as the Board of Directors. This may be due to lack of interest on the part of the shareholders who are widely dispersed; ignorance, indifference and lack of proper and timely information. Thus, the democratic virtues of a company do not really exist in practice.
  • 13. Speculation and Manipulation The shares of a company are purchased and sold in the stock exchanges. The value or price of a share is determined in terms of the dividend expected and the reputation of the company. These can be manipulated. Besides there is excessive speculation which is regarded as a social evil. Excessive government control A company is expected to comply with the provisions of several Acts. Non-compliance of these invites heavy penalty. This affects the smooth functioning of the companies
  • 14. Delay in Policy Decisions A company has to fulfill certain procedural formalities before making a policy decision. These formalities are time consuming and, therefore, policy decisions may be delayed. Social abuses A joint stock company is a large scale business organisation having huge resources. This provides a lot of power to them. Any misuse of such power creates unhealthy conditions in the society e.g. having monopoly of a particular business, industry or product; influencing politicians and government in getting their work done; exploiting workers, consumers and investors.