A joint stock company is an artificial legal entity created by law that has a separate legal status from its members. It has perpetual succession and a common seal. A joint stock company's capital is divided into transferable shares and it has limited liability for its members. The document defines key terms related to the formation and capital structure of joint stock companies, including shares, share capital, debentures, and the memorandum of association.

1. JOINT STOCK COMPANY
DEFINE JOINT STOCK COMPANY.
Company is an artificial person created by law having separate legal entity with perpetual
existence and common seal.
DEFINE SEPARATE LEGAL ENTITY.
It means the company is distinct from the person forming it.
DEFINE PERPETUAL EXISTENCE.
It means a Joint stock company has a continuous life.
DEFINE COMMON SEAL.
The official signature of the company is termed as “Common seal” of the company
DEFINE PROMOTERS.
The persons who undertake the responsibility of bringing a company into existence
DEFINE PRELIMINARY EXPENSES.
The expenses which are incurred in the formation of the company are called preliminary
expenses.
DEFINE PUBLIC LIMITED COMPANY.
According to the companies’ ordinance 198r:
 It can be formed by at least seven members and there is no limit ot maximum members.
 It can invite application from investors through advertisement in the newspapers.
DEFINE PRIVATE LIMITED COMPANY.
According to the company ordinance 1984 it can be formed by:
 At least two persons and its total membership cannot exceed 50.
 It cannot invite application from investors through advertisement in the newspapers.
DEFINE UNLIMITED COMPANY.
A company in which the liability of its shareholder is unlimited is called unlimited company.
DEFINE COMPANY LIMITED BY GUARANTEE.
A company in which each member gives a guarantee to contribute a specified sum to the
company in the event of its winding up
DEFINE COMPANY LIMITED BY SHARE.
A company in which the liability of its members is limited to the shares they held.
DEFINE SHARES.
The capital of a company divided into several small units and each unit is called shares.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 1

2. JOINT STOCK COMPANY
DEFINE FACE VALUE OF SHARE.
The value which is written on the face of the share is called face value or par value of share.
DEFINE BOOK VALUE OF SHARE.
The value of shares according to the books of the company is called book value of share.
DEFINE MARKET VALUE OF SHARE.
The price at which buyer is willing to purchase and seller is willing to sell is called market value
of share.
EXPLAIN ISSUE OF SHARES AT PREMIUM.
If the shares are issued more than its face value then it will be called issued at premium.
EXPLAIN ISSUE OF SHARES AT DISCOUNT.
If the shares are issued less than its face value then it will be called issued at discount.
DEFINE SHARE CAPITAL.
The total sum of the face value of shares of a company is called share capital.
DEFINE AUTHORIZED CAPITAL / NOMINAL CAPITA / REGISTERED CAPITAL.
It is the amount of capital with which the company is registered is called authorized.
DEFINE ISSUED CAPITAL.
Shares offered to general public for contribution are known as shares issued. The total face value
of such shares is called issued capital.
DEFINE SUBSCRIBED CAPITAL.
It is that part of the issued capital which has been taken up by the public. The total face value of
such shares is called subscribed capital.
DEFINE CALLED UP CAPITAL.
It is that portion of the subscribed capital which has been called up by the company.
DEFINE PAID UP CAPITAL.
It is that portion of the called up capital that has been actually paid up by shareholders.
DEFINE RESERVE CAPITAL.
It is that portion of subscribed capital which the company, through a special resolution, reserve
to call in the event of winding up.
DEFINE THE MEMORANDUM OF ASSOCIATION.
This is a document defining the constitution of the company. It is known as the charter of the
company.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 2

3. JOINT STOCK COMPANY
DEFINE PROSPECTUS.
It is a valuable document issued by the company for raising the capital
WHAT IS MEANT BY MINIMUM SUBSCRIPTION?
The minimum number of shares for which a person should apply if he want to purchase the
shares.
DEFINE UNDERWRITER.
The person who take the risk of unsold shares
DEFINE UNDERWRITING COMMISSION.
The commission which is paid to underwriter is called underwriter commission.
DEFINE OVER SUBSCRIPTION.
If company received application for shares more than it offered to public then such a condition is
called over subscription.
DEFINE UNDER SUBSCRIPTION.
If company received application for shares less then it offered to public then such a condition is
called under subscription.
DEFINE DEBENTURES.
It is an acknowledgement of debt.
DEFINE REDEEMABLE DEBENTURES.
Those debentures which are redeemable at the end of a specific period are called redeemable
debenture.
DEFINE IRREDEEMABLE DEBENTURES.
Those debentures which are not redeemable during the life of the company are called
irredeemable debentures.
DEFINE NAKED DEBENTURES.
Those debentures which carry no security are called naked debentures.
DEFINE MORTGAGE DEBENTURES.
Those debentures which are secured against fixed assets are called mortgage debentures.
DEFINE NON-CONVERTIBLE DEBENTURES.
Those debentures which are not convertible into shares are called non-convertible debentures.
DEFINE DEBENTURES STOCK.
The debentures which must always be fully paid are called debentures stock.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 3

4. JOINT STOCK COMPANY
DEFINE REGISTERED DEBENTURES.
Those debentures which are registered in the name of specific person and they are not
transferable are called registered debentures.
DEFINE BEARER DEBENTURES.
Those debentures which are transferable and whose amount is payable to the holder are called
bearer debentures.
DEFINE CONVERTIBLE DEBENTURES.
Those debentures which are convertible into shares are called convertible debentures.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 4