Question

Explain the features of join stock company?​

Answer 1

Answer:

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. And in a public company, there are some restrictions, but the transfer cannot be prohibited.

Explanation:

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Answer 2

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Features of a Joint Stock Company – 5 Distinctive Features: Legal Formation, Artificial Person, Separate Legal Entity, Common Seal, Perpetual Existence and a Few Others

The distinctive features of a company may be listed thus:

i. Legal Formation:

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A company is an incorporated or registered association of individuals. No single individual or a group of individuals can start a business and call it a joint stock company. You need at least 7 persons to start a public limited company and at least 2 to start a private limited company. A joint stock company can come into existence only when it has been registered after completing all the legal formalities under the Indian Companies Act, 1956.

ii. Artificial Person:

A company has an artificial personality of its own, recognized by Law. It is invisible and intangible. Everything a company does, is regulated by law. It has a personality of its own only in the eyes of law—which cannot be seen. In short, a company’s birth, existence and death are regulated by Law and no one else.

iii. Separate Legal Entity:

Being an artificial person, a joint stock company has a personality and existence of its own that is independent of its in­vestors. This means that a joint stock company can own property, enter into contracts and conduct any lawful business in its “own” name. It can sue and can be sued by others in the court of law. The shareholders are “not” the owners of the property owned by the company. Also, the share­holders cannot be held responsible for any of the acts of the company.

iv. Common Seal:

A joint stock company has a “seal”, which is used while dealing with others or entering into contracts with outsiders. It is called a common seal as it can be used by any officer at any level of the orga­nization working on behalf of the company. Any document, on which the company’s seal is used and is duly signed by any designated official of the company, becomes legally binding on the company.

v. Perpetual Existence:

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A joint stock company continues to enjoy continu­ous and uninterrupted existence as long as it satisfies the requirements of law. It remains unaffected by the death, lunacy, insolvency or retire­ment of any of its investors. For example, in case of a private limited company having four members, if all of them die in an accident, the company will “not” be closed. It will continue to exist.

The shares of the company will be transferred to the legal heirs of the members. In other words, members may come and go but the company continues to play its innings on the field for ever—till it is wound up. Since a company is created by Law, it can be put to rest only through a winding up process as prescribed under Law.

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