Question

Explain the features of joint stock company​

Answer 1

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Features of Joint stock company

1. Artificial Person : A Joint Stock Company is an artificial person as it does not possess any physical attributes of a natural person and it is created by law. Thus it has a legal entity separate from its members.

2. Separate legal Entity : Being an artificial person a company has its own legal entity separate from its members. It can own assets or property, enter into contracts, sue or can be sued by anyone in the court of law. Its shareholders can not be held liable for any conduct of the company.

3. Perpetual Existence : A company once formed continues to exist as long as it is fulfilling all the conditions prescribed by the law. Its existence is not affected by the death, insolvency or retirement of its members.

4. Limited liability of shareholders : Shareholders of a joint stock company are only liable to the extent of shares they hold in a company not more than that. Their liability is limited by guarantee or shares held by them.

5. Common Seal : Being an artificial person a joint stock company cannot sign any documents thus this common seal is the company’s representative while dealing with the outsiders. Any document having common seal and the signature of the officer is binding on the company.

6. Transferability of Shares : Members of a joint stock company are free to transfer their shares to anyone.

7. Capital : A joint stock company can raise large amount of capital by issuing its shares.

8. Management : A joint stock company has a democratic management which is managed by the elected representatives of shareholders, known as directors of the company.

9. Membership : To form a private limited company minimum number of members prescribed in the companies Act is 2 and the maximum number is 50. But in the case of public limited company the minimum limit is 7 and no limit on maximum number of members.

10. Formation : Generally a company is formed with the initiative of group of members who are also known as promoters but it comes into existence after completing all the formalities prescribed in Companies Act 1956.

Answer 2

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Here is u r answer

Features of Joint Stock Company

Separate Legal Entity – A joint stock company is an individual legal entity, apart from the persons involved. It can own assets and can because it is an entity it can sue or can be sued. Whereas a partnership or a sole proprietor, it has no such legal existence apart from the person involved in it. So the members of the joint stock company are not liable to the company and are not dependent on each other for business activities.

Perpetual – Once a firm if born, it can only be dissolved by the functioning of law. So, company life is not affected even if its member keeps changing.

Number of Members – For a public limited company, there can be an unlimited number of members but minimum being seven. For a private limited company, only two members. In general, a partnership firm cannot have more than 10 members in one business.

Limited Liability – In this type of company, the liability of the company’s shareholders is limited. However, no member can liquidate the personal assets to pay the debts of a firm.

Transferable share – A company’s shareholder without consulting can transfer his shares to others. Whereas, in a partnership firm without any approval of other partners, a partner cannot move his share.

Incorporation – For a firm to be accepted as an individual legal entity, it has to be incorporated. So, it is compulsory to register a firm under a joint stock company.

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