Explain the features of joint stock company
Answers
Answer:
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Explanation:
1. Legal Formation 2. Artificial Person 3. Separate Legal Entity 4. Common Seal 5. Perpetual Existence 6. Limited Liability 7. Separation of Ownership and Management 8. Voluntary Organisation 9. Legal Formation 10. Large Capital 11. Transferability of Shares
12. Risk Bearing 13. Compulsory Incorporation 14. Large Number of Members 15. Reasonable / Lower Tax Liability 16. Enterprising Management 17. Public Confidence 18. Social Benefits 19. Incorporated Association 20. Statutory Compliance 21. Nature of Business 22. Registration and a Few Others.
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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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