-: Joint Stock Company :-
A business organisation that is owned jointly by all its shareholders is known as Joint Stock Company .
All the shareholders own a certain amount of stock in the company , which is represented by their shares . When dealing with business on a fairly large scale a joint stock company is the most suitable form of business organization .
Features of Joint Stock Company :-
1- Artificial Legal Person :- A company is a legal entity like a natural person , it can do certain things , like own property in its name , enter into a contract , barrow and lend money , sue or be sued etc .
2- Separate Legal Entity :- A member of the company is not liable for the company and similarly the company will not depend on any business activities .
3- Incorporation :- Without incorporation , a company simply does not exist .
4- Perpetual Succession :- Members or share holders of a company keep changing , but this does not affect the company's life .
5- Limited Liability :- Only the company's assets can be sold off to repay its own debt . The members can't made to pay up .
6- Transferability :- In a joint stock company , the ownership is divided into transferable units known as shares .
Advantages of Joint Stock Company :-
1- Limited Liability :- The liability of the member is only limited up to the unpaid amount on their shares . Since their personal wealth is safe , they are encouraged to invest in joint stock companies .
2- Transferability :- The shares of a company are transferable .
3- Perpetual Succession :- The death/ retirement / insanity / etc does affect the life of a company . only liquidation under the companies act will shut down a company .
4- Efficient Management :- Very proficient talented people are elected to the board and this result in effective and efficient management .
Disadvantages of Joint Stock Company :-
1- Complex and Lengthy Procedure :- One disadvantages of joint stock company is the complex and lengthy procedure for its formation . This can take up to several weeks and is a costly affair as well .
2- Conflict Of Interest :- A company has many stakeholders , all these stakeholders look out for their benefit and it often leads to a conflict of interest .
A business organisation that is owned jointly by all its shareholders is known as Joint Stock Company .
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All the shareholders own a certain amount of stock in the company , which is represented by their shares . When dealing with business on a fairly large scale a joint stock company is the most suitable form of business organization .
Features of Joint Stock Company :-
1- Artificial Legal Person :- A company is a legal entity like a natural person , it can do certain things , like own property in its name , enter into a contract , barrow and lend money , sue or be sued etc .
2- Separate Legal Entity :- A member of the company is not liable for the company and similarly the company will not depend on any business activities .
3- Incorporation :- Without incorporation , a company simply does not exist .
4- Perpetual Succession :- Members or share holders of a company keep changing , but this does not affect the company's life .
5- Limited Liability :- Only the company's assets can be sold off to repay its own debt . The members can't made to pay up .
6- Transferability :- In a joint stock company , the ownership is divided into transferable units known as shares .
Advantages of Joint Stock Company :-
1- Limited Liability :- The liability of the member is only limited up to the unpaid amount on their shares . Since their personal wealth is safe , they are encouraged to invest in joint stock companies .
2- Transferability :- The shares of a company are transferable .
3- Perpetual Succession :- The death/ retirement / insanity / etc does affect the life of a company . only liquidation under the companies act will shut down a company .
4- Efficient Management :- Very proficient talented people are elected to the board and this result in effective and efficient management .
Disadvantages of Joint Stock Company :-
1- Complex and Lengthy Procedure :- One disadvantages of joint stock company is the complex and lengthy procedure for its formation . This can take up to several weeks and is a costly affair as well .
2- Conflict Of Interest :- A company has many stakeholders , all these stakeholders look out for their benefit and it often leads to a conflict of interest .
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