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Joint stock company and its features and advantages

Joint stock company and its features and advantages

Joint stock company

A joint stock company is self imposed association of persons to contribute to its capital. It is an bionic person created by law. It has a typical name and a common seal. It can be act and be acted in its own.

In joint stock company is limited in liability of members. In a joint stock company the capital is divided into a small units called shares. The shares are offered to the public to buy. Anyone can purchase the shares in the open market. The  Shareholders,  one who contribute to the capital of an company.

Features of  company organisation

Separated legal

In the eyes of the law, joint stock company is an artificial persons. That’s why it has separate legal existence.

Limited liability

In a joint stock company the liability of the shareholders is limited to the value of shares held by them. In a joint stock company creditors of the company have a no right to go against the private properties of the shareholders.

Transfer of shares

Public limited company company be easily transfer their shares. Without the consent of other shareholders of the company he can transfer his share to anyone.

Minimum and maximum number

In a joint stock company, the minimum number of members in a private limited company is two, where it comes to public company it is seven.

The maximum number of members in a private limited company is 50, where it is comes to a public company there is no limit to the number of members.

Management

In a joint stock company management and ownership are separated. The real owners of the company is Shareholders, but the management is done by the directors who are the elected representatives of the company shareholders.

Perpetual existence

A joint stock company has everlasting and continuous existence. It cannot be closed for the death or insolvency of a shareholder.

Common seal

A joint stock company is an artificial person. So the document cannot be signed. Therefore the seal with the name of the company is used as a replacement for the signature.

Advantages of company organisation

Huge financial resources

A joint stock company raise amount of capital by publishing shares to the public. In a public limited company, there is no limitations to the members of shareholders in the company. That’s why can rise large amount of share capital.

Limited liability

Where it comes to liability, shareholders has limited liability to the value of shares held by them. Also there personal properties are not affected.

Stability

The company enjoys everlasting existence. The company cannot be closed by the death or insolvency of a shareshareholder.

Transfer of shares

In a joint stock company shares can be transferred from one to another with out consenting of shareholders. A shareholder can convert his shares into cash whenever he likes.

Efficient management

It is a large size business undertaking it can choose efficient people for the management.

Higher profit

In a joint stock companies they are possibility of earning huge profits because of large capital investment and efficient management.

Diffusion of risk

In a joint stock company risk is reduced for each shareholder because it is spread to several share holders.

Large scale economies

In a joint stock company it undertakes large scale operations with large capital. It enable the company to secure the large scale operations.

Scope for expansion

In this company the business can be expanded by the profit, efficient management and also huge amount of capital.

Social benefit

It provides good employment opportunities. And also quality goods are available at low price.

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