Joint stock companies are form of business unit which is operated by a group of production, who contribute money in the form of shares to earn profit in the form of dividends.

It is formed by a minimum of two members and a maximum of fifty it is private company.

If it is a public company, a minimum membership of seven and maximum is unlimited. The owners of a company are called shareholders.

Characteristic of joint stock company

Limited liability: The word limited written at the end of business company's name means that in case of bankruptcy, the private property of the shareholders will not be sole to pay for the debt of the company unlike that of sole trader and partnerships.

Separate legal entity: This means the company is separate from its owners by law. It can sue and be sued in the court.

Capital: Joint stock companies raise their capital through the sales of shares to the general public, issue of debentures or loans from banks.

Continuity of existence: The death, retirement or withdrawal of a shareholder may not bring the end of the business. This is because it does not depend on the life of once shareholder.

Separation between management and ownership: Joint stock companies are owned by shareholders, managed and controlled by Board of Directors with the day to day administration of the company in the hands of a Managing Director who supervises the employees of the company.

Post a Comment

* Please Don't Spam Here. All the Comments are Reviewed by Admin.