When a group of persons divide the capital of a Company into transferable shares, a Joint-Stock Company is formed. The only way to join this ownership matrix is by purchasing shares. Note that by its very definition, the ultimate aim of all shareholders, large or small, is profit.
Full Answer
What is the difference between a joint stock company and Corporation?
Joint-Stock Company Versus Public Company The term joint-stock company is virtually synonymous with a corporation, public company, or just plain company, except for a historical association with unlimited liability. That is, a modern corporation is a joint-stock company that has been incorporated in order to limit shareholder liability.
What is a joint-stock company?
The term joint-stock company is virtually synonymous with a corporation, public company, or just plain company, except for that historic association with unlimited liability. That is, a modern corporation is a joint-stock company that has been incorporated in order to limit shareholder liability.
What are the advantages of a joint stock company?
Joint-stock companies allow a solid business to form and thrive with many working together. Each shareholder invests in the company and is able to benefit from the business. Every shareholder owns a piece of the company, up to the amount that they’ve invested. Ownership comes with additional privileges.
What is a joint stock company (JSC)?
A joint stock company is an organisation which is owned jointly by all its shareholders. Here, all the stakeholders have a specific portion of stock owned, usually displayed as a share.
How joint-stock company is incorporated?
Incorporation: A company comes into existence only when it is incorporated or registered with the Registrar of Companies. The promoter has to take the following steps for this purpose: (a) Approval of name (b) Filing of Documents, and (c) Payment of Filing and registrations fees.
How many ways joint-stock company can incorporate?
The joint stock company is divided into three different types. Chartered Company – A firm incorporated by the king or the head of the state is known as a chartered company. Statutory Company – A company which is formed by a particular act of parliament is known as a statutory company.
How are joint stock companies formatted?
A joint-stock company is a cross between a partnership and the modern LLC. In this format, ownership of the company is split between shareholders who receive a share of the company's profits in proportion to their ownership stake. They also assume a share of the company's liabilities in equal measure.
How joint-stock company is formed in India?
What is the Formation of a Joint Stock company? Formation of a company means the establishment of the business/company which includes promotion, incorporation, subscription of the capital, and after these steps, the final decision is taken by the promoter related to the starting of the business.
How do you establish a new joint stock company?
Steps in Formation of Joint Stock CompanyStage 1. Promotion Stage.Stage 2. Incorporation or Registration Stage.Stage 3. Capital Subscription Stage.Stage 4. Commencement of Business Stage.
What are five characteristics of joint stock company?
Features of a Joint Stock Company – Artificial Person, Separate Legal Existence, Legal Formation, Voluntary Organisation, Perpetual Succession, Large Capital and a Few Others.
What is joint stock company and its characteristics?
The Companies Act 1956 defines a joint stock company as an artificial person created by law, having separate legal entity from its owner with perpetual succession and a common seal. Shareholders of Joint Stock Company have limited liability i.e liability limited by guarantee or shares.
What is the concept of incorporation?
Incorporation is the way that a business is formally organized and officially brought into existence. The process of incorporation involves writing up a document known as the articles of incorporation and enumerating the firm's shareholders.
Which is the main document for a joint stock company?
Main document of joint stock company are Memorandum of Association, Article of Association and Prospectus.
Which best describes a joint-stock company?
A joint-stock company is a business owned by its investors, with each investor owning a share based on the amount of stock purchased.
What are some examples of joint-stock companies?
Some Major Ones Include:Tata Motors Limited.Reliance Industries Limited, owned by Mukesh D. Ambani, is a premier example of the Joint-Stock Company in India.State Bank of India.Jindal Steel & Power Ltd.Grasim Industries Ltd.Oil & Natural Gas Ltd. (ONGC)
What is joint-stock company?
Definition of joint-stock company : a company or association consisting of individuals organized to conduct a business for gain and having a joint stock of capital represented by shares owned individually by the members and transferable without the consent of the group.
Is Tesla a joint-stock company?
The company is one of the leading suppliers in the field of radio communications and special communications equipment for military, stationary and mobile tactical networks.
How does a joint stock company work?
Joint stock company is a type of business organization that is owned by its investors. In a joint stock company the company stock can be bought and...
What are the legal documents required for a joint stock company?
Joint stock company requires the following legal documents: Article of Association Memorandum of Association Prospectus
What is the characteristics of a joint stock company?
The following are some of the characteristics of a joint stock company: Independent legal entity Limited liability Common seal Separate ownership a...
What are 2 examples of joint stock companies?
Examples of joint stock companies are: Reliance industries ltd. State Bank of India
What is joint stock company?
Summary: Joint-stock companies are businesses that combine the structure of a corporation with the flexibility and freedoms of a partnership/limited liability company. Joint-stock companies are built to benefit all shareholders; each investor owns a piece of the company – in accordance with the amount they’ve invested – and takes a percentage ...
Why do companies have joint stock?
Joint-stock companies are generally formed to enable a company to thrive. If only a few shareholders participated, the company wouldn’t be able to fund itself. But by banding together, the individuals make it possible to build a thriving business, with each shareholder then expecting to profit from the company’s success.
What do shareholders vote for?
Shareholders not only vote for the board of directors , but also vote to approve or deny annual reports, budgets, and how accounts are set up . In some instances, specific shareholders may be asked to step into a role if the role is not filled or becomes unoccupied.
How many shares do you need to be a shareholder?
A shareholder must own a minimum of one share in a company’s stock or mutual fund to make them a partial owner. can buy and sell shares and transfer shares between one another, without putting the continued existence of the company in jeopardy. Joint-stock companies are generally formed to enable a company to thrive.
What is joint stock?
What is a Joint-Stock Company? A joint-stock company is a business that is owned by its investors. The shareholders buy and sell shares and own a portion of the company. The percentage of ownership is based on the number of shares that each individual owns. Shareholders.
What is an LLC?
Limited Liability Company (LLC) A limited liability company (LLC) is a business structure for private companies in the United States, one that combines aspects of partnerships and corp. .
What is a hybrid corporation?
Corporation A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit.
What is joint stock company?
v. t. e. A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are able to transfer their shares to others without any effects to the continued existence ...
What was the first joint stock company in England?
In more recent history, the earliest joint-stock company recognized in England was the Company of Merchant Adventurers to New Lands, chartered in 1553 with 250 shareholders. The Muscovy Company, which had a monopoly on trade between Russia and England, was chartered two years later in 1555.
What is a publicly traded company?
The institution most often referenced by the word "corporation" is publicly traded, which means that the company's shares are traded on a public stock exchange (for example, the New York Stock Exchange or Nasdaq in the United States) whose shares of stock of corporations are bought and sold by and to the general public. Most of the largest businesses in the world are publicly traded corporations.
What was the most important joint stock company in the British Isles?
The most notable joint-stock company from the British Isles was the East India Company, which was granted a royal charter by Queen Elizabeth I on December 31, 1600 with the intention of establishing trade on the Indian subcontinent.
What was the first recorded joint stock company to get a fixed capital stock?
In other words, the VOC was the first recorded joint-stock company to get a fixed capital stock. One of the oldest known stock certificates, issued by the VOC chamber of Enkhuizen, dated 9 Sep 1606.
Which countries recognize the form of limited company?
Germany, Austria, Switzerland and Liechtenstein recognize two forms of company limited by shares: the Aktiengesellschaft (AG), analogous to public limited companies (or corporations in US/Can) in the English-speaking world, and the Gesellschaft mit beschränkter Haftung (GmbH), similar to the modern private limited company .
Which dynasty was the first to have joint stock companies?
China. Further information: Economy of the Song dynasty. The earliest records of joint-stock companies appear in China during the Tang and Song dynasties. The Tang dynasty saw the development of the heben, the earliest form of joint stock company with an active partner and one or two passive investors.
What is joint stock company?
Joint stock company is a type of business organization that is owned by its investors. In a joint stock company the company stock can be bought and sold by the shareholders. Shareholders should be having possession of at least 1 stock of the company in order to be counted as a partial owner.
What are the different types of joint stock companies?
Types of Joint Stock Company. The joint stock company is divided into three different types. Chartered Company – A firm incorporated by the king or the head of the state is known as a chartered company. Statutory Company – A company which is formed by a particular act of parliament is known as a statutory company.
What is a limited liability company?
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.
What is a statutory company?
Statutory Company – A company which is formed by a particular act of parliament is known as a statutory company. Here, all the power, object, right, and responsibility are all defined by the act. Registered Company – An organisation that is formed by registering under the law of the company comes under a registered company.
Is joint stock a partnership or sole proprietorship?
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.
Can a partner move his share?
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. Also read: Importance of Partnership Agreement.
Can you transfer joint stock to another party?
Each joint stock company share is transferable, and if the company is public, then its shares are marketed on registered stock exchanges. Private joint stock company shares can be transferred from one party to another party. However, the transfer is limited by agreement and family members.
Understanding Joint-Stock Companies
- Unless the company is incorporated, the shareholders of a joint-stock company have unlimited liability for company debts. The legal process of incorporation, in the U.S., reduces that liability to the face value of stock owned by the shareholder.1 In Great Britain, the term "limited" has a simil…
Joint-Stock Company vs. Public Company
- The term joint-stock company is virtually synonymous with a corporation, public company, or just plain company, except for a historical association with unlimited liability. That is, a modern corporation is a joint-stock company that has been incorporated in order to limit shareholder liability. Each country has its own laws regarding a joint-stock company. These generally includ…
A Short History of Joint-Stock Companies
- There are records of joint-stock companies being formed in Europe as early as the 13th century. However, they appear to have multiplied beginning in the 16th century, when adventurous investors began speculating about opportunities to be found in the New World.4 European exploration of the Americas was largely financed by joint-stock companies. Governments were e…
The Bottom Line
- Joint-stock companies are collectively owned by shareholders. Some existed as early as the 13th century. While, historically, they left shareholders open to unlimited liability, incorporation law has limited liability for shareholders. In the U.S., it was limited to the face value of their shares.
Benefits of Joint-Stock Companies
- Joint-stock companies allow a solid business to form and thrive with many working together. Each shareholder invests in the company and is able to benefit from the business. Every shareholder owns a piece of the company, up to the amount that they’ve invested. Ownership comes with additional privileges. Shareholders have a say in everything that ha...
Limited Liability Companies
- Today’s corporate law usually makes joint-stock companies synonymous withlimited liability companies (LLCs). What does this mean? LLCs are private companies. They are a sort of hybrid; they combine a pass-through taxation partnership with all the benefits of a corporation. The best part of an LLC is the fact that it’s incredibly flexible and beneficial to all members. Each party inv…
More Resources
- CFI offers the Financial Modeling & Valuation Analyst (FMVA)™certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following CFI resources will be helpful: 1. Management Buyout (MBO) 2. Minority Interest 3. Stockholders Equity 4. Types of Businesses
Overview
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.
By countries
In Australia corporations are registered and regulated by the Commonwealth Government through the Australian Securities and Investments Commission. Corporations law has been largely codified in the Corporations Act 2001.
In Brazil there are many different types of legal entities (sociedades), but the two most common ones commercially speaking are (i) sociedade limitada, identified by "Ltda." or "Limitada" after th…
Advantages
Ownership refers to a large number of privileges. The company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting.
The shareholders also vote to accept or reject an annual report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but that is uncommon.
Early joint-stock companies
The earliest records of joint-stock companies appear in China during the Tang and Song dynasties. The Tang dynasty saw the development of the heben, the earliest form of joint stock company with an active partner and one or two passive investors. By the Song dynasty this had expanded into the douniu, a large pool of shareholders with management in the hands of jingshang, merch…
Corporate law
The existence of a corporation requires a special legal framework and body of law that specifically grants the corporation legal personality, and it typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person) which shields its owners (shareholders) from "corporate" losses or liabilities; losses are limited to the number of shares owned. It furthermore creates an inducement to new investors (marketable stocks and f…
Closely held corporations and publicly traded corporations
The institution most often referenced by the word "corporation" is publicly traded, which means that the company's shares are traded on a public stock exchange (for example, the New York Stock Exchange or Nasdaq in the United States) whose shares of stock of corporations are bought and sold by and to the general public. Most of the largest businesses in the world are publicly traded corporations.
Other business entities
Almost every recognized type of organization carries out some economic activities (for example, the family). Other organizations that may carry out activities that are generally considered to be business exist under the laws of various countries:
• Consumers' cooperative
• Holding company
See also
• Aktieselskab
• Types of business entity
• Public–private partnership