Joint Stock Company
Definition of Joint Stock Company
A Joint Stock Company may be defined as a company that issues stock and allows derived promotion trading making the stockholders legally responsible for the debts caused to the company. A Joint Stock Company is a combination of a partnership and a corporation. A joint stock company has right to use the liquidity and fiscal funds of stock markets but also is restricted like a partnership.
Features of Joint Stock Company
The following are the features of a Joint Stock Company:
- Registration of the Joint Stock Company is important as it gives the company a legal right.
- The Joint Stock Company can have a long term existence as a company and is not affected by any changes to the company members or death.
- The company can create a large capital for the business by issuing shares and other such funds.
- This company cannot hold any member of the Joint Stock company responsible for debts caused to the company
Advantages of the Joint Stock Company
The following are the advantages of a Joint Stock Company. They are:
- A Joint Stock Company has access to a large amount of capital that is contributed to the company because of the shares that are issued.
- The liability of the Joint Stock Company Holders is limited because of the shares that are held by them. The holders are not responsible for debts or losses faced by the company.
- The company is managed by the Directors which are elected by the shareholders.
Disadvantages of the Joint Stock Company
The following are the disadvantages of a Joint Stock Company:
- A joint stock company has to be formed only after completing a long list of legal formalities which is a long and complicated process. It requires experienced members and the formation of the company can be quite high.
- The Joint Stock Company is regulated by the Government, and all the legal formalities have to be completed according to the Companies Act.
Every decision in a Joint Stock Company would be taken at the Meetings of the Board of Directors that has lots of formalities to be taken care of, which can take a lot of time.
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