Features of joint stock company

FEATURES OF JOINT STOCK COMPANY

FEATURES

1)incorporated Association

  A registration of joint stock company is compulsory. Every Indian company should be registered with the register of the company as per Indian companies Act, 1956. After registration, the company is known as voluntary incorporated association.

2)Artificial person

Company is an artificial person created by law. It has a separate name and a common seal as a substitute for its signature. It is does not have a physical existence because it is not a natural person. However, it can enter into contracts with third parties.

E.g.:it can buy and sell property, borrow money, etc.

3)perpetual succession

  Perpetual succession means continuity and stability of business. Old members may go and new members may come but the continuity of company does not get affected. Moreover, the death, retirement, insolvency or insanity of any of its members does not result dissolution of company.

4)common seal

A company is an artificial person which cannot sign as a human being. Therefore, a common seal is used as a substitute for the signature of the company. The common seal shows the name of the company, which is engraved in a particular manner. It is to be witnessed by the signature of two directors of the company.

5)limited liability

The most important advantage of a joint stock company is limited to the extent of unpaid amount on shares held by members. Their personal property will never be utilized for  payment of debts of the company.

6)separation of ownership and management

Shareholders are the real owners of the company. They elected their representative known as board of directors, to run the business on their behalf. Thus, ownership of joint stock company is separated from its management.

7)Transferability of shares

The ownership capital of the company is divided into shares which  are freely transferable in a public limited company. I.e. members can buy or sell these shares without taking permission from the company. However, the shares of private limited company are not freely transferable.

8)large membership

In case of public limited company , minimum numbers of members is 7. However their is no maximum limited on number of members. Such large membership helps in raising large capital.

9)statutory regulation

Every company must submit various documents to the register of the companies for getting certificate of the incorporation and certificate of commencement. The statutory regulation is necessary to protect the interest of a Large number of shareholders.

10)separate legal entity

A joint stock company is created by law and enjoys an independent legal status different from its members. Therefore, the company's liabilities are its own I.e. shareholders are not liable for the debts of the company. Similarly, shareholders cannot act on behalf of the company or bind person or persons.