JOINT STOCK COMPANY PDF
A joint stock company is a company whose capital is divided into shares and the NOTE: In joint stock companies the phrase "Public Joint Stock Company" or. Joint Stock Company. You must have heard about Reliance Industries Limited ( RIL), Tata Iron and Steel. Company Limited (TISCO), Steel Authority of India. A joint-stock company is a business entity in which shares of the company's stock can be Print/export. Create a book · Download as PDF · Printable version.
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companies. A joint stock company has, solely, the characteristics of a company of capital. The prototype of a personal company type is the public trade company. According to Haney, “Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares. The ownership. A joint stock company is a voluntary association formed for the purpose of carrying on some business. Legally, it is an artificial person and having a distinctive.
Features of legal status of joint-stock companies set up by privatization of state and municipal enterprises are also defined by the laws and other legal acts on privatization of enterprises. Features of legal status of credit organizations set up in the form of joint-stock companies, the rights and duties of their shareholders are also defined by the laws regulating the activity of credit organizations.
The Development of the Joint Stock Company
Open joint-stock company Joint-stock company which makers can alienate their shares without consent of other shareholders is the open joint-stock company. Such joint-stock company has the right for open public subscription for issued shares and their sale according to the law and other legal acts.
The open joint-stock company is obliged to publish annually the annual report urbi et orbi, the accounting balance, the account of profits and losses. The incorporators of joint-stock company conclude the contract defining a procedure of joint activity on setting up the company, the authorized capital rate, a category of issued shares and the order of stock floatation, and also other conditions stipulated by law on joint-stock companies.
The contract of joint-stock company setting up is made in writing. When OJSC registration the following points should be considered: Shareholders have the right to alienate their shares without any consent of other shareholders and a company.
Open joint-stock company is the legal entity and has a separate estate in the property considered in entity accounting and can become on its own behalf the owner and carry out property and personal non-property rights, bear responsibility, to be the claimant and the respondent in court.
OJSC has the right for open public subscription for issued shares and sell them under conditions established by the law and other legal acts. OJSC has the right for closed public subscription for issued shares, except for cases when closed public subscription is limited by the charter of company or requirements of legal acts of the Russian Federation.
OJSC bears responsibility for all its obligations by all its property, but does not respond for obligations of the shareholders. Shareholders do not respond for OJSC obligations and bear risk of the losses connected with its activity within the cost of their shares.
The number of shareholders in the open joint-stock company is not limited.
Further in the case of the company, accounts must be audited by a charted accountant but it is not compulsory in the case of partnership and sole proprietorship.
Some of the advantages are as follows: 1. Financial Strength: The joint stock company can raise a large amount of capital by issuing shares and debentures to the public. There is no limit to the number of shareholders in a company.
However, in a private company the membership cannot exceed The capital of the company is divided into numerous parts of small value called shares and this attracts even the person with limited resources.
Further, anyone can purchase the shares and leave the responsibility of management to the body of persons called directors. Again, as the shares are freely transferred by selling it in the stock market, this works as an added attraction to the investors.
Because of this, the joint stock form of organization is well adopted for raising amounts of capital. Limited Liability: One important factor which attracts the investors to subscribe is the principle of limited liability.
This form of organization is a great attraction to persons who do not want to take much risk in other forms of organization that do not enjoy the benefit of limited liability.
Joint Stock Company: Definition, Features, Advantages and Disadvantages
Benefits of Large Scale Organization: As the size of a company is large, the economies of large-scale organization and production are secured.
Due to this, the cost of production will be less and the society is in a position to get its requirements at a lesser price.
Scope for Expansion: As there is no limit to the number of persons in a company, there is a great scope for expansion of the business. A company, which is making good profits, can create big reserves which can be used for the expansion of the company.
In addition, the availability of managerial talent in the company facilitates the expansion of the business.
Stability: A company is a legal entity and enjoys perpetual succession which means the retirement or death of a shareholder cannot affect the company Even the change in the management or the owner or disputes over the ownership of shares or stock cannot affect the continuity of a company.
The companies are well suited for business, which require a long period to establish and consolidate. Transferability of Shares: One special feature of company is that shares are freely transferable from one person to another without the knowledge of the shareholders.
The existence of stock exchanges where shares and debentures are sold and purchased has facilitated as good as cash as they can be sold at any time and there is an added attraction to the investors. Efficient Management: In company organizations, the agents of production are effectively combined and also there is scope for increased efficiency of direction and management. The most efficient persons may be chosen as directors and if found indifferent, they may be changed in the next meeting.
Normally, as the directors have a great stake in the business, in the interest of the company, and in their own interest, they have to be very efficient.
Higher Profit: As a large capital is invested in companies, it would be possible for them to use the expensive machinery and up-to-date equipment resulting in greater production, reduced cost, and higher profit. The progress of industries and commerce of the nation.
Diffused Risk: In this form of organization, the risk is reduced for each shareholder, because it is diffused and spread over several shareholders of the company. Bolder Management: In this form of organization, as the persons who manage the company have relatively smaller financial stake, they can become adventurous. There are many industries, which would not have come into existence if people had been unduly cautious.
Starting of a new enterprise needs an adventurous spirit and in case of joint-stock company because of its limited liability and smaller financial stake of the persons, who manage it, people can become adventurous and thus start new enterprises.
Social Benefit: The company form of organization has encouraged the habit of saving and investment among the public. It has also indirectly helped the growth of financial institutions such as banks and insurance companies by providing avenues to invest their funds. Further, as companies cannot be managed by all the shareholders who are large in number, it has to employ professional managerial personnel and this has helped the development of management as a profession.
Again, as the affairs of the company are published, and as the companies are well regulated and controlled by the State, the public has great confidence in the company form of organization. Disadvantages of Joint-Stock Company: In spite of so many advantages of company form of organization, there are many drawbacks and limitations from which it suffers.
They are as follows: 1. Formation is Difficult: The formation of a company involves a long-drawn-out complex procedure. For formation many provisions of the Companies Act are be complied with. Large amount of money have to be spent in order to fulfill the preliminaries.
Further, in many cases government sanction is required. These difficulties discourage many persons from starting companies. Fraudulent Management: Many a time unscrupulous promoters by presenting the prospectus as a rosy picture manage to get capital from the public.
This results in companies being started and managed by incapable and fraudulent hands. Concentration of Control in Few Hands: In theory, democratic principles are followed in the management of companies, but in practice it is nothing but oligarchy of managing director and directors leading to concentration of control in a few hands.
The shareholders have no say in the affairs of the company. As they are spread throughout the country, very few care to attend the meetings and those who do not attend, normally give proxies in favor of managing director or directors.
All these facilitate the concentration of economic power in the hands of a few persons. Encourages Speculation: This form of organization encourages speculation on the stock exchange.Minimum government regulation Strict and excessive government regulation Search my Subject Specializations: An analysis of the above definition reveals many distinctive features of joint-stock company, which distinguish it from other forms of business organization.
A joint stock company is a large-scale business organisation having huge resources. All Rights Reserved.
They may take part in deciding the general policies of the company but the day-today affairs of the company are managed by their elected representatives, called Directors. They may or may not have share capital. There are many industries, which would not have come into existence if people had been unduly cautious. Library Card.