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Features of Joint Stock Company


Posted Date: 22-Aug-2010  Last Updated:   Category: Education    
Author: Member Level: Gold    Points: 10


This resource gives information on features or characteristics of Joint Stock Company.



The features of the Joint Stock Company are as follows:-

(1) Incorporated Association: In India, registration of companies is compulsory. Registration gives the legal birth to the company. Without registration there cannot be a company. Registration gives separate legal existence apart from its members. This feature is not available in Sole Trading Concern, Joint Hindu Family Business, Partnership Firm, etc.

(2) Artificial Person: A company is an artificial person created by law. It does not have physical existence but it can conduct business like a natural person. It can make contracts, appoint staff, borrow money and it can sue and even by sued by other parties.

(3) Common Seal: A company being an artificial person cannot sign but its sign is replaced by common seal. The seal represents the company. It is affixed on all documents of the company and it must be signed by an authorized officer of the company. It is kept in the safe custody of company secretary.

(4) Perpetual Succession: A company has long and continuous life. It is not affected due to death, insolvency or insanity of any of its member or director. New members may come, and old may go but the existence of the company is not affected till it is going concern.

(5) Large Membership: In case of private company the minimum number of members required is two and maximum is fifty, but in case of a public company minimum number of members required is seven and there is no limit on maximum number of members.

(6) Huge Capital: The company can collect large amount of capital by issuing shares, debentures and public deposits. Huge capital is also possible because of large membership.

(7) Limited Liability: The liability of shareholders is always limited then to the extent of face value of the shares purchased. Every shareholder is responsible to pay the unpaid amount on each share held by him. Shareholders cannot be held liable for any other debts of the company.

(8) Transferability of Shares: The shares of a public limited company are easily transferable. The members can easily transfer their shares in open market by following a suitable transfer procedure. There is no need that a member should remain as a member of the company as it is a going concern.

(9) Separation of Ownership and Management: The ownership of the company is with the shareholders, while the day to day management is in the hand of Directors. The policy decisions are taken by the directors. The owners of the company do not have direct control over the business because owners are in large numbers. They invest small amount, they are scattered over a wide area, their liability is limited and their intention behind purchasing the shares is to get dividend.

(10) Government Regulation and Control: Joint Stock Companies have to work under strict supervision and control of the government. Registration is compulsory and all companies have to follow the provisions of Indian Companies Act, 1956. Such strict government control is essential, as the business is conducted with large capital collected from thousands of investors.

(11) Separate Legal Entity: A company has an independent legal entity, separate and distinct from its members. A company cannot hold any member responsible for its debts and members also cannot bind company for their acts.


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