ARE THERE ANY
LIMITATIONS FOR
SOLE TRADERS &
PARTNERSHIP
BUSINESS ?
YES ! THERE ARE SOME
PROBLEMS
Financial Burden
Management problems
High risks
Limited liability……………
NOW a question? how can you
overcome these problems ?
Any idea?
Exactly!
It is ,JOINT STOCK
COMPANY.
start
We are going to discuss about Joint
stock company in chapter 1
Corporate organization
JOINT STOCK
COMPANY
• It is a voluntary association formed
by some persons for profits with a
capital divided into transferable
shares, having a corporate body and a
common seal.
JOINT STOCK
COMPANY
• Definition:
According to Prof.L.H. Haney," A joint stock
company is a voluntary association of
individuals for profit, having a capital
divided into transferable shares, the
ownership of which is the condition of
membership.”
FEATURES OF JOINT
STOCK COMPANY
1.Separate legal entity:
It has an existence entirely distinct from an
independent of its members.
It can own property and enter in to contracts in its
own name.
It can sue and be sued in its own name
No member can directly claim the ownership right in
the assets of the company.
FEATURES OF JOINT
STOCK COMPANY
2.Artificial Legal person:
.Company is an artificial person created by law
.It is intangible and invisible having no body and no
soul.
Like a natural person, it has rights and obligations
in terms of law.
.
FEATURES OF JOINT
STOCK COMPANY
3.Perpetual existence:
A company enjoys continuous existence.
Its life is not affected by the death,insolvancy,luncy
etc..
Company die only through the legal process of
winding up.
FEATURES OF JOINT
STOCK COMPANY
4.:Limited liability:
Members liability is limited to the face value of the
shares subscribed.
The personal property of the members cannot be
attached to satisfy the claims of the creditors of
the company.
FEATURES OF JOINT
STOCK COMPANY
5.Common seal:
A company being an artificial person cannot sign
itself.
So law provides the authority to sign by using
common seal.
FEATURES OF JOINT STOCK
COMPANY
6.Transferability of shares
The shares of a public limited company are freely
transferable.
They can be purchased and sold through the stock exchange.
Every member is free to transfer his share to any one without
the consent of other member.
FEATURES OF JOINT
STOCK COMPANY
7.Separation of ownership and
management:
Members in a public company is very large
They cannot take active part in the day to day
management.
There fore we elect a representative known as
director to manage the company.
Board of directors act as the agents and trustees of
the company.
FEATURES OF JOINT
STOCK COMPANY
8.Voluntary association
It is an incorporated association of persons.
One person cannot constitute a company under the
law.
In a public company at least 7 person and in private
at least two are required.
Every member can free to join and leave the
company.
FEATURES OF JOINT
STOCK COMPANY
9.Corporate finance:
joint stock company raise huge amount of
capital by issuing shares.
There is no limit in the number of members in a
public company.
FEATURES OF JOINT
STOCK COMPANY
10.Statutory regulation and control
In order to protect the interest of investors, the
organization is controlled by government through
law.
It must follow the companies act 1956
Accounts is audited by chartered accountant.