Business Organizations and Corporate Governance

Earlier, the Act which regulated the Joint stock company is the Companies Act 1956. But this Act has been amended recently in the year 2013, known as Companies Act 2013.

A joint stock company has an independent status i.e. it has a separate legal entity from its members. It has an independent existence in the eyes of law and can also purchase and sell property in its own name.

In joint stock company there is separation of ownership and management and it involves placing the management of the firm under the responsibility of professionals who are not its owners. Owners of a company may include shareholders, directors, government entities and initial founders.

One of the feature of joint stock company is that it has a perpetual existence that implies death or insanity of any of its member, board of directors, employees or shareholder cannot lead to the closure of company. It has a long business life i.e. cannot be easily diluted.

The large scale business can be easily carried out by Joint stock company as capital can be easily accumulated by inviting subscriptions from the general public in the form of shares and companies have a long and stable life i.e. perpetual succession.

A business organisation registered under the Companies act 1956 is a Joint stock company. All the companies have to register itself with registrars under the Companies act 1956. It has been recently amended in the year 2013.

The large scale business can be easily carried out by Joint stock company as capital can be easily accumulated by inviting subscriptions from the general public in the form of shares and companies have a long and stable life i.e. perpetual succession.

It is true that a secretary is appointed by the Board of Directors in accordance with provisions of Companies Act, who is responsible for the administration of a company, with regard to compliance  with statutory and legal requirements.

The third stage in the formation of Joint stock company is Capital subscription or raising. At this step, a company is allowed to raise their funds from general public by issuing shares and debentures. But before that it has to issue a prospectus for the public to subscribe to the capital of company.

Memorandum of Association is the constitution of Joint stock company. It directs or instructs joint stock company. The joint stock company runs in accordance with the memorandum of association. Activities of the joint stock company are directed by the Memorandum of Association. Memorandum of association is regarded as a blueprint as it is needed for the incorporation of the joint stock company. Memorandum of Association is submitted to Company Registrar Office. Basic information and provision of the company are clearly mentioned in the memorandum of association. It defines scopes, objectives, functions of the joint stock company.

In a Joint Stock Company, the shareholders (owners) are distinct from the board of directors and management who run the daily operations, creating a separation of ownership and management.

Winding up of a company is a legal process governed by specific statutes and court procedures. It cannot be done simply by a private agreement between parties without following the legal framework.

Publicly traded company shares are bought and sold on a stock exchange, which is a centralized market for trading securities.

The liability of a shareholder in a limited company is limited to the unpaid amount on the shares they hold. If the shares are fully paid, the shareholder has no further liability.

Company secretary occupies an important place in a corporate set up. As per Companies Act 2013, a Company Secretary is a key managerial person.