Tag: joint stock company 1 - definition, classification, advantages and disadvantages

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.

Authorized share capital, or nominal capital, is the maximum amount of share capital that a company is authorized to issue according to its constitutional documents.

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.