Joint stock company is a large sized business organization established and operated by raising capital through issuing of shares. It has some distinct features or characteristics like legal personality, share transfers, limited liability, artificial person, common seal etc.
Some notable features or characteristics of joint stock company can be described as follows:
A joint stock company has its own legal personality. It is created by law and has separate legal existence from its owners. It is not liable for the acts of its shareholders. The shareholders are not liable for the acts of the company.
A company is an artificial person. It exists in the eyes of law. It can own, buy and sell property in its own name. it can enter into contract. It can file cases in the courts of law. It can be sued by others.
Continuity is another main characteristic of joint stock company. A company has continued existence. It is created by law. It can be liquidated only by law.
The shareholders of a company have limited liability. It is limited to the face value of shares. The shareholders are not personally liable for the debts of company.
The capital of a joint stock company is divided into shares. The shares of a public company are freely transferable. The share transfer is done through stock exchange. The shareholder can sell his shares at his own will.
A company has separation of ownership and management. The shareholders are the owners. They elect a board of directors to manage the company. The management is democratic and representative. Shareholders have no right to participate in day to day management of a company.
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A company has a common seal. It represents the official signature of the company. It i put on all important documents. It indicates approval by the company. The name of the company is engraved on the common seal. So, common seal is also a notable characteristic of joint stock company.
1. Legal personality
A joint stock company has its own legal personality. It is created by law and has separate legal existence from its owners. It is not liable for the acts of its shareholders. The shareholders are not liable for the acts of the company.
2. Artificial person
A company is an artificial person. It exists in the eyes of law. It can own, buy and sell property in its own name. it can enter into contract. It can file cases in the courts of law. It can be sued by others.
3. Continued existence
Continuity is another main characteristic of joint stock company. A company has continued existence. It is created by law. It can be liquidated only by law.
4. Limited liability
The shareholders of a company have limited liability. It is limited to the face value of shares. The shareholders are not personally liable for the debts of company.
5. Share transferable
The capital of a joint stock company is divided into shares. The shares of a public company are freely transferable. The share transfer is done through stock exchange. The shareholder can sell his shares at his own will.
6. Separation of ownership and management
A company has separation of ownership and management. The shareholders are the owners. They elect a board of directors to manage the company. The management is democratic and representative. Shareholders have no right to participate in day to day management of a company.
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7. Common seal
A company has a common seal. It represents the official signature of the company. It i put on all important documents. It indicates approval by the company. The name of the company is engraved on the common seal. So, common seal is also a notable characteristic of joint stock company.
