July 03, 2012

Concept And Meaning Of Joint Stock Company

A joint stock company is a voluntary association. It is created, operated and liquidated by law. Joint stock company is an artificial person. It has separate legal existence and it exists only in the eyes of law.

The joint stock company raises capital by issue of shares. The shares are freely transferable. Shareholders come and go but company continues. The liability of shareholders is limited. The shareholders are the owners of a company. They elect a board of directors to manage the company.

The company form of business organization is very popular. It removes the problems of capital shortage and unlimited liability like in sole trading and partnership.

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The main points in the concept of joint stock company are as follows:

* Joint stock company is an artificial person

* Joint stock company is created by law.

* Joint stock company has continued existence.

* Joint stock company issues shares to raise capital.

* The liability of shareholders is limited

* Ownership and management are separated.