Question

Attempt the following:

Explain the five features of Joint Stock Company.

Answer 1

The features of Joint Stock Company are as follows:

1. Common Seal: A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. The common seal is a symbol of the company’s incorporated existence. As common seal 1s the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two directors of the Company. The common seal is under the custody of the Company Secretary.
2. Artificial Person: A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.
3. Registration: The Registration of Joint Stock Company is compulsory. All companies have to be registered under the Indian Companies Act, 2013.
4. Membership: A company is an association of persons. A private limited company must have at least two persons and a public limited company must have at least seven persons. The maximum limit of members for private companies is 200. A public company can have unlimited members.
5. Ownership and Management: Persons investing in the shares of the company are called shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. A large number of shareholders cannot manage the business. They elect representatives who are collectively called as Board of Directors. They manage the business of the Company.
6. Limited Liability: The liability of shareholders 18 limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company