joint stock company

DEFINITION

In the modern times the business and industry has been developed on a large scale the capital required for such industry and trade is huge which cannot be accumulated either in a sole proprietorship or a partnership organization. As a result of this change, a new form of organization has become quite popular in modern times which are known as Joint Stock Company. It is normally defined as;

“An association of many person who contribute money or money’s worth to common stock or employ it in some trade and business, and who share profit or loss arising from there.”

It means the joint stock company is a voluntary association of individual who contribute their money or profit to a common stock for carrying on a particular business. The money or money’s worth contributed by the member known as ‘share holders’ forms the capital of the company. The capital is divided into numbers of unit called share. Each share carries definite face value and is transferable in the market without any restriction or formalities.

A company as soon as incorporated takes a legal entity distinct from the share holder who composes it. It is managed by a group of persons known as directors. Directors are the representatives of share holders.
FORMATION OF JOINT STOCK COMPANY

All the joint stock companies whether public or private are governed by the company’s ordinance 1984 and must be formed according to the procedures laid down in that act. For the formulation ofJoint Stock Company the following document must be submitted to the registrar, joint stockCompany;

1. The list of directors along with their address.

2. the memorandum of association on which at least 7 person, who are promoters should sign in case of public limited company and two in case of private limited company. In addition of this it is also essential for the, to purchase the qualification share.

3. Articles of association duly signed as memorandum of association.

4. The consent of all the directors to act as directors.

5. A formal declaration by the secretary that all the formalities are duly completed.

6. A statement of normal capital.

Along with the above documents, registration fees, which varies with the amount of share capital is paid off to the treasury.

When the registrar of the joint stock companies is satisfied from all the formalities he will enter the name of the company in the register and will issue a certificate of incorporation. Now thecompany will have its separate existence.

CLASSES OF COMPANIES

There are following classes of Joint Stock Company:

1.CHARTERED COMPANY

2.STATUTORY COMPANY

3. REGISTERED COMPANY

............(A) LIMITED COMPANY

......................(I) PRIVATE LIMITED COMPANY

......................(II)PUBLIC LIMITED COMPANY

...................................... * COMPANY LIMITED BY GUARANTEE

...................................... * COMPANY LIMITED BY SHARES

...........(B) UNLIMITED COMPANY