Definition
A Joint Stock Company is an association of
people who contribute towards a joint stock of capital for the purpose of
carrying on business with the view to profit.
The stock of capital is divided into many
small units called shares. People who buy these shares are known as
shareholders. The company is legally owned by shareholders. They elect a board
of directors to manage the business. The total profit is then distributed to
all shareholders. Each part of profits paid to shareholders is called dividend.
Limited Liability
A shareholder’s liability for the debts of
a joint stock company is strictly limited to the value of the shares he has
agreed to buy. Once shareholders have fully paid for the shares, they have no further
liability for the company’s debts.
Features of Joint Stock Companies
v It
has a separate legal existence from its shareholders
v Shareholders
are the owners of the company
v Company
is managed by board of directors
v Shareholders
have limited liability
v There
must be a minimum of two shareholders
v Companies
are regulated by Companies Act 1980
v Profits
of the company is divided among the shareholders in the form of dividend
v A
common seal is used to sign the important documents
Types of Joint Stock Companies
There are two types of Joint Stock
Companies. They are;
1. Private
Limited Companies
2. Public
Limited Companies
