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Class : 11
Unit : Business


What are the characteristic of joint stock company?

Ans : The characteristics of joint stock company are presented below: i) An artificial person:- A joint stock company is an artificial person which is created by the law. it has no physical shape as a natural person but has almost all the rights of a natural person. It can sue other and can be sued. ii) Limited liability:- The liability of the shareholder is limited to the extent of the value of shares held or the amount. iii) Establishment:- For establishment of Joint Stock Company it is necessary to prepare some documents and fulfill official procedures. A private company or public limited company can is business after getting certificate of incorporations or commencement along with registration certificate. iv) Managed by representatives:- The management of the company is done by the representatives of shareholders known as members of board of directors. The boards of director are the elected representative of shareholders. v) Transferability of shares:- The shares of Joint Stock Company are easily transferable to the third party without prior permission from company management. It cannot dissolve the company. vi) Common seal:- As an artificial person, a company cannot sign itself in official documents. Thus, it has a common seal for official activities of the company. It is official signature of the company. vii) Perpetual succession:- A joint stock company continues to exist as long as it fulfills the requirements of law it is not affected by the death, lunacy, insolvency or retirement of its shareholders. viii) Publication of financial statements:- A joint stock company should publish its audited financial statements early in renowned national newspaper. This statement helps to provide information to general public. ix) Separate legal entity:- Since, the company is created by law it has separate legal entity compared to its member. Therefore, the members cannot be personally held responsible for the acts of company and company cannot be held level for the acts of the member. x) Collection of capital:- A joint stock company can collect capital by issuing shares among the general people. The persons who purchase the shares can obtain membership as well as ownership of the company.
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