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Class : 11
Unit : Business

What are the types of joint stock company?

Ans : The types of joint stock company are presented below: A. On the Basis of Incorporation:- On the basis of incorporation joint stock company may be classified into three types: i) Chartered company:- Such company is established by special Royal charter for sanction granted by head of nation through Parliament. This type of company is not established in Nepal and is rare at the present business world. ii) Statutory company:- A company, when incorporated by special act of the Parliament is known as statutory company. The examples of statutory company of Nepal are Nepal Rastra Bank, Nepal Airline Corporation, Nepal Oil Corporation etc. iii) Registered company:- A company registered according to the provision of company act is known as registered company. In the context of Nepal, a registered company should be incorporated according to the provision of company act 2063 BS. B. On the Basis of Liability:- On the basis of liability, company may be classified into three types: i) Limited company:- This types of company is registered with certain numbers of shares. In such company, liability of shareholder is limited up to extent of the face value of shares that they have purchased. ii) Unlimited company:- In this company, liability of shareholders may be more than their capital investment. The shareholders are liable for payment of all the liabilities of the company. If assets of the company become insufficient for the payment of debts even by selling their personal property. iii) Company limited by guarantee:- In such company, liability of some shareholders may be up the amount they have guaranteed. Generally guaranteed amount is just like a Capital reserve which can be called of when the company would suffer from loss or the problem of dissolution is raised. C. On the Basis of Number of Members i) Private limited company:- It is one of the registered company incorporated according to the company Act in the concerned department. According to the Company Act 2063, the minimum number of shareholders may be one and maximum should not be exceeded 50. A private limited company cannot issue shares to the public. Shareholders cannot transfer their share to the third parties without consent of all the shareholders. A private limited company can start business after getting certificate of incorporation from the concerned department of the government. For quick identification it uses the word Pvt. Ltd after the name of company. ii) Public Limited Company:- According to section 2 of the Company Act 2063, public company means any company incorporated according to this act. The minimum numbers of shareholders are 7 and the maximum is unlimited. A public limited company can issue shares among the general people. Shareholder can easily transfer their shares to the third parties. It needs to obtain the certificate of commencement before starting any business along with certificate of incorporation. It needs to issue prospectus at the time of issuing shares. For quick identification the word “Ltd” is used after the name of the company. D. On the Basis of Ownership:- It is classified into two types. i) Government company:- In this type of company, government has invested minimum 51% or cent(100%) of the paid up share capital of the company. Generally public utility companies are established under government leadership. In the concept context of Nepal, Nepal Dairy Development Corporation, Janakpur Cigarette Factory, Birgunj Sugar Mill Ltd etc. are the example of a government company. ii) Non-government company:- This type of company is established under private ownership. Government has no involvement in the ownership of the company if involvement is there that is also less than 50% of total paid. The private members need to complete some government procedure only for registration of the company.
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