A joint stock company, also known as a joint stock corporation or joint venture, is a type of business entity in which the ownership is divided into shares of stock. Joint stock companies can be publicly traded on a stock exchange, or they can be privately held.
There are several advantages to operating as a joint stock company. One advantage is the ability to raise large amounts of capital. Because the ownership of a joint stock company is divided into shares of stock, individuals or institutions can purchase these shares and provide the company with capital. This can be especially useful for businesses that require a large amount of funding to start or expand, such as manufacturing or infrastructure projects.
Another advantage of a joint stock company is the limited liability protection it offers to its owners. In a joint stock company, the liability of the owners is limited to the amount of their investment in the company. This means that if the company experiences financial difficulties or is sued, the personal assets of the owners will not be at risk. This protection can be especially valuable for small business owners who may not have the resources to withstand significant financial losses.
A joint stock company also has the ability to issue additional shares of stock to raise additional capital or to reward employees with equity. This can be a powerful motivator for employees and can help to align their interests with those of the company.
In addition to these advantages, a joint stock company also has the ability to attract and retain top talent. The potential for equity ownership can be a strong incentive for talented individuals to join and remain with the company.
Overall, the advantages of a joint stock company include the ability to raise large amounts of capital, limited liability protection for owners, the ability to issue additional shares of stock, and the ability to attract and retain top talent. These benefits make the joint stock company a popular choice for many businesses looking to grow and succeed.
Joint Stock Company Advantages And Disadvantages
He is one of those persons who is authorized to conduct the management of the company. In this regard, particularly Limited Liabilities with single-partner are faced with unexpected economic, legal and penal risks and challenges. Not only a joint stock company has these advantages mentioned above but also society, government and all the people of the country directly or indirectly get several facilities and special benefits from these advantages. Formation of the Company The first stage in the formation of a company is that a few persons known as PROMOTERS get together to bring it into existence, to carry on a joint-stock business. Thus, the management of a joint stock company might become oligarchic in character.
Joint Stock Company: Features, Advantages, Disadvantages & Examples
Directors have two positions in the Joint Stock Company As an Agent Directors are considered special agents of the company and not ordinary agents. The excessive regulations are made with a view to protect the interest of the shareholders and the public; but in practice, they put obstacles in their normal and effective working. There are many inspections and formalities of submission of records, especially in the case of manufacturing companies. Tax for Share Transfers of Real Persons Earnings from the sale of shares held for more than two years after the expiration of this period are not subject to income tax. Employees may leak out the secrecy of trade agreements, techniques or production, formula, and other necessary matters. Diffused Risk: In this form of organization, the risk is reduced for each shareholder, because it is diffused and spread over several shareholders of the company.
Advantages And Disadvantages Of Joint Stock Company
These economies would provide goods to the consumer at a cheaper price. All these facilitate the concentration of economic power in the hands of a few persons. Social Evils: The company form of organization has resulted in growth of monopolies, corruption, and increase in pollution, increased cost of living, congestion and profiteering, which have had an adverse impact on the society. Diffused risk — The risk of loss in a company is spread over a large number of members. Appointed by the Subscribers If the articles are silent to describe the first directors of the company, the subscriber to the memorandum is to be deemed the first directors of the company and subsequent directors are to be elected by shareholders in the general meeting.
