Joint Stock Company
A joint-stock company is a business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company's shares (certificates of ownership).
[1] This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. [2]
In modern corporate law, the existence of a joint-stock company is often synonymous with incorporation (i.e. possession of legal personality separate from shareholders) and limited liability
(meaning that the shareholders are only liable for the company's debts to the value of the money they invested in the company).
And as a consequence joint-stock companies are commonly known as corporations or limited companies .
Some jurisdictions still provide the possibility of registering joint- stock companies without limited liability. In the United Kingdom and other countries which have adopted their model of company law, these are known as unlimited companies . In the United States, they are known simply as "joint- stock companies".
Advantages
Ownership of stock confers a large number of privileges. The company is managed on behalf of the shareholders by a Board of
Directors , elected at an Annual
General Meeting. The shareholders also vote to accept or reject an
Annual Report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company, should a vacancy occur, but this is uncommon. The shareholders are usually liable for any of the company debts that exceed the company's ability to pay. Meanwhile, the limit of their liability only extends to the face value of their shareholding. This concept of limited liability largely accounts for the success of this form of business organization.
Ordinary shares
[1] This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. [2]
In modern corporate law, the existence of a joint-stock company is often synonymous with incorporation (i.e. possession of legal personality separate from shareholders) and limited liability
(meaning that the shareholders are only liable for the company's debts to the value of the money they invested in the company).
And as a consequence joint-stock companies are commonly known as corporations or limited companies .
Some jurisdictions still provide the possibility of registering joint- stock companies without limited liability. In the United Kingdom and other countries which have adopted their model of company law, these are known as unlimited companies . In the United States, they are known simply as "joint- stock companies".
Advantages
Ownership of stock confers a large number of privileges. The company is managed on behalf of the shareholders by a Board of
Directors , elected at an Annual
General Meeting. The shareholders also vote to accept or reject an
Annual Report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company, should a vacancy occur, but this is uncommon. The shareholders are usually liable for any of the company debts that exceed the company's ability to pay. Meanwhile, the limit of their liability only extends to the face value of their shareholding. This concept of limited liability largely accounts for the success of this form of business organization.
Ordinary shares