The increased needs of modern industry and 

commerce could not met by Sole proprietorship

or Partnership firms. They were favourable till the trading and industry could be run small
scale and high capital was not needed. Some other form of organization was, therefore
needed to deliver the goods. After industrial revolution, use of machines increased,
production was undertaken on a large scale, and production was undertaken with
the expectation of high demand. Capital investment was needed much as unit became bigger,
resultantly, risk element increased; in these circumstances forms having unlimited liability
did not remain favourable. Need for establishing a type of business organization arose which
could sustain high risk.

JOINT STOCK COMPANY emerged from this. It was the joint stock type of organization
which facilitated the full utilization of technical and other innovations brought in by the
industrial revolution. The joint stock organization was already known when the industrial
revolution took place, but it was considered less efficient then the partnership form of
organization. Economist like Adam Smith thought that a joint stock company was suitable
only for such occupations as could be reduced to a routine or for those fields where monopoly
existed. For ordinary business requiring initiative and prompt decisions the joint stock
company was not considered suitable. Them is giving has, however, been belied by recent
developments. In fact, it can be said that the industrial revolution could not have been
succeeded so well, had it not been for the company type of organization.
The joint stock company was the chariot on which the forces of Industrial Revolution came
riding and conquering.
 
A joint stock company is a company whose capital is predetermined and divided into
shares and whose liability for its debts is limited to its assets. The shareholders are
only liable to the company up to the amount of their respective capital contributions.

Case Study
Two friends plan to open a bakery in a mall and rent a small shop. After a while they
cannot get along and the conflict reflects to the business: they fail to pay the rent.
The mall (X AŞ, a joint stock company) claims the total payment from one of the
friends. Can X AŞ claim the payment only from one of the friends ? What will be the
interest rate X should ask for and why?

After such a qualification, there are some results. First of them is the presumption of
solidarity. According to TCC act. 7, when two or more people jointly contract a debt
towards another person in connection with a transaction which has a commercial
character for only one or all of them, they are considered as being jointly liable, in the
absence of any agreement to the contrary in the contract. In case of joint liability, the
creditor may demand full or partial performance of the debt either from all or only
one of the debtors, depending on his choice. Therefore, yes X AŞ can claim the
payment only from one of the friends. But do not forget, X AŞ can claim the payment
both of friends also.

The second result of being qualified as a commercial transaction is about the interest
rate. The rate of interest may be fixed freely in commercial transactions. And creditor
may demand default interest on short-term advances rate.  It is because we qualified
the transaction between parties as commercial. 
Introduction Functioning of joint-stock companies has difficult enough system and in
the different countries this system differs in connection with the local legislation a
little. Here functioning is described and some requirements are led to joint-stock
companies. The joint-stock company is the organization created under the agreement
by legal bodies and citizens by association of their contributions, having own legal
body. Shareholders of joint-stock company participate with the contributions in the
authorized capital stock divided into actions.

Shareholders do not bear responsibility for joint-stock company obligations.

Shareholders risk only the contribution. The joint-stock company capital is formed at
the expense of sale of actions. Formation of an authorized capital stock of joint-stock
company occurs by merge of the general face-value of all actions. An authorized
capital stock it is necessary to show in balance as the subscription capital of joint-
stock company. The authorized capital stock cannot be less than the sum regulated
by the law.

Introduction Functioning of joint-stock companies has difficult enough system and in the
different countries this system differs in connection with the local legislation a little. Here
functioning is described and some requirements are led to joint-stock companies. The joint-
stock company is the organization created under the agreement by legal bodies and citizens
by association of their contributions, having own legal body. Shareholders of joint-stock
company participate with the contributions in the authorized capital stock divided into
actions.

Shareholders do not bear responsibility for joint-stock company obligations. Shareholders

risk only the contribution. The joint-stock company capital is formed at the expense of sale of
actions. Formation of an authorized capital stock of joint-stock company occurs by merge of
the general face-value of all actions. An authorized capital stock it is necessary to show in
balance as the subscription capital of joint-stock company. The authorized capital stock
cannot be less than the sum regulated by the law.