JOINT STOCK COMPANY

Definition
A joint-stock company is a business entity in which shares of the
company's stock can be bought and sold by shareholders. Each
shareholder owns company stock in proportion, evidenced by their
shares. Shareholders are able to transfer their shares to others
without any effects to the continued existence of the company.

Meaning
A joint-stock company is a business owned by its
shareholders, who can buy and sell shares freely. Historically, the
shareholders of a joint-stock company could bear unlimited liability
for debts owed by the company.

CHARACTERISTICS

A joint stock company, also known as a corporation, has several

key characteristics:

Limited Liability: Shareholders' liability is limited to the amount

they have invested in the company. Their personal assets are
protected from the company's debts.

Separate Legal Entity: A company is considered a separate legal

entity from its owners. It can enter into contracts, own property,
and sue or be sued in its own name.
Perpetual Existence: The company continues to exist even if
shareholders come and go. It has perpetual succession,
meaning its life is not dependent on the life of its members.

Transferability of Shares: Shares of a joint stock company are

usually freely transferable, allowing shareholders to buy and
sell their ownership stakes.

Ownership by Shareholders: The company is owned by its

shareholders who hold shares of stock representing their
ownership interest.

Centralized Management: Shareholders elect a board of

directors to manage the company's affairs. The board appoints
officers to run the day-to-day operations.

Capital Accumulation: Joint stock companies can accumulate

large amounts of capital through the sale of shares, which can
be used for expansion and investment.

Regulatory Compliance: They are subject to regulatory and legal

requirements, including financial reporting, governance, and
taxation.

Public or Private: Joint stock companies can be publicly traded,

meaning their shares are available to the public, or privately
held, where shares are held by a smaller group of individuals or
entities.
Corporate Governance: They often have a system of checks and
balances to ensure transparency and accountability in
decision-making.

These characteristics make joint stock companies a popular

choice for businesses looking to raise capital and limit the
personal liability of their owners.