Meaning: -A Joint stock is an incorporated association, which is an artificial person, having independent legal status with a perpetual succession, a common seal, a common capital of transferable shares carrying limited capital. In other words, Joint Stock Company is a business organization organized and owned by shareholders but managed by directors. But the directors must have to purchase the Qualification shares with in two months from the date of his admission.
Definition: - PROF. (H.L.Haney) “A joint stock company is a voluntary association of individual for profit, having its capital divided into transferable shares, the ownership of which is the condition of membership.”
Following is the features of Joint Stock Company
1. Artificial person
2. Incorporated association
3. Perpetual succession
4. Common seal
5. Limited liability
6. Large membership
7. Voluntary Association
The above important features are explained briefly as under:
1. Artificial Person: - A company is an artificial person created by a law, it has non-physical existence, but it has legal existence. Like human being, it can acquire property, enter into a contract, and sign documents, take legal action, etc,
2. Incorporated Association: - Every company in India has to be registered under the Indian companies Act, 1956. Registration or incorporation gives birth to a company. On registration, it gets a separate identity.
3. Perpetual Succession: A company has a perpetual succession. It means that the company has a long and stable life. Its existence is not affected by death, insolvency or insanity of its members.
4. Common Seal: - A company is an artificial person, and as such, it has to sign documents and other papers. However, it cannot sign as a human being and, therefore, the common seal serves as its signature. The common seal remain in the custody of the Board of Directors
5. Limited Liability: -The liability of the members of the joint stock company is limited to the extent of the Shares Purchased by them. If the shares are fully paid, the member is not liable for any debts of the company.
6. Large Membership: - A joint stock company enjoys large membership. This is because, in a private company, the minimum members are two maximum members can be fifty. In a Public company, the minimum members are Seven and there is no Maximum limit.
7. Voluntary Association: - A company is a voluntary association of persons. Any person competent to enter into a contract can become its member. To be a member, a person should buy or own the shares of the company. A person can terminate is membership form the company by transferring his shares.