1. JOINT STOCK COMPANY
By- RUNA

2. Why Company?
In a partnership we cannot exceed 20 members So there is a limit of contribution of capital, resources, wisdom etc. Also a risk of unlimited liability

3. MEANING OF COMPANY A company is an association of persons.
It is formed for carrying out business activities
It a legal statues independent of its members.

4. JOINT STOCK COMPANY
It is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.

5. Features
1.Artificial Person Artificial no body, soul i.e. its invisible and intangible Person it can incur debts, own property, borrow money, enter contracts etc.

6. Business Business Owners IN THE EYES OF LAW has own legal
2. Separate Legal Entity
Business Business Owners
IN THE EYES OF LAW
has own legal
entity
Assets and Liability Assets and Liability
of company of its owners
Separate
From

7. }
3. Formation time consuming expensive complicated REGISTRATION Indian Companies UNDER Act
Preparation of Documents
Compliance with several Legal Requirements

8. } 4. Perpetual Succession Never ending OR Permanent Existence
Not affected by death Or
the coming and going of people
A BUSINESS CAN ONLY
BE BROUGHT TO AN
END BY LAW
By procedure of WINDING UP

9. Exercised by Shareholders
5. Control
OWNERS
Ownership
control
Exercised by Shareholders
Management
Control
Exercised by Board of Directors
LEGAL REPRESENTATIVES

10. 6. Liability Limited to the extent of the capital contributed Personal assets are free/safe

11. 7. Common seal Official signature of company in the form of a Stamp(seal) with name of company engraved on it. This is a legal requirement. NEED: arises due to the company being an artificial person and not being able to sign documents

12. 8. Risk Bearing Risk is borne by all shareholders
8. Risk Bearing Risk is borne by all shareholders. Individual risk decreases

13. 9. Transfer of Shares The shareholders enjoy a right to transfer their shares to other persons in the open market.

14. Merits
1.Limited liability Limited to the extent of the capital contributed Personal assets are free/safe REDUCES RISK BORNE BY OWNERS

15. 2. Perpetual Existence Change is ownership or management does not affect its continuity Not affected by death, retirement, insolvency or insanity of its members MAINTAINS STABILITY OF COMPANY

16. 3. Increased resources and production capacity When 2 or more enterprises join hands Both their resources, capital, wisdom etc. are clubbed together Resources pool increases Production Capacity Increases

17. 4. Access to new markets When 2 or more enterprises join hands Get access to each other’s market Market expands

18. 5. Access to latest technology companyA companyB
Joint Venture
Local company
Large MNC
Benefited by
Technological advancements

19. } 6. Scope of expansion has large financial resources CAPITAL
Attracted from public
Loans from banks
or financial institution
Reason Investors are inclined to invest in shares
limited liability
Transferable ownership
Possibility of high returns

20. 7. Professional Management In large scale operations Division of work Each department deals with a particular activity and is headed by an expert Management is in the hands of specialised and experiences personnel balanced and rational decision making

21. Demerits 1. Complexity in formation
Large amount of time, effort and procedures
( i.e. legal documents preparation)
According to Companies Act

22. 2. Lack of secrecy According to the Companies Act: A company has to provide information from time-to-time to the Office of Registrar available to general public

23. 3. Numerous Regulations Functioning Large no
3. Numerous Regulations Functioning Large no. of Of company legal formalities e.g. an audit, filing reports, obtaining certificates from agencies
SUBJECTED TO {
Time consuming
&
Reduces freedom of
operations

24. 4. Delay in decision making time consuming process Board of Directors General Meeting RESULT: Delay in decision making And execution Opportunities lost

25. rule by a few 5. Oligarchic Management
Shareholders are scattered →disunited
Not interested in company meetings
B.O.D enjoy considerable freedom in exercising their power which they can use against the interest of shareholders
Dissatisfied shareholders→ sell their shares
& exit company

26. 6. Conflict in Interests Clash of demands or interests e. g
6. Conflict in Interests Clash of demands or interests e.g. employees→ higher salaries consumers→ better goods in lower price shareholders→ higher dividends