Joint Stock Company: Meaning And Types Of Joint Stock Company

Table Of Contents

1. Meaning Of Joint Stock Company
2. Types Of Joint Stock Company
3. Difference Between Private Company And Public Company
4. Similarities Between Private Company And Public Company
5. Main Features Of public Limited Company
6.Advantages Of The Public Limited Company
7. Disadvantages Of The Public Limited Company

Meaning Of Joint Stock Company

A joint-stock company is an income operated business enterprise in which the capital is divided into small unit called shares.
So that a number of investors called share holders, contributes varying amount to the total, and share the profit in proportion to the number of shares they own. It is registered with the number of registrar of the company s a limited liability company, and it is a legal person with it own identity capable of owning assets of entering into contract of swing and being sued like an individual.

Types Of Joint-Stock Company

1. Private Company
2. Public Company

Difference Between Private Company And Public Company

Private Company

1.It has a minimum of 2 and maximum of 50 members.

2. Share cannot be transfered without the consent of other share holders.

3. It cannot after it shares to the general public. It is not goof on the stock exchange.

Public Company

1. It has a maximum of 7 members and no legal minimum

2. A shareholder can freely transfer his share to other members of the public.

3. It can raise it capital by inviting the general public to subscribe to it shares. It is quoted on the stock exchange.

Similarities Between Private Company And Public Company

1. Both operates as legal entity separate from their owner’s.

2. Their shareholders enjoy limited liability.

3. Both exercise their power through the same document. The memorandum of association and the articles of association.

4. Both are controlled by directors.

Main Features Of Public Limited Liability Company

1. The liability of the owners(Share holders) is limited to the amount they have agreed to invest in the case of failure of the enterprise.

2. Separate Legal Entity: Prise a separate legal entity districts from its owners, it can be sure and be sued on it own right.

3. Separation Of Ownership From Control: Those who own the business (i.e the shareholders ) often do not take part in the day-day running of the business. The controllers and also decision takers are professionals who may not be shareholders. How ever some employees can also become shareholders.

4. It is required by to publish its audited accounts in the national papers.

5. Many Source Of Capital: They can raise its fund from many source such as the issue of the share debentures, bank loans and reinvested profits.

6. Continuity: the withdrawal depth of a shareholder has no effect on the continued existence of the company.

Incase of death of heirs, the person will inherit his shares, incase of withdrawal his shares will be sold.

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Advantages Of The Public Limited Company

1. Limited Liability Shareholder enjoy limited liability if the company becomes bankrupt, shareholders maximum loss is the total value of his shares and no more.

2. Because of its large scale production it can afford to employ specialist and to undertakes research.

3. Continuity: the company’s existence is mot affected by any change in the identity of its shareholders. It cannot fold up due to death or withdrawal of some shareholders.

4. Its shares can easily be transferred through the stock exchange.

5. Employees can become co-owners by buying their own shares.

6. The risk of the business are widely spread over to many shareholders.

Disadvantages Of Public Limited Company

1. The separation of ownership from control result to the shareholder not being fully in control of their business their interests and that of the management may lead to conflict.

2. There is an impersonal relationship between the owners and the employees as well as the customers. This lovers efficiency.

3. It is cumbersome and costly to form and register a limited company because of the legal procedure involved.

4. The company cannot keep its affairs private since it has to furnish the register of companies with almost all vital information about itself and make public its audited account.

5. Double Taxation: the company profit are taxed twice, the company pays a corporation or company tax and the shareholders pay personal income tax on the dividends they recare.

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