Definition of Joint Stock Company
Definition of Joint Stock Company:
According to Indian Companies Act 1913, "A Company is an artificial person created by law, having separate entity, perpetual succession, and common seal".
According to Indian Companies Act 1956, "A Company means a company formed and registered under this Act or an existing Company".
Features of Joint Stock Company:
Following are the features of the Joint Stock Company:
- Artificial Person created by Law: Since a company is created by law, it is called an artificial person. It can acquire assets, take loans, signs contracts, file cases and can be sued as well in the court of law.
- Separate legal entity: The identity of the company is separate from its shareholders. A shareholder is not responsible for the acts of the company even if its own all its shares.
- Perpetual Existence: The existence of the company is perpetual and it is least affected by the death or insanity of the shareholders.
- Limited Liability: Liability of shareholders of a company is limited. It is limited to the extent of unpaid amount on shares held by the shareholders.
- Transfer of shares: Shareholders enjoy the right to transfer their shares to other persons in the open market at the price prevailing in that market.