Concept of joint stock company class is for the HSC candidates or for the students of classes 11 and 12. This class is a part of HSC (11-12) [ এইচএসসি (১১-১২) ], business organization and management. You can find it as Business Environment, chapter 5, the topic name is “Concept of joint-stock company”. This class will help you in your upcoming HSC examination.
Concept of joint stock company
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 (certificates of ownership). Shareholders are able to transfer their shares to others without any effects on the continued existence of the company.
In modern-day corporate law, the existence of a joint-stock company is often synonymous with incorporation (possession of legal personality separate from shareholders) and limited liability (shareholders are liable for the company’s debts only to the value of the money they have invested in the company). Therefore, joint-stock companies are commonly known as corporations or limited companies.
Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and in other countries that have adopted its model of company law, they are known as unlimited companies. In the United States, they are known simply as joint-stock companies. A joint stock company is an artificial person; it has a legal existence separate from the persons composing it.
It can sue and can be sued in its own name. It is created by law, established for commercial purposes, and comprises a large number of members. The shares of each member can be purchased, sold, and transferred without the consent of other members. Its capital is divided into transferable shares, suitable for large undertakings.
Ownership refers to a large number of privileges. The company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting.
The shareholders also vote to accept or reject an annual report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but that is uncommon.
A joint-stock company also differs from other company forms, as it lacks internal ownership (hence its shareholders). This means that although the shareholder(s) in the joint-stock company may also work for the company as employees or by contract when they act as shareholders they are always exterior to the company, which may help keep ownership business-oriented and impersonal.
Provided sales and assets exist within the company, a joint-stock company is effectively a forum for three-party trading: Owners, i.e. shareholders, are seeking financial funds (profits) and offer economic assets, in the form of capital. Employees, contractors, and other contracted parties seek compensation and offer labor for this. Utilisers, ie customers, clients, and other stakeholders, seek products and services and offer financial funds for this.
The shareholders are usually not liable for any of the company debts that extend beyond the company’s ability to pay up to the amount of them.
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