Page 1 - Lesson Notes 7

SAI INTERNATIONAL SCHOOL

CLASSS XI

SUBJECT: BUSINESS STUDIES

CHAPTER -2, BUSINESS ORGANISATION,

CH 2 Lesson Notes 7 Joint Stock company, Features, Merits and Types

Meaning- Joint stock company is a voluntary association of persons for profit, having a
capital divided into transferable shares, the ownership of which is the condition of
membership.

FEATURES

1. Incorporated association – The company must be incorporated or registered tender the
companies Act 2013. Without registration no company can come into existence.

2. Separate Legal Existence – It is created by law and it is a distinct legal
entityindependent of its members. It can own property, enter into contracts, can file suits
in its own name.

3. Perpetual Existence - Death, insolvency and insanity or change of members as no

effect on the life of a company. It can come to an end only through the prescribed legal
procedure.

4. Limited Liability - The liability of everymember islimited to the nominal value of the
shares bought by him or to the amt. guaranteed by him.

5. Transferability of shares – Shares of public Co. is easily transferable. But there are
certain restrictions on transfer of share of private Co. .

6. Common Seal- It is the official signature of the company and it is affixed on all
important documents ofcompany.

7. Separation of ownership and control – Management of company is in the hands of
electedrepresentatives of shareholders known individually as director and

collectively as board of directors.

MERITS