The document discusses joint stock companies, including their formation, features, and examples. A joint stock company pools capital from shareholders to undertake large-scale business operations. It requires documents like a memorandum of association, articles of association, and prospectus for registration. Promoters collect information and prepare documents to establish the company. Key features include being an artificial legal entity, ability to raise large capital, use of a common seal, and transferability of shares. Some well-known Indian joint stock companies are listed.
2. A joint stock company is a form of organization
where investors or shareholders with a common
purpose pool their funds to form a company.
This type of company is usually suitable for
large scale operations where the capital
requirement is huge and beyond the capacity of
a single person.
Meaning of Joint Stock Company
5. Necessary documents required for the
formation of joint stock company
Memorandum of
Association
Articles of
Association Prospectus for registration
6. Memorandum of Association
Aim and objectives of the company
Different types of shares
Ways of subscription
The memorandum of association should contain:
Articles of Association
The articles of association should contain the rules and
regulations of the administration of the company.
7. PROMOTERS:
Some people join together with the aim to start a company
and are called Promoters.
They act as the first directors to formulate the company.
The promoters collect all the information needed for the
formation, promotion and financial requirement of the
business.
Promoters also prepare the important documents required
for the formation of the company.
Promoters also follow up the process to get the certificate of
Incorporation.
In case of Public companies, Promoters take the required
steps to pool the share capital.
8. For Public companies, a name has to be chosen, which should not be
identical to any existing company.
The promoters then need to submit the requisition letter along with
all the necessary documents and prescribed fees to the register.
The requisition letter should contain:
All the requisition letters should be signed by the first seven directors
and counter signature by a Chartered accountant or Practicing
Supreme Court Advocate.
⇒Proposed name of the company
⇒Name and Address of first seven directors.
⇒Consent to act as a first director
⇒Two Witnesses
Registration:
9. Capital Subscription:
Once the directors receive the
certificate of incorporation, they issue the
prospectus (brochure) to the public, which
results in start of capital subscriptions of
the company.
Private companies cannot issue
prospectus and however in place of
prospectus they submit statements to
the registrar.
10. Commencement of Business:
A public limited company
cannot commence business
just by raising capital.
In order to start a business, a
public limited company should
get a certificate called the
certificate to commence the
business from registrar.
11. Features of Joint Stock Company
An artificial person
1.
The company enjoys all the rights a citizen of a
country would enjoy. It can own properties, enter
into contracts, etc.
2. Separate legal entity
The company is separate from the persons who
own it. The company cannot be held responsible
for any misdeeds of the members.
12. Features of Joint Stock Company
3. Large Capital
A Joint Stock Company can generate huge amount
of money towards capital, because the number of
persons contributing towards capital are more in
number when compared to Sole Proprietorship or
Partnership organization.
4. Common seal
The company, being an artificial being, cannot
affix its signature on the documents on its own.
The common seal is used in place of a signature
13. Features of Joint Stock Company
5. Legal formation
The formation of a Joint Stock Company is
governed by the rules and regulations laid down
in the Companies Act, 1956.
6. Transferability of shares
The shares of a Joint Stock Company are
easily transferable from one person to another,
since it is a Public Limited Company
14. Indian Oil Corporation Ltd.
Tata Motors Ltd.
Reliance Industries Ltd.
State Bank of India.
Jindal Steel & Power Ltd.
Grasim Industries Ltd.
Some known Joint Stocks company
15. The British East India Business, which was founded to trade with
India and Asia in the 16th century, is the most well-known joint-
stock company.
