According to Chief justice Marshall “A corporation is an artificial being, invisible, intangible and existing only in contemplation of the law. Being a mere creation of law, it possesses only the properties which the charter of its creation confers upon it either expressly or as incidental to its very existence.”
According to Sec. 2(20) of Companies Act, 2013, “Company means a company incorporated under this Act or under any previous company law.”
1. Voluntary Association
A Joint Stock Company is a voluntary association of people. Any person irrespective of his/her caste, creed, religion, region etc. can become member. A person can be a member at his wish and leave membership as and when he/she wants subject to provision in Articles of Association of the company.
2. Incorporated Association
A Joint Stock Company is an incorporated association as it is registered under Indian Companies Act, 2013. The registration is compulsory in India for every Joint Stock Company irrespective of its size and nature of business.
3. Artificial Person
A Joint Stock Company is an artificial person created by law. Just like a natural person, a Joint Stock Com- pany can sign (common seal) documents, appoint employees, purchase or sale assets and property and enter into contracts.
4. Independent Legal Entity
A Joint Stock Company can enjoy separate legal status. Existence of Joint Stock Company is different from its shareholders and directors.
5. Perpetual Succession
A Joint Stock Company has perpetual succession. The death, insolvency and insanity of any shareholder or director does not affect continuity of company. There is no death of company. However, it can be closed by following legal procedure stated in the Companies Act.
6. Common Seal
A Company cannot sign physically so common seal can be affixed on all the documents of company along with signature of Board of Directors. Common seal is treated as signature of company. It remains in the custody of Board of Directors of company.
7. Limited Liability
The liability of shareholders of company is limited upto unpaid value of shares. Once the unpaid value of shares is paid by shareholders, they are not liable to pay any debts of company out of their personal property.
8. Separation of Ownership and Management
In Joint Stock Company the ownership and management are different. Shareholders are the owners of company and Board of Directors are the Managers of company. The shareholders are large in number and spread over wide area. It is not feasible for them to participate in management of company. So they appoint Board ofDirectors as their representatives to look after day to day routine of company.
9. Huge Membership
The membership of Joint Stock Company is huge. A private limited company must have minimum 2 members and maximum 200 members. A public limited company must have minimum 7 members and maximum no limit onbmembership.
10. Huge Capital
Joint Stock Company can collect huge capital due to huge membership. They can collect capital by issue of shares (owner’s fund) or debentures and bonds (debt fund). They also accept public deposits. It obtains loans from banks and financial institutions.
11 Transferability of Shares
Though the shares of Private Limited Company are not freely transferable, the shares of Public Limited Company are freely transferable in open market. Anyone who wishes to sell share can do so anytime.
12. Government Control
Functioning of Joint Stock Company is controlled by Government. The purpose is to protect interest of investors. It also helps to control frauds taking place in companies and maintain good governance in the functioning of company.