Joint Stock Company’s Work

Topics: Joint stock company, Stock, Virginia Company Pages: 24 (4093 words) Published: April 2, 2013

A group of private investors who pool their money to support big projects. A joint-stock company is a business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company's shares (certificates of ownership). This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. This type of company issues stock and allows for secondary market trading; however, stockholders are liable for company debts.


Joint-stock companies were companies in which a group of people that invest in together. The investors all shared a part of the company's profits and losses. The joint-stock company allows all investors who buy a part of the company to share all profits and losses. It would allow the investor to lose less money than compared to when they were the sole owner of the company.


Though it is not possible to discover instances of the joint stock company in England before the middle of the sixteenth century, it must at the same time be recognized that before that date there were tendencies that would make its ultimate establishment inevitable.

As early as 1407 the Bank of St. George at Genoa had been established. The trade of the Italian city states was already including western Europe in its scope and Italian finance consequently exerted an important influence in England. Naturally the methods and organizations employed were copied to some extent abroad. There were two main lines of development which might result in the formation of a joint stock body. These were medieval partnership and the growth of the idea of a corporation. The canonist doctrine on the use of capital discouraged loans while it encouraged the formation of partnerships. There were the “Commenda” and “Societas” both of which were in frequent use on the Continent and were forms of the medieval partnership. In the commenda the commendator provide the capital and the commendatarius managed the investment; in the societas both contributed capital. In 1284, 1296, and 1312 certain Italia societas were granted rights to trade in England. However, in 1345, the Italian banker, Bardi, and several foreign firms failed, and as a result, when need of capital arose to provide for industrial expansion, there was little inclination in England to copy the form of the Italian societas.


You are now familiar with the concept of company as a form of business organization. Let us now study its characteristics.

o Legal formation
o Artificial person
o Separate legal entity
o Common seal
o Perpetual existence
o Limited liability
o Democratic management
o Investment facilities
o Accountability

i. Legal formation
No single individual or a group of individuals can start a business and call it a joint stock company. A joint stock company comes into existence only when it has been registered after completion of all formalities required by the Indian Companies Act, 1956. ii. Artificial person

Just like an individual, who takes birth, grows, enters into relationships and dies, a joint stock company takes birth, grows, enters into relationships and dies. However, it is called an artificial person as its birth, existence and death...
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