Joint Stock Company

Topics: Corporation, Types of companies, Public company Pages: 16 (2390 words) Published: May 26, 2014
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).
[1] 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. [2]
In modern corporate law, the
existence of a joint-stock company
is often synonymous with
incorporation (i.e. possession of
legal personality separate from
shareholders) and limited liability
(meaning that the shareholders
are only liable for the company's
debts to the value of the money
they invested in the company).
And as a consequence 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 other countries which have
adopted their model of company
law, these are known as unlimited
companies . In the United States,
they are known simply as "joint-
stock companies".
Advantages
Ownership of stock confers 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,
should a vacancy occur, but this is
uncommon.
The shareholders are usually
liable for any of the company
debts that exceed the company's
ability to pay. Meanwhile, the
limit of their liability only extends
to the face value of their
shareholding. This concept of
limited liability largely accounts
for the success of this form of
business organization.
Ordinary shares entitle the owner
to a share in the company's net
profit. This is calculated in the
following way: the net profit is
divided by the total number of
owned shares, producing a
notional value per share, known as
a dividend . The individual's share
of the profit is thus the dividend
multiplied by the number of
shares that they own.
Early joint-stock companies
The transfer letter dated 1288
through which bishop Peter of
Västerås re-acquires 1/8 of
Tiskasjöberg, i.e.
Kopparberget. The original can
be found at Riksarkivet
(National Archive) in
Stockholm.
Finding the earliest joint-stock
company is a matter of definition.
Around 1250 in France at
Toulouse , 96 shares of the Société
des Moulins du Bazacle, or Bazacle
Milling Company were traded at a
value that depended on the
profitability of the mills the
society owned, making it probably
the first company of its kind in
history. [3][4] The Swedish
company Stora has documented a
stock transfer for 1/8 of the
company (or more specifically, the
mountain in which the copper
resource was available) as early as
1288.
In more recent history, the
earliest joint-stock company
recognized in England was the
Company of Merchant Adventurers
to New Lands, chartered in 1553
with 250 shareholders. Russia's
Muscovy Company, which had a
monopoly on trade between
Moscow and London, was chartered
soon after in 1555. The much more
famous, wealthy and powerful
English (later British) East India
Company was granted an English
Royal Charter by Elizabeth I on
December 31, 1600, with the
intention of favouring trade
privileges in India . The Royal
Charter effectively gave the newly
created Honourable East India
Company a 15-year monopoly on
all trade in the East Indies .[5] The
Company transformed from a
commercial trading venture to one
that ruled India and exploited its
resources as it acquired auxiliary
governmental and military
functions, until its dissolution.
Soon afterwards,...
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