Features That Make a Joint Stock Company

What are the features of a joint stock company? There are many features and by the time you complete reading this page, then you'll be fully equipped with each feature. The features are:

1. Perpetual existence-People join to be members and drop their membership, but the company continues its business as usual. It is not affected by death, insanity or insolvency of its members.

2. Incorporated association-A joint stock company has to be registered under the companies act for it to be legal.

3. Artificial person created by law-It is an artificial person created by law thus it can be sued in its own name and enter into contracts in its own capacity.

4. Voluntary association or organization-No one forces anybody to be a member of a joint stock company or give up membership. A person joins it willingly.

5. Common seal-It has its own seal which it uses in documents. The seal is one on which the name of the joint stock company is engraved and it's used as an official signature.

6. Limited liability-The personal properties of its members cannot be brought to clear its liabilities.

7. Specific trade or purpose-It is formed for a specific purpose only. The purpose is stated in the memorandum of association which acts as its constitution. This is meant to protect the shareholders and creditors.

8. Ownership and management separate-The members are not involved in the day to day operations of a company. This task is entrusted to board of directors whom the members elect. But the control of the joint stock company is vested on the members.

9. Shares divided-Its capital is split into a fixed value of shares that members are entitled as money and money's worth they have contributed.

10. Not a citizen-It has a nationality residence and domicile but it has no citizenship of any country.

11. Separate property-A joint stock company has full rights to own and dispose properties in its name. Members cannot claim to own any of its properties.

12. Large number-A private Co has a minimum of 2 and a maximum of 50 members while a public Co has a minimum of 7 but there is no maximum number of members.

13. Transferable shares-Members of a public Co can transfer their shares freely to another person without consent of the Co. But in certain cases, the restriction of transferring shares may be imposed through its article. However, a private Co does not allow its members to transfer their shares freely.

14. Separate legal entity, corporate personality and veil of incorporation-A joint stock company has its own existence separate from its members. As a legal entity it can; acquire and dispose of properties, enter into contracts, sue and be sued in its name, continue even if members leave it (perpetual existence.)

But there are a times when the separate legal entity is brushed aside by the courts. When the courts do this, then it's termed as piercing the corporate veil. In this case, the courts ignore the separate legal entity of the joint stock company and look into the economic realities behind the corporate veil. It treats the company and its members as one person. This normally happens when there is a reason to suspect that the legal entity is misused for fraudulent purposes.