What are the characteristics of Joint Stock Company?

The characteristics of Joint Stock Company

A joint stock company is a body corporate with a common seal and perpetual succession owned by a large number of persons known as shareholders who contribute capital to the company and it is being managed by the board of directors elected by the shareholders. The following are the chief characteristics of a joint stock company:

Legal person:

A company form of business organisation is the creation of law. It is an independent person in the eye of law and as such it is regarded as an artificial person having legal entity distinct from its members. Being a legal person it can enter into contract, own property and can sue and be sued by others.

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The formation of company is not easy and it is formed with the initiative of a few persons called promoters. The members of a company are increased by sale of shares. The formation of company require compliance of various provisions of the law as many documents and information are to be submitted to get certificate of incorporation and certificate of commencement.

Perpetual Succession:


A company has perpetual existence as its existence is independent of the life of its members. The existence of a company is not effected by the death, insolvency or lunacy of its members. Because of this nature, it has been told that shareholders may come and go but company continues for ever like a brook.

Limited Liability:

The liability of the members of the company is limited to the extent of the face value of shares held by them. In case of winding up a shareholders can lose money to the extent of his investment only and nothing more. In no case  the personal property of the shareholders are liable to be attached to meet the claim of the creditors of the company.

Representative control:


The company form of business is controlled by the board of directors elected by the shareholders. The board of directors is a representative body as its members are elected by shareholders. The board of directors are known as agents and trustees of the shareholders.

Separation of Ownership and Control:

The owners of the company are called shareholders. Since the shareholders are scattered all over the world, they may not have time to take part in the day-to-day management of the company. Thus, the management of the company is vested in the hands of board of directors elected in the general body meeting of the company. The owners do not exercise do not exercise a direct control over the business of the company.

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