Characteristics of Joint Stock Company – Artificial Legal, Separate Legal Entity, Perpetual Succession, Etc (For CBSE, ICSE, IAS, NET, NRA 2022)

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Characteristics of a Joint Stock Company

Characteristics of a Joint Stock Company

Artificial Legal Person

A company is an artificial person created by law and existing only in contemplation of law. It is called an artificial person as its birth, existence and death are regulated by law. A human being who takes birth, grows, enters into relationships and dies, whereas a joint stock company also takes birth, grows, enters into relationship and dies.

Separate Legal Entity

A company has a separate legal entity distinct from its members. It can own property and enter into contracts in its own name. It can sue and be sued in its own name.

Perpetual Succession

A company is an artificial person. Company enjoys a perpetual succession and its life is not affected by the death, insolvency, lunacy, etc. of its members or directors.

Limited Liability

Liability of the members of a limited company is based on the share subscribed by them or amount guaranteed by members of company.

Common Seal

Being an artificial person, it cannot sign for itself that՚s why a company has a common seal.

Transferability of Shares

Through the Stock Exchange the shares of a public limited company are freely transferable. They can be purchased and sold easily.

Separation of Ownership and Management

Public company is covered large number of member so all of them cannot take part in the routine management of the company. Ownership of company on the head of members. Though the company is managed by Board of Directors who is elected by the members.

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