JOINT STOCK COMPANY

MEANING OF JOINT STOCK COMPANY

The limitation of sole trading concern and partnership firms of organization gave birth to Joint Stock Company Company. Their two important limitations were limited capital and unlimited liability. Unlimited liability discouraged people to invest more, even if they had the capacity to do so. So, new form of organization was invented with limited liability and the capacity of acquiring huge sum of capital. This form is known as Joint Stock Company. Thus, Joint Stock Company has evolved out of the defects and limitations of sole trading and partnership form of organization. In modern days, it is the most popular form of business organization.

A Company is a voluntary association of persons formed to carry on business in its own name under a common seal with the capital divided into shares. It is recognized by law as an artificial person having perpetual, continuous, and uninterrupted existence. Members of the company are owned by the share of a company gives perpetual succession to it. A Company is owned by the shareholders and managed by the directors, elected by the shareholders of a company. The liability of the shareholders remains limited to the extent of the nominal value of shares purchased by them.

According to Prof. L. H.Haney: " A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership”. In other words of Kimball and Kimball: A corporation is by nature an artificial person created or authorized by the legal status for some specific purpose.”

The Nepalese Company Act, 2053(1997) has not given any comprehensive definition and simply mentions that “Company means any company incorporated under this act”. This does not make anything clear. We can define company indicates all the essential features in this way: “Company is an artificial person recognized by law with a distinctive name, a common seal, a common capital comprising transferable shares of fixed value carrying limited liability and having a perpetual succession”.