A Joint stock company is the largest form of business organization. It is an association of persons formed for carrying out business activities and has a legal status independent of its members.
Companies are compulsorily to be registered under the Companies Act, 1956. Features :
(a) Separate legal entity: A company is a legal entity distinct from its shareholders, directors and promoters. Its assets and liabilities are separate from that of its owners.
(b) Artificial person: A company is the creation of law. It has to depend upon directors, managers, etc. for getting its work done. It can carry on business in its own name, enter into contracts, buy, sell and hold property, sue and be sued.
(c) Limited Liability: The liability of the members is limited to the face value of the shares held by them. They are not personally liable for the debts of the company.
(d) Perpetual succession: Being distinct from the members, the death, insolvency, or retirement of its members does not affect the life of the company. Members may come and go, but the company can go forever. It can come to an end only on winding up.
(e) Common seal: Common seal is the official signature of the company. It is affixed on all contracts and letterheads, and is legally binding on the company.
