How did the need of a joint stock company arise?

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answered Aug 25, 2022 by Ramesh nirvani (59.2k points)
selected Aug 26, 2022 by Taraknath Pal

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The need of joint stock company:

In a partnership, there can be a maximum of 20 partners. These partners together can raise only a limited capital but their liabilities will be unlimited and also their firm will have a shorter life.
After the industrial revolution the demand of newly produced goods went up drastically. To meet these demands there arose need of setting up huge factories and very large business establishments. A very large scale production was the need of the hour.
Due to limited capital, unlimited liability, short life of the business firm, etc. sole proprietorship and partnership forms of business were unable to set-up such large establishments.
These reasons led to creation of a new form or Business known as the Joint Stock Company or simply, company.
In India a company is formed as per Companies Act, 1956. The latest companies act is the Companies Act, 2013 which is in force from 01-04-2014. The companies are now formed and managed as per this to latest act.
Broadly, there are two types of companies, (A) Private limited company and (B) Public limited company.