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Characteristics of Joint Stock Company
On the basis of the analysis of the above definition, following are the characteristics of a company


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1. Separate legal existence. A company is an artificial person and has a legal entity quiet distinct from its members or owners. A shareholder can use a company and his investment as creditor has nothing to do with his investment in its share capital. As an artificial person, it enjoys all the rights enjoyed by such a natural person. Therefore, a company cannot marry, cannot take oath, cannot be sent to jail, cannot enter into partnership and cannot practice as a professional (lawyer, doctor).

2. Division of capital into shares. The capital of a company is divided into shares of small denominations which are readily transferable from one owner to another without much formality.

3. Limited Liability. The liabilities of the members is generally limited to the extent of the face value of the shares that a person has agreed to take up. For example, if a person has paid Rs. 5 on a share of Rs. 10, his liability extends up to a further sum of Rs. 5/- only. Whatever may happen to the company and whatever may be the state of solvency of the company, his total liability does not exceed the face value of the share(Rs. 10/-in our case).

4. Perpetual existence. A company has the distinct characteristic of having perpetual existence. In other words, its existence is not affected by the death, insolvency or retirement of its shareholders or directors. The shares may constantly change hand and yet the company goes on. This characteristic gives life and stability to the company form of organisation.

5. Common Seal. A company has a common seal which is substitute for tis signature as a company. Being an artificial person, it can not sign documents by itself. The name of the company is engraved on the common seal. The common seal is kept in safe custody by the secretary of the company, it is used accordingly to the directions of the Board of Directors. When this seal is affixed for the company on any document, it has to be witnessed by atleast two directors.

6. Separation of ownership from management. A we know that the entity of a company is quite distinct from that of the members or shareholders who compose it, a shareholder cannot bind the company for his acts. All the shareholders do not manage the company themselves but they leave the management into the hands of their representative and trustees, i.e,. the Board of Directors.

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