| Solution 16 (A) |
|
| |
According to Marshall, 'A joint stock company is an artificial person invisible, intangible and existing only in the eyes of law'. |
| Salient features of a Joint Stock Company are explained as under : |
(i) |
Artificial person: A company is said to be an artificial person created by law as it derives all its authority from law also it does not come into existence through natural birth as human beings but has rights and obligations in terms of law. |
(ii) |
Separate legal entity: A company is a legal entity entirely distinct from and independent of its members, who own it. It can hold a company, enter into contracts and is capable of suing and be sued in its own name. No member can directly claim any ownership right in the assets of the company. |
(iii) |
Perpetual succession: A company enjoys continuous existence and its life is not affected by good or bad position, death, insolvency, lunacy etc. of its members or directors. Members may come and go but the company survives so long as it is not wound up. Law gives birth to a company and law alone can terminate the existence of a company. |
(iv) |
Common seal: A company cannot sign itself as it is an artificial person, therefore, the law provides for the use of common seal as a substitute for its signatures. Common seal is the official signatures of the company. Hence a company is said to be an artificial person created by law, having a separate legal entity with a perpetual succession and a common seal. |
|
| |
Hence, due to these salient features, we can say a joint stock company is an artificial person created by law, having a separate legal entity with a perpetual succession and a common seal. |
|
|
|
| Tips / Guidelines : |
|
• |
Joint Stock Company is a company that trades for the benefit of all its members and divides its profit among members according to the size of their contribution to its stock. The general members do not take part in the day to day running of the company's association of traders who trade for their own account and form partnerships where each partner takes an active part in running the business. |
|
• |
A joint stock company is invariably incorporated with the Registrar of companies. |
|
• |
Transferability of shares of a company gives perpetual succession to it. |
|
• |
The same person can be a shareholder, a creditor, a debtor or an employee of the company, all at the same time. |
|
• |
Answer may be concluded for better presentation and good marks. |
|
• |
At the same time, irrelevant information may be avoided while writing. |
|
