Joint Stock Company

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Joint Stock Company

Anxious investors wait for news about the South Sea Company, a joint stock company formed in London in 1711. Joint stock companies are a form of partnership in which each member, or stockholder, is financially responsible for the acts of the company. LIBRARY OF CONGRESS
Anxious investors wait for news about the South Sea Company, a joint stock company formed in London in 1711. Joint stock companies are a form of partnership in which each member, or stockholder, is financially responsible for the acts of the company.
LIBRARY OF CONGRESS

An association engaged in a business for profit with ownership interests represented by shares of stock.

A joint stock company is financed with capital invested by the members or stockholders who receive transferable shares, or stock. It is under the control of certain selected managers called directors.

A joint stock company is a form of partnership, possessing the element of personal liability where each member remains financially responsible for the acts of the company. It is not a legal entity separate from its stockholders.

A joint stock company differs from a partnership in that the latter is composed of a few persons brought together by shared confidence. Partners are not free to retire from the firm or to substitute other persons in their place without prior assent of all the partners. A partner's death causes the dissolution of the firm.

In contrast, a joint stock company consists of a large number of stockholders who are unacquainted with each other. A change in membership or a transfer of stock has no effect on the continued existence of the company and the death of a stockholder does not result in its dissolution. Unlike partners in a partnership, a stockholder in a joint stock company has no agency relationship to the company or any of its members.

A joint stock company is similar to a corporation in that both are characterized by perpetual succession where a member is allowed to freely transfer stock and introduce a stranger in the membership. The transfer has no effect on the continuation of the organization since both a joint stock company and a corporation act through a central management, board of directors, trustees, or governors. Individual stockholders have no authority to act on behalf of the company or its members.

A joint stock company differs from a corporation in certain respects. A corporation exists under a state charter, while a joint stock company is formed by an agreement among the members. The existence of a joint stock company is based upon the right of individuals to contract with each other and, unlike a corporation, does not require a grant of authority from the state before it can organize.

While members of a corporation are generally not held liable for debts of a corporation, the members of a joint stock company are held liable as partners.

In a legal action, a corporation sues and is sued in its corporate name, but a joint stock company sues and defends in the name of a designated officer.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
At the same time, the NBU underlines that regardless of the type of joint stock company, a bank has to disclose information and ensure strict compliance with corporate governance requirements.
Ms Turner said: "The Old Joint Stock will offer Birmingham's culture vultures the change to see some great productions in an intimate setting.
They look around and at the Old Joint Stock there is so much to see you are in trouble of forgetting your drinking companion completely and amusing yourself with the view.
Chairman of Azeravtoyol Open Joint Stock Company Saleh Mammadov informed the president and first lady of the characteristics of the highway.
1 of the Credit Institution Licensing and Liquidation Division of the Bank of Russia Main Branch for the Central Federal District, has been appointed as a head of the provisional administration of the credit institution Joint Stock Company SMARTBANK.
Birmingham City Council's planning committee yesterday granted permission to Fuller, Smith and Turner brewery, which owns the Old Joint Stock in Temple Row, to turn the second floor of the pub into a theatre.
President of the Republic of Azerbaijan Ilham Aliyev has attended a ceremony to launch drinking water supply and sewage systems in the city of Khacmaz and opening of a new administrative building of the Khacmaz branch of Azersu Open Joint Stock Company.
Muscat, Feb 22 (ONA) The Higher Education Ministry in collaboration with the Capital Market Authority (CMA) organized at the Ministry's General Diwan in Airport Heights today a workshop on investment in joint stock companies.
Muscat, Feb 20 (ONA) The Capital Market Authority (CMA) will organize on February 28 th , a workshop on "The Roles, Duties and Responsibilities of Legal Advisors" at Joint Stock Companies.

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