7 Types of Joint Stock Company You Should Know
A joint stock company is a business entity that issues shares of its stock to the public. The shareholders of a joint stock company own the company in proportion to their shareholding and have limited liability for the company’s debts. A joint stock company has a separate legal existence from its shareholders and can sue and be sued in its own name.
There are different types of joint stock companies based on various criteria, such as incorporation, number of members, liability, and ownership. Here are some of the common types of joint stock companies that you should know:
1. Chartered Company
A chartered company is a company that is incorporated by a royal charter or a similar document issued by the king or the head of the state. A chartered company has exclusive rights and privileges granted by the charter, such as trading in a certain region or industry. Examples of chartered companies are the British East India Company, the Hudson’s Bay Company, and the Royal African Company.
2. Statutory Company
A statutory company is a company that is formed by a specific act of parliament or legislature. A statutory company has its powers, objectives, rights, and responsibilities defined by the act. Examples of statutory companies are the Reserve Bank of India, the Life Insurance Corporation of India, and the Indian Railways.
3. Registered Company
A registered company is a company that is formed and registered under the law of the land, such as the Companies Act or the Corporations Act. A registered company has to follow the rules and regulations prescribed by the law and file its documents with the registrar of companies. Examples of registered companies are Reliance Industries Limited, Apple Inc., and Microsoft Corporation.
4. Public Company
A public company is a company that has more than 50 shareholders and can offer its shares to the general public. A public company has to disclose its financial information and performance to the public and comply with the securities laws. Examples of public companies are Tata Motors Limited, Amazon.com Inc., and Facebook Inc.
5. Private Company
A private company is a company that has less than 50 shareholders and cannot offer its shares to the general public. A private company does not have to disclose its financial information and performance to the public and has more flexibility in its operations. Examples of private companies are Flipkart Private Limited, SpaceX Inc., and Airbnb Inc.
6. Limited Liability Company
A limited liability company is a company that has limited liability for its shareholders, meaning that they are only liable for the amount they have invested in the company. A limited liability company can have one or more shareholders and can be either public or private. Examples of limited liability companies are Infosys Limited, Google LLC, and Starbucks Corporation.
7. Unlimited Liability Company
An unlimited liability company is a company that has unlimited liability for its shareholders, meaning that they are liable for all the debts and obligations of the company. An unlimited liability company can have one or more shareholders and can be either public or private. Examples of unlimited liability companies are Lloyd’s of London, KPMG LLP, and Ernst & Young LLP.
These are some of the types of joint stock companies that exist in different countries and industries. Each type of joint stock company has its own advantages and disadvantages, depending on the nature and scale of the business.
Types of Joint Stock Company and Their Global Demand
A joint stock company is a business entity in which shares of the company’s stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership) . There are different types of joint stock companies based on their incorporation, number of members, liability and ownership.
Based on Incorporation
There are three types of joint stock companies based on their incorporation :
– Chartered Company: A firm incorporated by the king or the head of the state. For example, the British East India Company was a chartered company.
– Statutory Company: A company which is formed by a particular act of parliament. Here, all the power, object, right, and responsibility are all defined by the act. For example, the Reserve Bank of India is a statutory company.
– Registered Company: An organisation that is formed by registering under the law of the land. This is the most common type of joint stock company in modern times. For example, Apple Inc. is a registered company.
The global demand for registered companies has increased over time as they offer more flexibility, transparency and accountability than the other types . Chartered and statutory companies are less common and more restricted by the government regulations.
Based on Number of Members
There are two types of joint stock companies based on the number of members :
– Private Company: A company which has a minimum of two and a maximum of 50 members. It cannot invite the public to subscribe to its shares or debentures. It also has some restrictions on the transfer of its shares. For example, Flipkart Pvt. Ltd. is a private company.
– Public Company: A company which has a minimum of seven and no maximum limit on the number of members. It can invite the public to subscribe to its shares or debentures. It also has no restrictions on the transfer of its shares. For example, Reliance Industries Ltd. is a public company.
The global demand for public companies has increased over time as they offer more access to capital, liquidity and visibility than the private companies . Private companies are more suitable for small-scale businesses that want to maintain control and privacy.
References:
https://www.federalreserve.gov/pubs/ifdp/1990/392/ifdp392.pdf
http://www.sebastienpouget.com/wp-content/uploads/sites/218/2015/07/shareholderLawsuit.pdf
https://byjus.com/commerce/joint-stock-company/
https://en.wikipedia.org/wiki/Joint-stock_company
https://www.wallstreetmojo.com/joint-stock-company/
https://byjus.com/commerce/joint-stock-company/
https://en.wikipedia.org/wiki/Joint-stock_company
https://www.wallstreetmojo.com/joint-stock-company/
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