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Joint Stock Company

ICSE · Class 11 · Commerce

Quick revision notes for Joint Stock Company — ICSE Class 11 Commerce. Key concepts, formulas, and definitions for last-minute revision.

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Key Topics to Revise

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7.1 Meaning and Definitions of a Joint Stock Company

  • A Joint Stock Company is an association of individuals formed for a common objective where capital is divided into shares.
  • It is treated as an artificial legal person — it can own property, enter contracts, and sue or be sued in its own name.
  • Modern companies in India are formed under the Companies Act, 2013 (or any previous Company Law like 1913 or 1956).
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7.2 Essential Characteristics or Features of a Joint Stock Company

  • 1. Artificial Person Created by Law: A company has legal rights like a person but is not a natural human. It is created by law and dissolved by law.
  • 2. Separate Legal Entity: The company has an existence separate from its members. Shareholders can enter into contracts with their own company.
  • 3. Perpetual Succession: The company's life is not affected by the death, insolvency, or retirement of its members. 'Members may come and members may go, but company goes on for ever.'
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7.3 Difference between Partnership and Joint Stock Company

  • Partnership is governed by Partnership Act, 1932; Company is governed by Companies Act, 2013.
  • Partnership has no separate legal entity from its partners; Company has a separate legal entity.
  • Partnership: minimum 2, maximum 50 members; Private Company: 2 to 200 members; Public Company: minimum 7, no upper limit.
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7.4 Evaluation of Joint Stock Company — Merits and Demerits

  • MERITS (16 Points):
  • 1. Huge Financial Resources: Capital divided into small shares — can mobilise large funds from many investors.
  • 2. Limited Liability: Members' risk is restricted to their share value — encourages investment.

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Key Concepts

A joint stock company is createdThe company has its own rightsThis is a crucial protection whereA company continues to exist indefinitelyShareholders can sell their shares

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Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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