A modern business requires huge capital and expert management professional to run it effectively and efficiently. Sole proprietorship and partnership business could not meet the requirement of large scale organization. Both of them have limited fund and unlimited liability. There is lack of management ability in sole trading and partnership firm. It is not possible to manage and control them efficiently. So, Joint Stock Company is established. A Joint Stock Company is an association of many persons who invest capital to carry on comparatively large scale business and share profit and losses with limited liabilities of their capital investment.
Simply, Joint Stock Company refers to the independent or voluntary association of individuals which is established for generating revenue. it is an artificial person created by law having common seal and perpetual succession. The required capital to operate the business is collected by promoters and general public. Who are known as shareholders. The capital of the company is divided into large number of units which are known as shares. A company issues shares to the general people to raise the fund. The liability of the shareholders is limited. The company is managed and controlled by the Board Of Director(BOD). BOD is elected by the shareholders in an annual general meeting through voting procedures in Nepal. It is established under Nepal company act 2063 in Nepal.
Character of joint stock company
a) An artificial person
b) Separate legal entity
c) Perpetual secession
d) Limited liability
e) Common seal
f) Capital divided in separate
g) Public of final statement
h) Transfer of share
i) Democratic management
Advantage of joint stock company
a) Huge amount of capital
b) Limited liability
c) Perpetual existence
d) Transferability of share
e) Effective management
f) Public faith
g) Democratic management
h) Diffusion of risk
i) Social important
Disadvantage of Joint Stock Company
a) Difficult in formatting
b) separation of ownership and management
c) Possible of fraudulent management
d) Lack of secure
e) Lack of prompt decision
f) Conflict of interest
g) Excessive regulating
