Joint-stock company definition:
A joint-stock company (JSC) is a form of company or joint
venture involving two or more individuals that own shares of stock in the
business. Certificates of ownership ("shares") are issued by the
corporation in return for each financial contribution, and the shareholders are
free to relocate their ownership interest at any time by selling their shares
to others.
At present, company law the existence of a joint-stock
company is often identical with incorporation (i.e. possession of authorized
personality separate from shareholders) and limited liability (meaning that the
shareholders are only liable for the company's debts to the value of the money
they invested in the company). And as an outcome joint-stock company is
generally known as corporations or limited companies.
Some jurisdictions still provide the opportunity of
registering joint-stock companies without limited liability. In the United
Kingdom and other countries which have adopted their form of company law, these
are known as unlimited companies. In the United States they are, to some extent
confusingly known as joint-stock companies. (Company means a company formed and
registered under this act or an existing company. – Company Act 1994)
1. Chartered Company: The companies that form by the order
of the king of England are called the charter company. These companies were
formed before 1844. For example, East India Company, Chartered Bank of England,
the charter of the British South Africa Company, given by Queen Victoria (More
information here)
2. Statutory Company: Companies that are formed by the order
of the President, or by the Legislative Committee or by bill of Parliament are
called Statutory Company. These Companies are operated by those laws. For
example, municipal councils, universities, central banks and government
regulators, Central Bank. (More information here)
3. Registered Corporation: Companies that are formed under
the prevailing law of the company are called the registered company. The
corporation that has filed a registration statement with the SEC prior to
releasing a new stock issue. It is two types-
i) Unlimited Company: The liabilities of the shareholders of
this company are unlimited. For example, British all-terrain vehicle
manufacturer Land Rover, GlaxoSmithKline Services Unlimited.
ii) Limited Company / limited corporation: The liabilities
of the shareholders are limited. For example, Charitable organisations,
Financial Services Authority. This liability of a company can be of two types.
a) By Guarantee
b) By share value. The company limited by share can be of
two types.
• Private Limited Company, where the number of shareholder
ranges from two to fifty. The share of these companies can’t be traded in the
stock market.
• Public Limited Company, where the number of shareholder
ranges from seven to share limitation. The share of the public limited company
is traded in the stock market.
In "Bangladesh" perspective (but the moreover same
process all over the world) Joint Stock Company is formed, registered and
guided by the Companies Act 1994. The promoters by themselves or by their
appointed person (advocate, consultancy firm, or consultant) undertook the task
of formation. However, the task of formation could be discussed in steps.
1. Promotional Steps:
The person who undertook the task of formation is called
promoter or entrepreneur. For Public Limited Company there should be at least
seven (7) and for Private Limited company, there should be at least two (2)
promoters. These promoters undertook the following tasks:
a) Planning: Here the promoters decide about the objectives,
area, type, capital structure of the new business. Based on these factors, the
promoters go forward.
b) Feasibility Analysis: Here the promoters undertook the
feasibility analysis for the new venture: both from existing and potential view
point. Promoters undertook different tools like SWOT (Strength, Weakness,
Opportunity and Threat) Analysis; Competitive Analysis, etc. Being assured of
the potentiality of the business the promoters go for the further.
c) Naming the Company: The name of the company should be
such that is not used by any other existing company; it is not a name of the
King or Queen or President. The Public Limited Company should use (pvt.)
Limited and the Public Limited Company must use Limited at the end of the
company name. The promoter upon deciding the name, they submit the name in
black and white for Clearance in the registrar office. The registrar upon
verifying the uniqueness of the proposed name gives clearance of using the
name.
2. Registration or Incorporation:
To incorporate the new company the promoters needs go
through the following steps:
a) Collecting Registration Form and Filling it up: The
promoters have to collect the registration form and other papers for a fee from
the registrar office. Then they should fill up it by them selves or should take
the help of the consultants or advocates.
b) Preparing Documents and Submitting for Registration: The
promoters have to submit the filled-up form with fees and the following
documents in the registrar office:
• Memorandum of Association
• Articles of Association
• Capital Structure of the proposed Company
• List of Directors and the amount of the sponsored share
they purchased
• Declaration regarding the proposed name of the company
• Declaration of an advocate or chartered accountant or any
director of a proposed company that the company has followed all the rules and
regulations of Company Act 1994.
The registrar being satisfied on the paper submitted for the
proposed company issues' Certificate of Incorporation. On getting that
certificate the Private Limited Company can start its business but the Public
Limited Company has to go to another step to start its business.
c) Obtaining Certificate of Commencement: Here the promoters
should make the Prospectus for the company. This prospectus needs to be
published in the daily newspaper. To get the Certificate of Commencement, the
promoters need to submit the following documents to the registrar:
• A copy of Prospectus
• Name, address, designation, occupation, etc. of Directors
• Directors’ written Letter of Agreement that they want to
work as director of that company.
• Declaration that the directors have fully paid the minimum
amount of sponsor share.
• Declaration by the company secretary or other authorized
person that the above affairs have maintained all rules and regulation of
Company Act 1994.
The registrar being satisfied on the paper submitted for the
proposed company issues' Certificate of Commencement. On getting that
certificate the Public Limited Company can start its business.
3. Flotation Stage
If the sponsor directors are unable to provide the adequate
capital, public limited company can float their share in the capital market
(Stock Exchange) to get required capital. By this time, the company can do its
other functions.
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