Joint stock company or business is regarded as the most important innovation in the development of business enterprises. In this form of organization a separate 'legal person' is created. Its legal rights and duties are different from its members. The corporation has a power of a person. It means that it can sue, can be sued, can be a party of litigation, can negotiate and can acquire property in its name.
The form of corporation can be found in all types of businesses. The main participants in a company are- shareholders, board of directors and chairman. The shareholders are its real owners. They vote from time to time to elect the board of directors and to amend the constitution of the corporation. The ultimate right of giving guidelines regarding the activities of the corporation and designing general policies. The board of directors may consist o0f the top employees of the company itself and also outsiders. The chairman or the chief executive officer (CEO) is responsible for implementing the policies fixed by the board of directors and arranging day to day operation of the business. He submits reports to the board of directors from time to time.
There are two types of company- Private Companies and Public Companies. The share are not distributed to the general public in private companies. In public companies, the shares and debentures may be distributed to the general public. The public companies should use 'Public Limited Company' at the end of their name.
The promoters should submit 'memorandum of association' and 'articles of association' for the formation of a company. The memorandum of association consists of the rules regarding external activities of the company. On the other hand, articles of association consist of the internal rules, regulations and nature of business etc. related to the management of the company.
The company raises funds in different ways such as by issuing preference share, ordinary share and debenture. The preference shareholders get first priority in the distribution of dividend. The rate of return is fixed in definite percentage. They do not get dividend in the absence of profit. Similarly, they do not get additional payment even if there is excess profit. In general, they do not have voting right.
Most of the risks of the company are bore by ordinary shareholders because they have rights only to claim on profit remained after payment to others. The dividend received by them depends on the profitability of the firm and the decision of board of directors. Most of the ordinary shares have voting rights. The ordinary share capital of the company is known as common stock.
The fund needed by the company is also raise by issuing debentures. The debenture holders are not the owners but creditors of the company. The rate of interest is fixed at definite percentage in debentures. The debenture holders get first priority over the shareholders on payment.
The form of corporation can be found in all types of businesses. The main participants in a company are- shareholders, board of directors and chairman. The shareholders are its real owners. They vote from time to time to elect the board of directors and to amend the constitution of the corporation. The ultimate right of giving guidelines regarding the activities of the corporation and designing general policies. The board of directors may consist o0f the top employees of the company itself and also outsiders. The chairman or the chief executive officer (CEO) is responsible for implementing the policies fixed by the board of directors and arranging day to day operation of the business. He submits reports to the board of directors from time to time.
There are two types of company- Private Companies and Public Companies. The share are not distributed to the general public in private companies. In public companies, the shares and debentures may be distributed to the general public. The public companies should use 'Public Limited Company' at the end of their name.
The promoters should submit 'memorandum of association' and 'articles of association' for the formation of a company. The memorandum of association consists of the rules regarding external activities of the company. On the other hand, articles of association consist of the internal rules, regulations and nature of business etc. related to the management of the company.
The company raises funds in different ways such as by issuing preference share, ordinary share and debenture. The preference shareholders get first priority in the distribution of dividend. The rate of return is fixed in definite percentage. They do not get dividend in the absence of profit. Similarly, they do not get additional payment even if there is excess profit. In general, they do not have voting right.
Most of the risks of the company are bore by ordinary shareholders because they have rights only to claim on profit remained after payment to others. The dividend received by them depends on the profitability of the firm and the decision of board of directors. Most of the ordinary shares have voting rights. The ordinary share capital of the company is known as common stock.
The fund needed by the company is also raise by issuing debentures. The debenture holders are not the owners but creditors of the company. The rate of interest is fixed at definite percentage in debentures. The debenture holders get first priority over the shareholders on payment.
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