Joint St

oc k
Compa
ny

What is a J.S.C. ?

AJoint-Stock Companyis abusiness entitywhich is owned

byshareholders. Each shareholder owns the portion of the
company in proportion to his or her ownership of the
company's shares (certificates of ownership).
This allows for the unequal ownership of a business with
some shareholders owning a larger proportion of a company
than others. Shareholders are able to transfer their shares to
others without any effects to the continued existence of the
company.

Reliance Industries Limited (RIL) is

an Indian conglomerate holding
company headquartered in
Mumbai, Maharashtra, India. It is
one of the largest Joint-Stock
Company in India.

History of J.S.C.s .

The earliest joint-stock company recognized in England was

the Company of Merchant Adventurers to New Lands,
chartered in 1553 with 250 shareholders. Russia's
Muscovy Company, which had a monopoly on trade
between Moscow and London, was chartered soon after in
1555.

The much more famous, wealthy and powerful English

(later British) East India Company was granted an English
Royal Charter by Elizabeth I on December 31, 1600,
with the intention of favouring trade privileges in India.

in 1602, the Dutch East India Company issued shares,

that were made tradable on the Amsterdam Stock
Exchange. This invention enhanced the ability of joint-stock
companies to attract capital from investors as they now
easily could dispose their shares.

The transfer letter dated

1288 through which
bishop Peter of Vsters
re-acquires 1/8 of
Tiskasjberg, i.e.
Kopparberget. The
original can be found at
Riksarkivet (National
Archive) in Stockholm.

Key Features of a J.S.C.

A voluntary association of persons who generally

contribute capital to carry on a particular type of
business.

Persons who contribute capital become members of the

company

Company has a legal existence separate from its

members, which means even if its members die, the
company remains in existence

The total capital of a JSC is called share capital and it is

divided into a number of units called shares.

Members are also called shareholders.

An illustration showing the key

features of a Joint-Stock
Company

Formation Of a J.S.C.
Formation of a
Joint-Stock
Company

These are the 4 most

prominent stages of
establishment.

Promotion Stage

Incorporation
Stage

Capital
Subscription
Stage

Certificate of
Commencement

Formation Of
a J.S.C.
These are the 4
most prominent
stages of
establishment.

Formation of a Joint-Stock
Company

Capital
Subscription Stage

Promotion Stage

Certificate of
Commencement

Incorporation
Stage

Promotion Stage

Promotion is the discovery of ideas and organization of funds, property and skill to run the
business for the purpose of earning income. Steps involved

Idea about Business

Investigation- make out plans as regards to the availability of resources like capital, means of
transportation, labour, electricity, gas ,water, etc.

Assembling various Factors- like arrangement of licences, copyrights, employment of necessary

employees, etc.

Financial Sources

Preparation of Essential Documents like Memorandum, Articles and Prospectus of company.

The promoters carryout these various activities to give the company its physical shape in the
form of

Giving a name to the company

Sanctioning of Capital Issue

Incorporation Stage

The second stage for establishment

Filing of Document: Following documents are to be submitted by the promoters in the Registrars
office.

Memorandum of Association indicates name, address, authorized capital etc.

Articles of Association contains laws and rules for internal control and management of a company.

List of Directors - list of the names, occupations, addresses, along with the declaration of director

Written Consent of Directors

Declaration of Qualifying Shares- A declaration certificate showing that the directors have take n up
qualifying shares and have paid up the money or pay it in near future to the registrar.

Prospectus

Statutory Declaration stating that all legal formalities have been completed.

Incorporation Stage (Contd.)

Payment of Registration Fee - the registration fee is paid to the Registrar for

Application and documents filing fee

Registration fee

Stamp fee on Memorandum and Articles

Certificate of Incorporation - If the registrar finds all the documents right, he issues the certificate
of incorporation to promoters.

Capital Subscription Stage

After getting certificate of incorporation, the next stage is to make arrangement for raising
capital by issuing

Shares

Debentures

Savings CERTIFICATE OF COMMENCEMENT requires the fulfilment of following conditions

Issue of Prospectus: Acompany has to issue prospectus for selling shares and debentures to public.

Certificate of Establishment

The Certificate of Establishment is a parchment that sates that

the following company is now established as per the given date.

Within the period specified in sub- section (5), the occupier of

every establishment shall send to the Chief Inspector a statement
in a prescribed form, together with such fees as may be
prescribed, containing the detailed information of the company.

The following is a e.g..

Of a Certificate of
Establishment form
Switzerland

Shares
Companies act 1956
a share in the share capital of a company and includes stock except when a distinction
between stock and shares is expressed and implied.
Companies act 2013
a share in the share capital of a company and Includes stock

Equity
Shares

Equity is the residual claimant or interest

of the most junior class of investors in
assets, after all liabilities are paid. If
liability exceeds assets, negative equity
exists. In an accounting context,
shareholders' equity (or stockholders'
equity, shareholders' funds, shareholders'
capital or similar terms) represents the
remaining interest in the assets of a
company, spread among individual
shareholders of common or preferred
stock. A negative shareholders' equity is
often referred to as a positive
shareholders' deficit.

Preference
Shares

is a type ofstockwhich may have any

combination of features not possessed
by common stock including properties
of both an equity and a debt
instrument, and is generally considered
a hybrid instrument.

Features of Equity Shares

Maturity of shares: Equity shares have permanent nature of capital.

Right to income:Dividend paid to shareholders in the form of immediate cash flows. Retained
earnings gives benefit in the form of capital gains.

Claim on Assets: In case of liquidation, equity share holders will get payment after debt
holders, preference shareholders etc.

Right to control: Equity shares gives right to elect board directors of the company.

Voting Rights:Shareholders have right to vote in person or by proxy.

Limited Liability:Equity share holder's liability is limited to the investment made on equity
shares.

Features of Preference Shares

Fixed Dividends:Like debt carries a fixed interest rate, preference shares have fixed
dividends attached to them.

Preference over Equity:As the word preference suggests, these type of shares get
preference over equity shares in sharing the income as well as claims on assets.

No Voting Rights:Preference share capital is not allotted any voting rights normally. They
are similar to debenture holders and do not have any say in the management of the
company.

No Share in Earnings:Preference shareholders can only claim two things. One, agreed
percentage of dividend and second the amount of capital invested.

Fixed Maturity:Just like debt, preference shares also have fixed maturity date. On the
date of maturity, the preference capital will have to be repaid to the preference
shareholders.

Difference Between
Equity and Preference
Shares

Equity

Shares

Shares who do not enjoy any

preference as regards payment of
dividend and repayment of capital.
This share holder have right to vote
And Equity share holders are
owners of the company.
Risk about losing money is more..

Preference Shares
Shares which enjoy preference as
regards payment of dividend and
repayment of capital.
This share holder have no right to
vote And Equity share holders are
Creditors of the company.
Risk about losing money is less than
equity share holders.

Stock Exchange

A Stock exchange is a form of exchange which provides services for stock brokers and traders to
trade stocks, bonds, and other securities.
Stock exchanges also provide facilities for issue and redemption of securities and other financial
instruments, and capital events including the payment of income and dividends. Securities traded on
a stock exchange include stock issued by companies, unit trusts, derivatives, pooled investment
products and bonds. Stock exchanges often function as "continuous auction" markets, with buyers
and sellers consummating transactions at a central location, such as the floor of the exchange.