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A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership).[1] Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.[2]
In modern-day corporate law, the existence of a joint-stock company is often synonymous with incorporation (possession of legal personality separate from shareholders) and limited liability (shareholders are liable for the company's debts only to the value of the money they have invested in the company). Therefore, joint-stock companies are commonly known as corporations or limited companies.
Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and in other countries that have adopted its model of company law, they are known as unlimited companies.
A joint-stock company is an artificial person; it has legal existence separate from persons composing it. It can sue and can be sued in its own name. It is created by law, established for commercial purposes, and comprises a large number of members. The shares of each member can be purchased, sold, and transferred without the consent of other members. Its capital is divided into transferable shares, suitable for large undertakings.
- ^ Courtney, Thomas B. (2002). The Law of Private Companies (2nd ed.). Butterworths. p. 26. ISBN 1-85475-265-0.
- ^ Lehman, Jeffrey; Phelps, Shirelle (2005). West's Encyclopedia of American Law, Vol. 1 (2 ed.). Detroit: Thomson/Gale. p. 117. ISBN 9780787663742.