SL.NO.

NAME

ROLL.NO.

ARITRA BANERJEE

B070543CE

AVINASH KUMAR

B070462CE

B.JAGADEESH REDDY

B070549CE

MAYANK PANWAR

B070311CE

PERALA SANGEETH KUMAR

B070587CE

RAGHUL RAVINDRAN

B070423CE

SRIRAM KIRAN VALAVALA

B070449CE

Definition
A Joint Stock Company is a voluntary association of
individuals for profit, having its capital divided into
transferable shares, the ownership of which is the condition
of membership.
A company is an incorporated association of persons
formed usually for the pursuit of some commercial purpose.
Section 3(1) of Indian Companies Act, 1956-Company
means a company formed and registered under this Act or
an existing company

Existing company means a company formed and

registered under any of the previous company laws

A JSC is a type of corporation or partnership involving two or

more individuals that own shares of stock in the company.

Certificates of ownership ("shares") are issued by the company

in return for each financial contribution.

The shareholders are free to transfer their ownership interest at

any time by selling their shareholding to others.

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.
This type of company needs huge capital investment.
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.

In 1250, in Toulouse, France, Bazacle Milling Company

traded 96 shares whose value depended on the profit of the
company.
In 1288, a Swedish company, Stora documented transfer of
shares.
In modern history, the earliest recognized company was the
British East India Company, was one of the most famous jointstock companies.
In 1602, the Dutch East India Company issued shares on
the Amsterdam Stock Exchange.
The first JSC to be implemented in the America were
The Virginia Company and The Plymouth Company.

 Its

a separate legal entity, distinct from the people engaged in it.

It involves three sets of economic actors:
1. shareholders - provide financial capital in return for a share in
the profits,
2. directors Their role is to:
protect the interest of the share holders,
to ensure the company is working within the law
it does not trade in cases of bankruptcy.

3. employees - who work but, are legally not a part of the

company

Characteristics of JSC (Contd.)

Compulsory

Incorporation
a voluntary association of persons formed and incorporated
under the existing law.
Artificial person
created by legal process and not by natural birth. Even though
it has no natural personality, it has legal personality
Common Seal
every company by law must have a common seal on which its
name is engraved. The common seal can serve as its
signature.

Characteristics of JSC (Contd.)

1.

2.

Perpetual succession
men may come and men may go but a company remains
forever. It can be wound up only under the provisions of the
act.
Limited liability
usually the liability of members of a company is limited to
the extent of uncalled or unpaid value of shares held by them.
Share capital
The capital required by the company is raised by issuing
shares.
The member who holds the shares of a company can transfer
its ownership any other person, without the companys
permission.

Characteristics of JSC (Contd.)

Separation of ownership and management
1.
The shareholders do not take active part in the everyday
affairs of the company.
2.
Elected representatives known as Directors, who with the
help of managers and employees manage the company.
Legal Entity
1. It has separate legal existence compared to its members.
2. The members cannot be personally held responsible for the
acts of the company.
Large membership
Owned by a larger number of members.

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
1) Idea about Business
2) Investigation- make out plans as regards to the
availability of resources like capital, means of
transportation, labour, electricity, gas ,water, etc.
3) Assembling various Factors- like arrangement of
licences, copyrights, employment of necessary
employees, etc.

4) Financial Sources
5) 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

The second stage for establishment

1)Filing of Document: Following documents are to be
submitted by the promoters in the Registrars office
a) Memorandum of Association indicates
name, address, authorized capital etc.
b) Articles of Association contains
laws and rules for internal control and management of a
company.
c) List of Directors list of the names, occupations, addresses, along with the
declaration of director.

d) Written Consent of Directors

e) Declaration of Qualifying SharesA 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.
f) Prospectus
g) Statutory Declaration stating that
all legal formalities have been completed.

2) 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
3) Certificate of Incorporation If the registrar finds all the documents right, he issues
the certificate of incorporation to promoters.

After getting certificate of incorporation, the next stage

is to make arrangement for raising capital by
issuing
i) Shares
ii) Debentures
iii) Savings CERTIFICATE OF COMMENCEMENT requires
the fulfilment of following conditions
a) Issue of Prospectus:
A company has to issue prospectus for selling shares and
debentures to public.

b) Allotment of Shares
c) Minimum Subscription certified that the shares have been allotted up to an amount, not
less than the minimum subscription.

The Fourth and Final Stage

After verifying the foregoing documents, the registrar
issues the certificate of commencement of business

1) On the basis of Incorporation

a) Chartered Companies
i) Such companies are incorporated under a Royal Character
(order) issued by the King or Queen or Head of the State.
ii) Such companies have exclusive rights, powers and
privileges under the royal charter.
Example: East India Company, Bank of England
2) Statutory Companies
i) Such companies are formed under the special act passed by
the Parliament or State Legislature.
ii) The powers which can be exercised by such companies are
defined by the Acts that constitute them.

Example: Reserve Bank of India, State Bank of India, Life

Insurance Corporation
3) Registered Companies
i) A company incorporated under the Indian Companies Act,
1956 is called Registered Company.
ii) The powers exercised by such companies are defined by the
Companies Act and Memorandum of Association.
iii) A registered company can be a Private Ltd. Company or a
Public Ltd. Company

On the basis of liability of its members

1)Companies Limited by Shares
i) the liability of the members is limited to the extent of the
unpaid value on shares.
ii) Such companies may be a Public limited company or a
Private limited company
2) Companies Limited by Guarantee
i) Member guarantees to pay a fixed sum of money (specified
in the memorandum) at the time of liquidation of the
company for payment of companies liabilities.
ii) Such companies are formed without a share capital for non
trading (non profit) purpose.
iii) Depend on entrance and subscription fees as they do not
have share capital.

3) Unlimited Companies
i) The liability of the members is unlimited.
ii) In the event of winding up of the company. the private
property of the member can be used to pay the debts of the
firm.
iii)Due to the high risk involved, such companies are not found
in India.
On the basis of Membership
1) Private Limited Company
A private limited company is the one which by its articles
i) Limits the maximum number of its members to 50, minimum
being 2.

ii) Places some restriction on the transfer of its shares

iii) Prohibits any invitation by prospectus or otherwise to the
general public to subscribe to any of its shares or debentures
iv) A private company must used the word Private Limited
after its name.
2) Public Limited Company
i) It must have atleast 3 directors 1/3rd of the directors are
permanent and 2/3rd are subject to retirement by rotation out of
which 1/3rd retire every year.
ii) Shares can be freely transferred in a public company.
iii) In case of a public company Statutory Meeting is
compulsory.

On the basis of Ownership

1) Government Company
i) Company in which not less than 51% of the paid up share
capital is held by the Central Government and / or by any
State Government(s) or partly by the Central Government
and partly by one or more State Governments.

ii) Follows provisions of the Indian Companies Act, 1956.

Examples: Hindustan Machine Tools, Oil and Natural Gas
Commission etc.

2) Foreign Companies:
i) company which is registered in one country but carries out
its operations in India.

On the basis of Shareholding

1) Holding Companies
i) A company which controls another company by
holding a minimum 51% of shares and thereby
controlling the composition of the board of the
company.
2) Subsidiary Companies
i) A company in which another company holds a
minimum of 51% of share capital i.e. holding
company is known as subsidiary company.

Private Limited Company

Public Limited Company
1. Membership:
Minimum membership 2, Maximum Minimum membership 7, Maximum
membership 50
membership unlimited

2. Formation
Comparatively simple, certificate of Comparatively difficult as the procedure
incorporation is adequate
is lengthy.
3. Number of Directors:
It must have at least two directors

It must have at least three directors

4. Transfer of Shares:
The shares are not freely transferable

Shares are freely transferable.

5. Issue of Prospectus:
It is allowed to issue prospectus

It can issue prospectus

6. Commencement of Business:
It can start the business after the It requires trading certificate for starting
receipt of certificate of incorporation. business
7. Suitability:
Suitable for business on a small scale

Suitable for large scale business.

8. Invitation:
It cannot invite public to subscribe for It invites public to purchase securities of
securities of the company
the company.

9. Allotment:
It can allot shares immediately after Shares cannot be allotted unless
incorporation
minimum subscription is collected.
10.
Qualification shares:
The directors need not
qualification shares

hold The directors have to purchase some

qualification shares to become the
director.

11.
Directorship:
There is no restriction on the number
of directorship
12.
Quorum:
Two members present in the meeting is a
quorum at general meeting

A director cannot be a director of more

than 20 companies

Five members present in the meetings is

a quorum at general meeting.

A) There are three type of companies -Private Limited, Public

Limited and Government companies on the basis of ownership
B) Two types of companies - Indian and Foreign on the basis of
nationality.

1) Private Limited Company

i) can be formed by at least two individuals having minimum
paidup capital of not less than Rupees one lakh.
ii) total membership of these companies cannot exceed 50.

iii) shares allotted to its members are also not freely

transferable between them.
iv) not allowed to raise money from the public through open
invitation.
v) are required to use Private Limited after their names.
examples : Combined Marketing Services Private Limited,
Indian Publishers and Distributors Private Limited Limited,
etc.

2) Public Limited Company

i) Min of 7members are required, no restriction on max no of
members
ii) must have minimum paidup capital of Rs. 5 lakhs.
iii) shares allotted to the members are freely transferable.

iv) can raise funds from general public through open invitations
by selling its shares or accepting fixed deposits.
v) required to write either public limited or limited after their
names.
Examples :Hyundai Motors India Limited, Steel Authority of
India Limited, Jhandu Pharmaceuticals Limited etc.

3) Government Company
i) the Govt (either state or central Gvt or both) holds a majority
share capital i.e., not less than 51%.
ii) companies having less than 51% share holding by the govt
can also be called Govt companies provided control and
management lies with the Govt.

examples : Mahanagar Telephone Nigam Limited, Bharat Heavy

Electricals Limited, etc.

4) Indian Company
i) A company having business operations in India and registered
under the Indian Companies Act, 1956
ii) company may be formed as a public limited, private limited
or government company.

5) Foreign Company
i) a company formed and registered outside India having
business operations in India.

Indian Companies Act 1956 defines share as a share in the

share capital of a company and includes stock except when a
distinction between stock and shares is expressed and
implied.
Owned capital of a company divided into a large number of
equal parts or units. Each such part having the same face value
is called share.

1.Equity Shares(Ordinary shares):

Equity shares are those shares which do not have, preferential
rights with regards to
(1) Payment of dividend
(2) Repayment (return) of capital, in case of winding up of the
company.
2.Preference Shares:
Preference shares are those shares which have preferential
rights over the equity shares with regards to:
(1)Repayment of capital in the event of liquidation / winding up
of the company.
(2)Payment of dividend.

Classification of Preference Shares:

(I) On the basis of participation:
(a) Participating Preference Shares
(b) Non participating Preference Shares
(II) On the basis of right to accumulate dividend:
(a) Cumulative Preference Share
(b) NonCumulative Preference Shares:

Classification of Preference Shares:

(Contd.)
(III) On the basis of Redemption:
(a) Redeemable Preference Shares
(b) Irredeemable/Non redeemable Preference Shares

(IV) On the basis of Conversion:

(a) Convertible Preference Shares
(b) Non Convertible Preference Shares

3.Bonus Shares:
A part of the companys profit is transferred to reserves.
Out of such reserves a company issues bonus shares. Such
shares are issued to the equity share holders of the company
free of charge. Infact bonus shares are also equity shares.

4.Deferred Shares / Founder Shares / Management Shares:

These shares are issued to the promoters of the company.
They rank last of all shares in respect of payment of dividend
and repayment of capital. Deferred shares are usually of a
lower face value. Only private companies can issue deferred
shares.

5.Qualification Shares:
The articles of a company usually require a director to
hold certain number of shares to be eligible as a director. Such
shares are called qualification shares.
The directors must obtain qualification shares within 6
months from his appointment as a director. If he does not
purchase the qualification shares within the prescribed period
he ceases to be the director of the company. He can purchase
the shares from the company itself or from the stock market.

(a)Statutory Meeting
The statutory meeting is held to inform the shareholders in
respect of matters relating to:
Allotment of shares
Receipts and payments made by the company, etc.
Incorporation of the company.
Details of preliminary expenses.
Details of the contracts concluded by the company or changes
in the existing contract.
Details of further prospects of the company
Any special matters which require approval of the
shareholders is placed before them at this meeting.

(b)Annual General Meeting

Every company shall in each year hold (in addition to any
other meetings) a general meeting of its shareholders. The
purpose of holding such meeting is to review the progress
and prospects of the company and to elect directors and
auditors, as the case may be.

(c)Extra Ordinary General Meeting

It is general meeting which is held between two annual
general meetings. This meeting is called to discuss
important and urgent matters which cannot be postpone till
the next annual general meeting

A stock exchange is an entity that provides "trading" facilities

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 shares issued by
companies, unit trusts, derivatives, pooled investment products
and bonds.

Roles of Stock Exchange:

1.Raising capital for businesses
2.Mobilizing savings for investment
3.Facilitating company growth
4.Profit sharing
5.Corporate governance
6.Creating investment opportunities for small investors
7.Government capital-raising for development projects
8.Barometer of the economy

Rank

Economy

Stock Exchange

Market Capitalization
(USD Billions)

Trade Value
(USD Billions)

United States
and Europe

NYSE Euronext

15970

19813

United States
and Europe

NASDAQ OMX

4931

13439

Japan

Tokyo Stock
Exchange

3827

3787

United Kingdom

London Stock
Exchange

3613

2741

China

Shanghai Stock
Exchange

2717

4496

Hong Kong

Hong Kong Stock

Exchange

2711

1496

Canada

Toronto Stock
Exchange

2170

1368

India

Bombay Stock
Exchange

1631

258

India

National Stock
Exchange of India

1596

801

10

Brazil

BM&F Bovespa

1545

868

11

Australia

Australian
Securities
Exchange

1454

1062

12

Germany

Deutsche Bores

1429

1628

13

China

Shenzhen Stock
Exchange

1311

3572

14

Switzerland

SIX Swiss
Exchange

1229

788

15

Spain

BME Spanish
Exchanges

1171

1360

Partnership
Joint Stock Company
1. Meaning:
Here 2 or more people come together for It is voluntary association, artificial person
doing some business and making profit
created by law having a common seal and
perpetual succession
2. Formation:
Relatively easy, less legal formalities Formation difficult, too many legal
involved
formalities involved.
3. Capital:
It can raise limited capital due to limitation It can raise large capital due to large
on the number of members and their members
capacity
4. Liability:
Liability of partners is unlimited joint and Members liability limited to the face value
several
of shares
5. Ownership and Management:
There is no difference in ownership and There is no difference in ownership and
management
management

6. Flexibility:
More flexible, compared to Joint Stock
Companies
7. Continuity and Stability:
Lacks continuity and stability, business may
come to an end with death, insolvency and
insanity of partners

Less flexible compared to partnership firm

Joint stock company is continuous and

stable, business does not come to an end
with death insolvency or insanity of
partners

8. Business Secrecy:
Can be maintained to a certain extent

No business secrecy

9. Government Regulation:
Minimum government regulation

Strict and excessive government regulation

10.
Taxation:
Less compared to joint stock companies

Subject to heavy taxation

11. Decision making:

Quick decision making

Delay in decision making

12.Economies of scale:
Less economies of scale as compared to Joint Stock Enjoys economies of scale as it undertakes
Companies
business on a large scale

13.Bargaining Power:
Generally weak bargaining power

Strong bargaining power

14.Contractwith customers & employees:

Close contact with customers and employees

No contacts with customers and employees

15.Legal status:
No legal status

Possesses and a legal status

16.Act:
Governed by Partnership Act, 1932

Governed by Companies Act, 1956

(i)
(ii)
(iii)
(iv)
(v)

(vi)
(vii)
(viii)
(ix)
(x)

(xi)

Large financial resources

Limited Liability
Professional management
Large-scale production
Contribution to society
Research and Development
Bargaining Power
Government Revenue
Economic Development
Public Confidence
Long Life

(i)
(ii)
(iii)
(iv)
(v)

(vi)
(vii)

(viii)
(ix)

(x)
(xi)
(xii)

Difficult to form
Excessive government control
Delay in policy decisions
Concentration of economic power and wealth in few hands
Labour Disputes
Lack of Responsibility
Lack of Secrecy
Double Taxes
Lack of contact with customers
Lack of contact with employees
Conflicts of Interest
Not suitable for all types of business

where the volume of business is large

huge financial resources are needed
suitable for businesses which involve heavy risks
which require public support and confidence
Examples: production of pharmaceuticals, machine
manufacturing, information technology, iron and
steel, aluminum, fertilisers, cement