Joint Stock Company Fundamentals

This video tutorial covers joint stock companies, including their types, merits, and demerits. It explains the legal framework established by the 1956 Act in India, detailing the formation stages: promotion, incorporation, capital subscription, and commencement of business. The tutorial highlights the advantages such as limited liability, capital raising, and economic contributions, while also addressing disadvantages like complex formation processes and limited shareholder involvement.

What is a joint stock company as per the 1956 Act in India?

• A business with unlimited liability

• A partnership firm with limited partners

• A sole proprietorship with multiple owners

• A business organization created by law with a separate legal entity

Which of the following is NOT a type of joint stock company?

• Non-profit organization

• Unlimited company

• Statutory company

• Chartered company

What is the first stage in the formation of a joint stock company?

• Promotion

• Capital subscription

• Registration

• Commencement of business

Who are the individuals responsible for starting a company during the promotion stage?

• Promoters

• Directors

• Employees

• Shareholders

What document contains the aims and objectives of a joint stock company?

• Articles of Association

• Memorandum of Association

• Prospectus

• Certificate of Incorporation

Which document outlines the rules and regulations for the administration of a company?

• Memorandum of Association

• Certificate of Commencement

• Articles of Association

• Prospectus

What is one of the key advantages of a public limited company?

• No requirement for a board of directors

• Limited number of shareholders

• Freely transferable shares

• Unlimited liability

How do joint stock companies contribute to a nation's economy?

• By limiting foreign exchange

• By avoiding taxes

• By paying taxes, rates, and duties

• By reducing employment

What is a major disadvantage of joint stock companies?

• High shareholder involvement

• Easy formation process

• Lengthy and expensive formation process

• Unlimited liability for shareholders

What issue can arise due to limited liability in joint stock companies?

• Directors may make poor decisions

• Shareholders have unlimited liability

• The company cannot raise capital

• The company has no legal entity