A joint-stock company (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, and the shareholders are free to transfer their ownership interest at any time by selling their shareholding to others.

Characteristics of Joint Stock Company:

The analysis of above definitions reveals the following characteristics of a company: 1. Association of persons: A company is a voluntary association of persons established for profit motive. A private company must have at least two persons and the public limited company must have at least seven persons to get it registered. The maximum number of persons required for the registration in case of private company is fifty and in case of public company there is no maximum limit. 2. Artificial person: A company is an artificial person. It is created by law. Like that of the natural person, it can own property, incur debts, file suits, enter into contracts with others under its own name. It can be sued and fined but cannot be imprisoned. 3. Separate legal entity: A company being created under law has a separate entity from its members. Any of its members can enter into contracts with others. A member cannot bind a company by his acts or dealings with the third parties. The company can file a suit against its members and its shareholders can also sue the company. Further, a shareholder is not liable for the acts of the company even though he may be holding all the shares of that company. 4. Limited liability: The liability of the members or shareholders is limited to the extent of the value of shares held or the amount guaranteed by them. The shareholders are not personally liable for the debts of a company beyond that limit. 5. Transferability of shares: The shares of a public limited company are freely transferable and can be purchased and sold through the stock exchanges. A shareholder of a public limited company can transfer

his shares without the consent of other shareholders. But there are certain restrictions on transferability of shares in case of private limited company. 6. Common seal: Since a company is an artificial person, it cannot put its signature on any document. Therefore, it is statutory for every company to have a seal on which the name of the company is engraved. Affixing of seal on any document signifies the signature of the company. Of course two directors have to sign as witnesses in such .cases. 7. Separation of ownership from management: The shareholders are the owners of the company. They are heterogeneous group of people who are widely scattered throughout the country and abroad. The shareholders elect their representatives called directors to manage the company. Thus, the company is managed by directors rather than the shareholders. This results in separation of ownership from management. 8. Perpetual succession: The company enjoys a continuous existence. Its existence is not affected by death, lunacy or insolvency of its shareholders or directors as the case in partnership or sole proprietorship. The company can only be dissolved by the operation of law. 9. Investment facilities: A joint stock company raises its funds through issue of shares to general public. Due to the small denomination of the shares, the company provides investment opportunities to all sections of people who want to put their surplus money in the company's share. 10. Accountability: A joint stock company has to function as per the provisions of the Companies Act. The accounts are to be audited by qualified auditors. Such accounts and exports are published for the information of all stakeholders. Regular and timely reports are to be submitted to the Government. 11. Restricted action: A company cannot go beyond the powers mentioned in the abject clause of the Memorandum of Association. Therefore, its action is limited.

Distinction Between A Public Company And a Private Company Following are the main points of difference between a Public Company and a Private Company :1. Minimum Paid-up Capital : A company to be Incorporated as a Private Company must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5,00,000. 2. Minimum number of members : Minimum number of members required to form a private company is 2, whereas a Public Company requires atleast 7 members. 3. Maximum number of members : Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company. 4. Transerferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company 5 .Issue of Prospectus : A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus. 6. Number of Directors : A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have atleast 3 directors. 7. Consent of the directors : There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar a consent to act as Director of the company. 8. Qualification shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company .

9. Commencement of Business : A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it. 10. Shares Warrants : A Private Company cannot issue Share Warrants against its fully paid shares, Whereas a Private Company can issue Share Warrants against its fully paid up shares. 11. Further issue of shares : A Private Company need not offer the further issue of shares to its existing share holders, whereas a Public Company has to offer the further issue of shares to

its existing share holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share holders in the general meeting of the share holders only. 12. Statutory meeting : A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies. 13. Quorum : The quorum in the case of a Private Company is TWO members present personally, whereas in the case of a Public Company FIVE members must be present personally to constitute quorum. However, the Articles of Association may provide and number of members more than the required under the Act. 14. Managerial remuneration : Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company. 15. Special privileges : A Private Company enjoys some special privileges, which are not available to a Public Company.

Doctrine of Ultra Vires

Ultra vires means beyond powers i.e. any act done by the company beyond its legal powers and authority. An act ultra vires the company: It has been observed that company has an Independent legal existence and is a separate body corporate distinct from its members. The company can therefore perform acts on its own. The acts which the company performs are authorized by: 1) Objects specified in the Memorandum of Association of the company with which it is registered. Objects include incidental objects also and 2) The Companies act Any act done by the company which is neither authorized by its object nor by the Companies act that acts is called ultra vires the powers and authority of the company. An act which is ultra vires the company is void and cannot bind the company Since the act is void it cannot be ratified by the shareholders either.

The ultra vires doctrine typically applies to a corporate body, such as a limited company, a government department or a local council so that any act done by the body which is beyond its capacity to act (and not intra vires) will be considered invalid. In corporate law, ultra vires describes acts attempted by a corporation that are beyond the scope of powers granted by the corporation's objects clause, articles of incorporation or in a

clause in its Bylaws, in the laws authorising a corporation's formation, or similar founding documents. Acts attempted by a corporation that are beyond the scope of its charter are void or voidable.

Difference Between MOA and AOA As can be seen with the above discussion, both AOA and MOA are important documents that are necessary to be submitted with the registrar at the time of incorporation of a company MOA is the Charter of the company that outlines the nature of the business, aims and objectives whereas AOA outlines the rules and regulations for internal management in doing the business. While MOA is a must for all the companies, AOA is not so; its not a must for companies limited by shares to have its own AOA MOA is the supreme document for a company AOA shall not violate MOA Alteration of MOA is restricted while AOA can be altered through a special resolution Though both AOA and MOA reveal information about the company, it is AOA that is of particular interest for shareholders and potential investors Taken together MOA and AOA are referred to as Constitution of the company.

MOA vs AOA MOA and AOA stand for memorandum of association and articles of association respectively and are important source of information for shareholders and other stakeholders in a company that has been duly incorporated. These are documents that are necessary at the time of formation of a company and must be deposited with the registrar of companies who approves the incorporation of the company. Though there are similarities, there are differences between MOA and AOA that need to be highlighted for the benefit of all those who are stakeholders in a company or are potential investors as these documents reveal a lot about a company. MOA MOA is the document that reveals the name, registered office address, aims and objectives of the company, clause about its limited liability, share capital, minimum paid up capital etc. MOA also gives information about its first shareholders including the number of shares subscribed by them. MOA is one document that tells people all about the company and its relationship with the outside world. Though it is essential to submit MOA with the registrar when a company is being formed, it does not find mention in the constitution of the company. Subsequent to an amendment added in 2006 Companies Act, it is no longer mandatory to include the details about name, address, objectives and first shareholders names. Hence there is no restriction upon a company to engage in a particular business. AOA Articles of Association, also simply referred to as Articles, are necessary to be submitted during incorporation of a company with the registrar of companies. When Articles are taken in conjunction with MOA, they form what is called as the constitution of the company. Though there are differences in these articles as to their requirements in different countries, in general AOA is a document that provides following information about the company.

 The manner in which shares have been distributed along with voting rights attached with different classes of shares Estimate of intellectual property rights The list of directors with shares allotted to each Schedule of the meetings of the board of directors along with the quorum required with percentage of votes with directors Chairmans special voting rights and the manner in which he is elected How profits are distributed through dividends How the company can be dissolved Secrecy of know-how and how it is managed

what is the doctrine of indoor management?

the doctrine of indoor management is a presumption on the part of the people dealing with the company such as the shareholders that the internal requirements with regard to the articles of association and memorandum of association have been complied with. the doctrine helps in protection of external members from the company and states that the people are entitled to presume that the internal proceedings are as per the documents submitted with the registrar of companies. they are not allowed to go into the procedural aspect, such as the fact that the internal proceedings might not happen regularly, or what are the proceedings before the directors, in an extraordinary general meeting.

Membership

(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members. (2) Every other person who 1[agrees in writing] to become a member of a company and whose name is entered in its register of members, shall be a member of the company.
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[(3) Every person holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.]