A joint stock company cannot arise by itself; it requires several people to form it. Each of them must contribute money to the common capital, which is called the authorized capital. By contributing their share in the production or development of a common company, they receive the right to manage the jointly created organization.
What is a joint stock company and how is it formed?
In order for a company to receive the status of "joint-stock", there must be three main features: the presence of total (authorized) capital, the property liability of the participants in the company, which is determined by the size of their contribution, the division of the authorized capital into shares held by the participants of the created company. The fact that shareholders have such rights and contributed money is confirmed by the presence of shares (securities), which they receive in return for their invested funds. In essence, a joint stock company is an economic or commercial organization managed by the owners of the shares.
What are the advantages of this legal form of commercial activity?
There are no restrictions on the authorized capital. This means that anyone can join a joint stock company by making their own contribution. At the same time, the number of participants can constantly grow, and if deposits are received, then the organization will develop, constantly increasing its income from production.
Shareholders decide how much money they want to invest in production. By investing in the authorized capital, participants can get a large profit (dividends), but they can also lose their investments if the company goes bankrupt. But even in this case, they will not lose more than they invested, since they are not responsible for the activities of the organization.
The advantage is the ability to leave the company at any time by selling your shares to other participants. At the same time, the activities of the organization will not stop.
Management in a joint-stock company is carried out only by professional managers united in a team. A shareholder can independently resell his shares and buy them from other holders. It takes a small amount to join the society. If a person does not have it, but wants to become a holder of shares, a joint-stock company can help him in obtaining loan funds and act as a lender.
Disadvantages of a joint stock company
Openness of society - this means that the organization must report on its profits and losses, creating annual reports. Inform about the redistribution of shares between holders. All this makes the joint stock company very vulnerable. Disputes can arise among managers about the distribution of the company's finances, which often leads to the disintegration of the organization.
It is impossible to control the resale of shares. This can lead to the fact that there will be a change in control over society.
The joint stock company pays taxes twice. It is paid first by the company as a whole, and then paid by each shareholder, upon receipt of profit from their investments.
The activities of a joint-stock company are regulated by the state, which means that the company, before starting its work, must undergo state registration. After it, the society must pay all the necessary contributions to the Pension Fund, to the tax and so on. Quarterly reports to government agencies are also the responsibility of the community.
But despite all the difficulties and disadvantages, a joint stock company is the most profitable and versatile form of commercial activity.
