What Is a Joint Stock Company?

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A joint stock company is a type of business organization with ownership represented by its dispersed shares of stock.

Features

This type of company is run by stockholders who receive transferable shares in exchange for the capital they've invested. The shareholders pool their money in a common fund. Directors form a central management team, responsible for ownership interests.

Liability

A joint stock company is similar to a corporation, though it is unincorporated, and the investors are liable for any financial debt that may occur.

Corporation Similarities

Members of a joint stock company are allowed to transfer stock and introduce a stranger into membership, which has no effect on the company or its central management, since individual shareholders have no authority. Changes in membership and transfers of stock have no effect on the continual company existence.

Legal Agreement

While corporations exist within the legal framework of a state charter, the contractual framework of a joint stock company is an agreement among its members. Individuals have the right to form a contract with one another, and this type of business contract does not require state authority.

Partnership Similarities and Differences

Like a partnership, members of a joint stock company are financially responsible for the company, which is not legally considered an entity separate from its shareholders. However, unlike a partnership, members are free to retire or transfer membership.

Considerations

Joint stock companies are more prevalent in Russia than in the U.S., where limited liability corporations (LLC) are more popular, according to the report, "Choosing between limited liability company (LLC) or joint stock company (JSC) in Russia," on doingbusiness.ru.

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