Since the government has the majority of the share so all the management of the company is taken over by the government authority.There is a lack of managerial ability in sole trading and partnership firm.A joint stock company is established under the Company Act, 2053.
The joint stock company divides its capital into a large number of parts with each value where each part of capital is called share. The person who holds the share is called shareholders of the company. Again a company is an artificial person created by law having a separate legal entity with a perpetual succession and a common seal. Under this charter, certain exclusive rights and privilege are granted to the company for undertaking certain commercial activities. The Bank of England, the East India Company, the charter bank of Australia are some of the examples of the chartered company. The objects, powers, rights, and responsibilities are clearly defined in the Act. When a company requires special rights and power these type of companies are established. Joint Stock Company Definition History Trial Development CorporationFor example, Nepal Rastra Bank, Nepal Industrial Development Corporation, RNAC, Karmachari Sanchaya Kosh, etc. Every activity and formation is governed by the provisions of the Company Act. Hence, the shareholder is not responsible for paying beyond the face value of shares. In this company, the liability of the shareholders is unlimited like the partner in partnership company. The shareholders personal properties can be used to meet the obligations. The guarantee amount is specified in Memorandum of Association. It gives the written guarantee that members will pay up to a certain fixed amount in the event of the liquidation of the company. This type of company promotes art, literature, sports, education and other non-business activities. A private company can be formed with one member but the maximum number of shareholders cannot exceed fifty. A private company must use the words Private Limited (Pvt. Ltd.) in its name. The minimum number for formation is seven but there is no restriction on the maximum number. It must have a certificate of commencement and certificate of incorporation before starting its business. Joint Stock Company Definition History Free To SellThe shareholders are free to sell their shares in the market. A public limited company must use the words Limited (Ltd.) in its name.
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