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Shares Of Joint Stock Companies

 Shares of Joint Stock Companies
  • Preference Shares – Priority given to shareholders while distributing dividends.

  • Cumulative preference shares – Interest of one non-performing year will be carried to the subsequent year and it is cumulative.

  • Non-cumulative preference shares – In the non-performing years, interest of one year will not be accumulated to the subsequent year.

  • Ordinary shares – After considering preference investors, ordinary shares holders are considered for payment of interest or dividend.

  • Deferred Shares – The remnants of earnings left out after paying interest and dividends to all the share holders, are distributed to the deferred share holders.

  • Debentures – These are debt owed by the company. Debenture holders are given foremost rights in the repayment of debt at any time or payment of interest or at the time of liquidation. They carry a fixed interest rate.

Capital of JSCs

  • Authorised Capital – This capital is fixed by the Registrar while commencement of business. That fixed amount will be the authorised amount beyond which a company cannot collect funds.

  • Issued Capital – That part of capital which is offered or issued to the public for sale is termed as Issued capital.

  • Subscribed Capital – The shares actually purchased by the public is termed as subscribed capital.

  • Paid-up Capital – All the shares issued to the public will generally not be fully paid. Part of the amount paid by the public with the subscribed amount is termed as paid-up capital.

  • Call Capital – The remaining part of the capital which is subscribed but yet to be paid is called call capital.

Management of JSCs

            Board of Directors runs the affairs of the business. Generally directors are voted by the share holders by election system. The Board lays down the general policy of the company and appoints officers like manager, secretary, salesman, representative etc who carry to take up the transactions of the company. The directors are shifted every year by voting process. And the shareholders have rights to change the Board of Directors.

Features of JSCs

  • Legal Entity – A JSC is a legal entity and it can sue and be sued as an individual person in the court of law.

  • Limited Liability – The liability of every shareholder is restricted to the limit of shares he holds. The personal property of share holders are not liable and the creditors cannot claim for personal properties.

  • Democratic Management – The Board of Directors are elected by the shareholders through a Democratic system of casting vote.

  • Collective Ownership – The Company is owned by a group of share holders to the extent of shares they hold and not by the individual person.


  • Limited Liability – This is a very beneficial property of JSCs. The risk bearing is restricted to the shares held by the share holders. Hence company can commence business even with a huge risk.

  • Large Capital – JSCs can arrange large capital unlike other forms of business. Capital can be raised easily by issuing shares at a lower rate. Thus it gives a large scale production.

  • Economic and Technical Development – The establishment of JSCs has made easy large scale production which has helped economic and technical development. Having huge capital and more resources it can spend them for research on methods of production and modern type of machines.

  • Champion of Democracy – The Company is managed or run on democratic system. The shareholders elect Board of directors. They can change the directors if they are disgruntled with his performance. They can unbolt criticism of the incorrect and unfavourable policies of the board in their annual general meeting.

  • Long Life – The Company has long life or is of more permanent nature. It does not make any difference to the company if the death of a share holder occurs or he sells his shares to another person. The share holders may change, but the company functions normally.

  • Benefits of small savings – One can devote his small savings by purchasing the shares of the company. In this way, small savings can be utilised in the large scale production which build the strong base of the economy.

  • Long Period Project – A JSC is the most suitable for the projects which have a large gap amidst the investment and the production of goods. An individual proprietor or partnership firm never has the audacity to endow in such long period projects.

  • Spread of Risk – The menace of the company is spread over a huge number of investors and is not limited to a few persons.


  • Separation of Organisation and Industries – In JSCs, the share holders are the entrepreneurs and the paid managers are the organisers. This separation of organisation and enterprise is hazardous for the reason that the managers do not safe guard adequately the interests of the entrepreneurs.

  • Danger of Monopoly – JSCs can create monopoly in the market. Occasionally a few companies producing similar goods from a union and create monopoly. They exploit the consumers by charging higher prices as of the monopoly.

  • Development of Capitalism – The JSCs makes easy large scale production which strengthens capitalism.

  • Burden of Taxes – The owners has to abide by the heavy taxes. Primarily the company has to pay corporation tax or its dividend and next to it is the shareholders have to pay again income tax on the income of their shares.

  • Inequalities – The dividends of the company is distributed to the share holders. Labourers who are numerous have only fixed compensation. Generally a single person purchases a majority of shares and takes away a large part of the total dividend. This leads to unequal distribution of wealth and income in the nation.

  • Speculation – limited liability and free negotiation of shares gives rise to speculation in the market. Economic activities are badly afflicted due to the speculation or change in the value of shares.

  • Exploitation of share holders – Generally the common share holders lack complete information and knowledge of the company’s affairs. The directors of company then make exploitation of the innocent share holders.


            It can be concluded that the imperfections can be circumvented with definite defensive measures or by ratifying proper legislation or through governmental policies. In recent times no democratic nation can make fiscal improvement and attain affluence without the help of JSCs.

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