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Joint-stock company

The meaning of «joint-stock company»

A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership).[1] Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.[2]

In modern-day corporate law, the existence of a joint-stock company is often synonymous with incorporation (possession of legal personality separate from shareholders) and limited liability (shareholders are liable for the company's debts only to the value of the money they have invested in the company). Therefore, joint-stock companies are commonly known as corporations or limited companies.

Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and in other countries that have adopted its model of company law, they are known as unlimited companies. In the United States, they are known simply as joint-stock companies.

Ownership refers to a large number of privileges. The company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting.

The shareholders also vote to accept or reject an annual report and audited set of accounts. Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but that is uncommon.

The shareholders are usually not liable for any of the company debts that extend beyond the company's ability to pay up to the amount of them.

Joint-Stock Companies are separate legal existence which means it has other legal existence rather than the owner.

The earliest records of joint-stock companies appear in China during the Tang and Song dynasties. The Tang dynasty saw the development of the heben, the earliest form of joint stock company with an active partner and one or two passive investors. By the Song dynasty this had expanded into the douniu, a large pool of shareholders with management in the hands of jingshang, merchants who operated their businesses using investors' funds, with investor compensation based on profit-sharing, reducing the risk of individual merchants and burdens of interest payment.[3]

The operation of these joint investment partnerships can be examined in a mathematical problem included in the Mathematical treatise in nine sections (Shu-shu chiu-chang) (1247 ed.) of Ch’in Chiu-shao (c.1202–61). Although the dealings it describes are perhaps more complex than those practiced a century earlier, it essentially deals with a kind of investment and division of profits that for sure would have been made in the twelfth if not also the eleventh century: a four-party partnership that collectively made an investment (of 424,000 strings of cash) in a Chinese trading venture to southeast Asia. Each party’s original investment consisted of precious metals like silver and gold and commodities like salt, paper, and monk certificates (and their accruing tax exemption). Yet the value of their individual investments varied considerably, as much as eightfold. Likewise, each party’s share of the profits varied greatly, evidently in proportion to its overall share in the total investment. While social and family ties may have shaped the circle of potential coinvestors, they affected little, if at all, an investor’s eventual share of the profits, or losses.[4]

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