What is the difference between incorporation, private limited and joint stock company?
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Dear friend,
--Joint stock company have the general public as shareholders. When companies require large capital, they invite public participation - to be owners/shareholders, who hold a fractional ownership in the company. These shares are then traded on the stock exchange and traded daily.
--The private limited company however has restricted ownership, and generally the promoters and their friends and associates may be owners/shareholders. The shares of a private limited company cannot be traded on the stock exchange. Companies requiring a smaller capital base may use this company structure to raise the necessary capital, without the required disclosure norms for publishing annual accounts, listing requirement etc. as required by the joint stock companies.
--The rationale for a private limited company as against a partnership is that in case of bankruptcy or default etc, the promoters of a private limited are not personally liable (The liability of the company is limited to the share capital)
--Basically a joint stock company is the one where different stock can be owned by public. Every shareholder can hold a particular proportion of shares.
--The share holding proportion determines the ownership of shareholders. There is no restriction for a joint stock company to invite public for subscription of shares. Thus a joint stock company can raise more capital.Whereas a private limited is the one that cannot invite public for its subscription. Thus it raises its capital from the directors and the promoters
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