A
joint stock company is the association of two or more people who have decided
to come together for the purpose of doing business. Joint Stock Company can be
classified into two basic forms. They include:
joint stock company is the association of two or more people who have decided
to come together for the purpose of doing business. Joint Stock Company can be
classified into two basic forms. They include:
1.
Private limited liability company (Ltd.)
Private limited liability company (Ltd.)
2.
Public limited liability company (Plc)
Public limited liability company (Plc)
Features
of Joint Stock Company
of Joint Stock Company
1.
Share holders have limited liability i.e should the company fold up, the
loss is restricted to their investment but not their private properties
Share holders have limited liability i.e should the company fold up, the
loss is restricted to their investment but not their private properties
2.
The company is regarded as a legal entity i.e it can sue and be sued on
its own name, it is a legal personality
The company is regarded as a legal entity i.e it can sue and be sued on
its own name, it is a legal personality
3.
A limited liability company is expected to pay corporate tax as a
corporate citizen
A limited liability company is expected to pay corporate tax as a
corporate citizen
Features
of Private Limited Company
of Private Limited Company
a)
According to CAMD (Company and Allied Matters Decree) 1990 a private
limited company is company with minimum of two members or shareholders and
maximum of fifty shareholder
According to CAMD (Company and Allied Matters Decree) 1990 a private
limited company is company with minimum of two members or shareholders and
maximum of fifty shareholder
b)
As a comp[any it is not required to publish its audited account for
public consumption
As a comp[any it is not required to publish its audited account for
public consumption
c)
It is not equally required to advertise its shares in the public i.e on
the Nigerian Stock Exchange.
It is not equally required to advertise its shares in the public i.e on
the Nigerian Stock Exchange.
Features
of public limited company
of public limited company
a.
A PLC is expected to have a minimum of seven shareholders with no upper
limits
A PLC is expected to have a minimum of seven shareholders with no upper
limits
b.
Share can be freely transferred without consulting anyone
Share can be freely transferred without consulting anyone
c.
Ownership and management are widely seperaed
Ownership and management are widely seperaed
d.
Annual reports and audited accounts are expected to be published for
public consumption
Annual reports and audited accounts are expected to be published for
public consumption
e.
Directors have to state the number of shares owned by them
Directors have to state the number of shares owned by them
Essential
documents before incorporation of JSC
documents before incorporation of JSC
Basically,
there are two documents required to be submitted to Corporate Affairs Commission
CAC, before a JSC can be incorporated. These are:
there are two documents required to be submitted to Corporate Affairs Commission
CAC, before a JSC can be incorporated. These are:
1.
Memorandum of Association
Memorandum of Association
2.
Articles of Association
Articles of Association
Memorandum
of association
of association
This
regulates the relationship of the company with its internal management.
regulates the relationship of the company with its internal management.
And
thus involves that the following has to be included
thus involves that the following has to be included
a.
Name of the company or organization
Name of the company or organization
b.
Registered office of the company
Registered office of the company
c.
Amount of capital to be raised
Amount of capital to be raised
d.
The objective for which the company is formed
The objective for which the company is formed
e.
A statement that the company is limited
A statement that the company is limited
f.
Conditions for amending the memorandum: these assist the company to
regulate its activities with the outside world. For example, for a company to
borrow money from a bank the memorandum has to be submitted for the bank to
ascertain its actual capital base, director’s power etc are scrutinized.
Conditions for amending the memorandum: these assist the company to
regulate its activities with the outside world. For example, for a company to
borrow money from a bank the memorandum has to be submitted for the bank to
ascertain its actual capital base, director’s power etc are scrutinized.
Articles
of Association
of Association
The
article of association deals with internal management of the business. It
spells out the duties and responsibilities of directors and managers of the
company.
article of association deals with internal management of the business. It
spells out the duties and responsibilities of directors and managers of the
company.
1.
It deals with procedure for holding meetings
It deals with procedure for holding meetings
2.
The rights of shareholders
The rights of shareholders
3.
The appointment of directors
The appointment of directors
4.
Procedure for voluntary winding up
Procedure for voluntary winding up
5.
The borrowing powers of the company
The borrowing powers of the company
6.
Share capital and variation of class shares rights
Share capital and variation of class shares rights
7.
The procedure for auditing, approving and publishing of the account of
the business
The procedure for auditing, approving and publishing of the account of
the business
Certificate
of incorporation
of incorporation
After
fulfilling the conditions for incorporation, a certificate of incorporation
will be issued by the Registrar of companies. On getting the certificate, the
company can take off as a legal entity
fulfilling the conditions for incorporation, a certificate of incorporation
will be issued by the Registrar of companies. On getting the certificate, the
company can take off as a legal entity
Every
shareholder should be issued with a prospectus stating the objectives for which
the business was established and describe its further prospects.
shareholder should be issued with a prospectus stating the objectives for which
the business was established and describe its further prospects.
Advantages
of Limited JSC
of Limited JSC
i.
Large capital is available to run the business effectively and
efficiently
ii.
Perpetual existence
iii.
Efficient management because o wide separation between owner and
management
iv.
Ease of expansion
v.
It is a legal entity – has own legal personality
Disadvantages
of limited JSC
of limited JSC
a.
Lack of secrecy
Lack of secrecy
b.
Double taxation – pays personal income tax and withholding tax of
dividends
Double taxation – pays personal income tax and withholding tax of
dividends