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What is a J.S.C. ?
History of J.S.C.s .
Formation Of a J.S.C.
Formation of a
Joint-Stock
Company
Promotion Stage
Incorporation
Stage
Capital
Subscription
Stage
Certificate of
Commencement
Formation Of
a J.S.C.
These are the 4
most prominent
stages of
establishment.
Formation of a Joint-Stock
Company
Capital
Subscription Stage
Promotion Stage
Certificate of
Commencement
Incorporation
Stage
Promotion Stage
Promotion is the discovery of ideas and organization of funds, property and skill to run the
business for the purpose of earning income. Steps involved
Investigation- make out plans as regards to the availability of resources like capital, means of
transportation, labour, electricity, gas ,water, etc.
Financial Sources
The promoters carryout these various activities to give the company its physical shape in the
form of
Incorporation Stage
Filing of Document: Following documents are to be submitted by the promoters in the Registrars
office.
Articles of Association contains laws and rules for internal control and management of a company.
List of Directors - list of the names, occupations, addresses, along with the declaration of director
Declaration of Qualifying Shares- A declaration certificate showing that the directors have take n up
qualifying shares and have paid up the money or pay it in near future to the registrar.
Prospectus
Statutory Declaration stating that all legal formalities have been completed.
Payment of Registration Fee - the registration fee is paid to the Registrar for
Registration fee
Certificate of Incorporation - If the registrar finds all the documents right, he issues the certificate
of incorporation to promoters.
After getting certificate of incorporation, the next stage is to make arrangement for raising
capital by issuing
Shares
Debentures
Issue of Prospectus: Acompany has to issue prospectus for selling shares and debentures to public.
Certificate of Establishment
Shares
Companies act 1956
a share in the share capital of a company and includes stock except when a distinction
between stock and shares is expressed and implied.
Companies act 2013
a share in the share capital of a company and Includes stock
Equity
Shares
Preference
Shares
Right to income:Dividend paid to shareholders in the form of immediate cash flows. Retained
earnings gives benefit in the form of capital gains.
Claim on Assets: In case of liquidation, equity share holders will get payment after debt
holders, preference shareholders etc.
Right to control: Equity shares gives right to elect board directors of the company.
Limited Liability:Equity share holder's liability is limited to the investment made on equity
shares.
Fixed Dividends:Like debt carries a fixed interest rate, preference shares have fixed
dividends attached to them.
Preference over Equity:As the word preference suggests, these type of shares get
preference over equity shares in sharing the income as well as claims on assets.
No Voting Rights:Preference share capital is not allotted any voting rights normally. They
are similar to debenture holders and do not have any say in the management of the
company.
No Share in Earnings:Preference shareholders can only claim two things. One, agreed
percentage of dividend and second the amount of capital invested.
Fixed Maturity:Just like debt, preference shares also have fixed maturity date. On the
date of maturity, the preference capital will have to be repaid to the preference
shareholders.
Difference Between
Equity and Preference
Shares
Equity
Shares
Preference Shares
Shares which enjoy preference as
regards payment of dividend and
repayment of capital.
This share holder have no right to
vote And Equity share holders are
Creditors of the company.
Risk about losing money is less than
equity share holders.
Stock Exchange
A Stock exchange is a form of exchange which provides services for stock brokers and traders to
trade stocks, bonds, and other securities.
Stock exchanges also provide facilities for issue and redemption of securities and other financial
instruments, and capital events including the payment of income and dividends. Securities traded on
a stock exchange include stock issued by companies, unit trusts, derivatives, pooled investment
products and bonds. Stock exchanges often function as "continuous auction" markets, with buyers
and sellers consummating transactions at a central location, such as the floor of the exchange.