Q.Define a joint stock company.

A joint stock company is a form of business organisation created and recognised only through registration under company law, and it exists as a person separate from the people who invest in it.

A joint stock company is not simply a business owned by a group of people; it is a distinct legal creation that comes into existence only when it is registered with the Registrar of Companies under the Companies Act, 2013.

Section 2(20) of the Act defines a company as 'a company incorporated under this Act or under any previous company law'. This is a purely legal definition — it tells us that registration (incorporation) is what makes an organisation a company in the eyes of law.

In descriptive terms, a company can be understood as an artificial person, created by law, that: (i) has an identity separate from its members; (ii) can own property and enter contracts in its own name; (iii) continues to exist regardless of changes in its membership (perpetual succession); and (iv) has its capital divided into units called shares, which members purchase to become part-owners with limited liability.

Students often define a company only as 'a group of people who invest money together', which describes a partnership too and misses the legal point that a company exists only after incorporation and has an identity separate from its members.