26 Aug, 2025
4 mins read
Have you ever wondered how large companies like Reliance or Infosys manage to raise huge amounts of money and include thousands of people as owners? The answer is a joint stock company. It is one of the most common forms of business in India. In this blog, you’ll learn what is joint stock company, its types, features, benefits, challenges, and how to set one up.
A joint stock company is a group of people who join together to run a business. Each person puts in money and gets shares. These shares show ownership in the company.
This type of company is a legal body. It means the company is separate from the people who own it. It can own property, sign contracts, and go to court. Shareholders have limited liability, which means they won’t lose more money than they invested.
There are different types of joint stock companies based on ownership, size, and rules.
Minimum of two members.
Cannot sell shares to the public.
Limits on selling shares to others.
Needs at least seven members.
Can sell shares to the public.
No limits on selling shares.
Members pay a set amount if the company closes.
Often used by non-profit groups.
No limit on members' losses.
Rare in India.
Has only one owner.
Combines the benefits of being a sole trader and limited company.
These are the main features of joint stock company:
Legal Registration: Must be registered under the Companies Act.
Separate Identity: It acts like a person in the eyes of law.
Continues Always: It stays even if owners change.
Limited Risk: Owners only lose the money they put in.
Company Seal: Used to sign documents.
Shares Can Be Sold: In public companies, shares are easy to sell.
Different People Manage It: Owners and managers are not always the same.
These characteristics of joint stock company make it safe and easy to run big businesses.
Here are some advantages of joint stock company:
Raise Large Money: Can collect money from many people by selling shares.
Limited Losses: Owners don’t lose personal money.
Never Ends: The company keeps going even if owners leave.
Expert Managers: Professionals handle daily work.
Easy to Leave: Owners can sell shares and exit.
Lower Costs: Big companies can save more.
More Trust: Rules and checks build public faith.
Here are a few disadvantages of joint stock company:
Hard to Start: Many steps and rules to follow.
High Costs: Running and checking accounts cost more.
Less Privacy: Must share financial details publicly.
Slow Work: Many approvals needed for decisions.
Owner vs Manager Issues: Owners and managers may not always agree.
Here are some examples of joint stock companies in India:
Reliance Industries Limited – A top public company in energy and telecom.
Infosys Limited – A leading IT company.
Tata Consultancy Services (TCS) – India's biggest software company.
Maruti Suzuki India Ltd – A well-known car maker.
HDFC Bank – A major joint stock bank.
These companies show the strength of joint stock businesses in India.
The formation of joint stock company takes several steps:
Choose Type: Decide between public, private, OPC, etc.
Pick a Name: Get name approval from the MCA.
Prepare Documents: Write the Memorandum and Articles of Association.
Apply to Register: Submit the forms and documents to the MCA.
Get Certificate: Once approved, the company is legally formed.
Start Work: Public companies must also get a business start certificate.
The registration of joint stock company must follow the Companies Act, 2013.
A joint stock company is a strong and safe way to run a business. It helps raise big money, protects owners, and continues without worry. Knowing the features of joint stock company, how it works, and how to register one will help you make smart choices. While there are some drawbacks, the benefits are clear, especially for large-scale business in India.
It is a company where many people own shares. Each person has limited risk, and the company is a separate legal body.
They include private limited companies, public limited companies, OPCs, companies limited by guarantee, and unlimited companies.
Yes, if it’s a public company. Private companies don’t allow open share buying.
It needs proper steps and documents, but online help and experts make it easier.
Calculate your Net P&L after deducting all the charges like Tax, Brokerage, etc.
Find your required margin.
Calculate the average price you paid for a stock and determine your total cost.
Estimate your investment growth. Calculate potential returns on one-time investments.
Forecast your investment returns. Understand potential growth with regular contributions.
You have successfully submitted your partnership request form. You will be hearing us soon!
Back
