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According to Heelis, “A Joint Stock Company is an association of individuals
for the purpose of carrying on some trade, business or undertaking usually
with limited liability, but sometimes with unlimited liability.”

In Nepal, Joint Stock Company should be established under the Company Act 2063
B.S.

Features of a company
The features of a joint stock company are discussed below:

i. Distinct legal entity: A company is an artificial person created by law. So it
has an existence independent of its members. It can own property, enter into
contracts in its own name and conduct a lawful business. Shareholders are
neither the owners nor the agents of the company. So a shareholder cannot be
held liable for the acts of the company and vice-versa.
ii. Perpetual existence: A joint stock company has a key perpetual succession. Its
existence is not affected by death, lunacy or bankruptcy of its members. Its old
shareholders may go by selling their shares and new shareholders may come,
but it does not affect the existence of the company. The company is created by
law and can be liquidated by law only.
iii. Limited liability: Since the company has a separate legal entity, its members
cannot be held liable for the debts of the company. The liability of every member
of a limited company is limited to the normal value of the shares subscribed by
him or to the amount of guarantee given by him. A member cannot be asked to
pay more than what is due from him in respect of shares allotted to him even
though the assets of the company are not sufficient to meet fully the claims of
its creditors.
iv. Transferability of shares: The shares of companies are transferable except in
case of private companies. Every shareholder of a public limited company is
free to transfer the shares held by him to anybody else.
v. Separation of ownership and management: Separation of ownership and
management has become an important feature of joint stock companies. The
number of persons who hold the shares of a company is generally very large.
Shareholders have no right to participate in the day-to-day administration of
the affairs of the company.
vi. Separate property: A company, being a legal person, is capable of owing, using
and disposing of property in its own name. Shareholders are not the joint
owners of the company’s property.
vii. Common seal: As an artificial person, a company cannot act and sign itself. It
acts through human beings known as directors. All the acts of the company done
through the directors are authenticated by the common seal of the company.
The common seal is the official signature of the company. Any document which
is not bearing the common seal of the company is not binding on the company.

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