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Encyclopedia > Trading company

A joint stock company is a special kind of partnership. Such a company has a common capital called the stock. The partners in the company are called shareholders, since they receive shares for their contributions to the stock. Shares express ownership interest and decision making power in the company, and shareholders are free to transfer their shares to someone else without needing consent of the other shareholders. While a normal partnership also has ownership interest, the difference is that in a partnership, interest can only be transferred to someone else if all the partners agree to it. In the common law, a partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which they have all invested. ... Some factual claims in this article need to be verified. ... Capital has a number of related meanings in economics, finance and accounting. ... See stock (disambiguation) for other meanings of the term stock A stock, also referred to as a share, is commonly a share of ownership in a corporation. ... A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. ... In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REITs. ...


A share also represents how much of the profit each shareholder receives. Since a joint stock company is not necessarily a corporation, a share also represents how much of the loss each shareholder is liable for. As an example, a shareholder holding a 20% share in the company would receive 20% of the company's profits but would also be liable for 20% of the company's debt if it could not be satisfied with company funds. A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name AS (anonymous society) or something similar, depending on language (see below). ...


A for-profit corporation is a joint stock company, except that the shareholders have no liability towards the corporation's debts. A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name AS (anonymous society) or something similar, depending on language (see below). ...


The joint stock company was a financing model that allowed companies to raise large amounts of capital while lowering risk by diversifying contributed capital among multiple ventures. Europeans, initially the British, trading with the near east for goods, pepper and calico for example enjoyed spreading the risk of trade over multiple sea voyages. The joint stock company became a more viable financial structure than previous guilds or state regulated companies. A guild is an association of persons of the same trade or pursuits, formed to protect mutual interests and maintain standards of morality or conduct. ...


Transferrable shares often earned positive returns on equity which is evidenced by investment in companies like the East India Company who used the financing model to manage trade in India. Joint stock companies paid out divisions, dividends, to its shareholders by diving up the profits of the voyage in the proportion of shares held. Divisions were usually cash, but when working capital was low and it was detrimental to the survival of the company, divisions were either postponed or paid out in remaining cargo which could be sold by shareholders for profit in the market. A dividend is the distribution of profits to a companys shareholders. ...


  Results from FactBites:
 
Joint stock company - Wikipedia, the free encyclopedia (800 words)
A joint stock company is a type of business partnership in which the capital is formed by the individual contributions of a group of shareholders.
During the period of colonialism, the joint stock company was a financing model that allowed companies to raise large amounts of capital while lowering risk by diversifying contributed capital among multiple ventures.
The joint stock company was a forerunner of contemporary corporate entities such as the American business corporation, the British public limited company, the French société anonyme, the German Aktiengesellschaft and the Japanese kabushiki kaisha.
The Spanish Royal Trading Companies (2652 words)
The earliest company to thrive was the Caracas (formed in 1728), followed by the Galicia (1734), the Havana (1740), the Barcelona (1755) and the Filipinas (1785).
In 1781 the company lost the monopoly with Venezuela, and in 1785 was absorbed by the Filipinas company.
The company struggled on, with its fortunes fluctuating with war and peace, but by the end of the Peninsular War in 1815, it was in a sorry state.
  More results at FactBites »

 
 

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