Differences Between Limited Liability Company and Joint Stock Company (2024)

FAQs

Differences Between Limited Liability Company and Joint Stock Company? ›

LLC is not allowed to issue shares (if it wants to issue, it must convert its form into a JSC), but can issue bonds (issuance of bonds must comply with the provisions of law). JSC is allowed to issue both shares, as well as bonds and other securities of the company.

Limited liability companies and joint stock companies may both be launched with a single shareholder. In joint stock companies, there are no restrictions as to the number of shareholder. Limited liability companies cannot have more than 50 shareholders.

In a joint stock company, the ownership is divided into transferable units known as shares. In case of a public company the shares can be transferred freely, there are almost no restrictions. And in a public company, there are some restrictions, but the transfer cannot be prohibited.

In an LLC, there are no shares for the owners to buy, but in an LTD, every shareholder can purchase shares to own the business. The company determines the price of shares in an LTD, whereas in the LLC, they're determined by market forces.

Limited by Guarantee: Ownership and control rests with the members, who are guarantors rather than shareholders. Limited by Shares: Liability is limited to the unpaid amount on shares. Limited by Guarantee: Liability is limited to the amount members agree to contribute upon dissolution.

A public company requires a minimum of seven members to start a company, whereas a private limited company can be started with only two members. A general meeting is mandatory for public companies, whereas for private companies, it is not mandatory.

LLC and JSC may have one or more legal representatives. Both types of companies have legal status; All have the ability to self-determine their own assets; All have the right to establish, contribute capital or buy shares of another company; Both can participate in a lawsuit as either the plaintiff or the defendant.

Almost by definition, an LLC will always possess limited liability. Thus, for an LLC to be classified as a partnership for federal tax purposes, it must lack at least two of the remaining three corporate characteristics: centralization of management, continuity of life, and free transferability of interests.

A joint stock company possesses several defining characteristics, which include: a separate legal identity, limited liability for shareholders, transferability of shares, perpetual existence, a common seal as a legal signature, and a distinction between ownership and management.

Joint stock company is a type of business organization that is owned by its investors. In a joint stock company the company stock can be bought and sold by the shareholders. Shareholders should be having possession of at least 1 stock of the company in order to be counted as a partial owner.

Why don't LLC pay taxes? ›

LLC members are considered self-employed business owners rather than employees of the LLC so they're not subject to tax withholding. Instead, each LLC member is responsible for setting aside enough money to pay taxes on that member's share of the profits.

Most limited companies are 'limited by shares'. This means they're owned by shareholders, who have certain rights. For example, directors may need shareholders to vote and agree changes to the company.

LLCs have a more simple business structure than LTDs. LLCs are mostly run by their members but LTDs on the other hand are run by directors and shareholders. This means if you are running an LTD, you have to wait for shareholders' and other directors' approval to make any business decisions.

Economic development: Joint Stock Companies have large financial resources, they are able to undertake large-scale production, satisfy the needs of more consumers, create large-scale employment opportunities, promote balanced regional development and contribute substantially to the government by way of taxes.

Disadvantages of a Joint-Stock Company

Lack of Confidentiality- Every issue is discussed at length during the board of directors' meeting. The minutes of the meeting, as well as the company's profit and loss statements, among other things, must be made public. It is difficult to maintain secrecy in this environment.

Following are the disadvantages of Company form of Organisation: Costly and difficult to form, scope for dishonest management, nepotism, lack of good labor relations, high taxation, lack of secrecy, delay in decision making process, speculation and lack of interest. Was this answer helpful?

What is a Joint-Stock Company? A joint-stock company is a business that is owned by its investors. The shareholders buy and sell shares and own a portion of the company. The percentage of ownership is based on the number of shares that each individual owns.