Explain below questions in detail.

 

a)     Discuss the various kind of partners in partnership firm.

 

b) What is a joint stock company? Discuss its characteristics. 

 

Note: Answer must cover all the contents in the question.

Kind of partners in a partnership firm.

1.General partners-These are partners who take part in the day to day running of the business and have unlimited liability to the debts the business partnership may owe. This means that their personal assets may be sold to pay off debts owned by the company.Majority of the general partners are normally professionals who have the knowledge and skills of running and operating the business venture they choose to involve themselves in with the other partners. General partners have the authority to make decisions on behalf of the company. General partners apart from bringing in their skills and expertise also contribute a pool of clients and contacts.

2.limited partners- These are partners in partnership who have limited liability over the debts owed by the company and normally do not take part in the day to day running of the business.Their liability cannot exceed the amounts the individuals have invested in the company. However if a limited partner assumes an active role of the day to day running of the business,he/she may be subject to unlimited liability in case the business makes debts.Limited partners lso enjoy the profits made by the partnership based on the percentage of shares they contribute to the firm.

Step-by-step explanation

Joint stock company-is a type of association or company that is made up of individuals who have shares of a joint stock capital and use the same to conduct business.Each of the members are shareholders although their percentage shares may be the same or may be different.

Characteristics

1. A joint stock company is considered an artificial legal entity and as such can be sued in a court of law independently. Like a natural person,the company can own property, lend or borrow money and enter into a contract. Such an association has been granted some rights under the law which are enjoyed through its board of directors. Officially as such, the company is recognized by its name and not that of the senior managers because it is its own artificial person legal under the law.
2. Separate legal entity- Unlike the sole proprietorship and the partnership which identifies with the owners, a joint stock company is independent of the owners and identifies as its own person separate from those who started it. The company as such does not depend on any of its members to conduct business and also no member of the association is liable to the company.All agreements entered are shown of approval by a common seal.
3. Incorporation- A joint stock company must be legally registered under the law for it to be allowed to conduct business. U like partnerships and sole proprietorships which can operate without these legal constraints, it is mandatory for a partnership to be registered under the law without which it does not even exist.
4. Limited Liability- Members of a joint venture enjoy limited liability to the company's debts and this means their assets cannot be taken to pay off the companies debts.A shareholders liability is only limited to the amount of unpaid capital and if their shares are fully paid, then they do not have any liability towards the company.The company can sell its assets to pay debts but members cannot be compelled to do so.
5. Perpetual succession-withdrawal of a member or even death does not result in the dissolution of this type of arrangement.Once registered under the law,it becomes an artificial person and therefore does not depend on the existence of its initial founders.Members can change but the existence of the company will remain. Life of the company is in no way related to the life of the shareholders.
6. Shares are transferred freely without any forms of restrictions and therefore members can sell their shares whenever they want without consulting the company's management.