Joint Stock Company
The difference between a joint stock company and a limited liability company, is that a joint stock company The simplest way to describe it as a commercial organization jointly owned by all its shareholders, all shareholders own a certain amount of shares.
The legal identity of the joint stock company is that its members are separate, and once the joint stock company is established it has its own distinctive legal identity and the management is done by agreement between the shareholders.
In order for a company to be recognized as a separate legal entity and to come into being, it must be incorporated, i.e. carry out the legal registration process.
The life of the company is in no way related to the lives of its members, the members or shareholders of the company are constantly changing, but this does not affect the continuation of the company, and this is one of the most important difference between a joint stock company and a limited liability company.
The personal assets of the contributing member cannot be liquidated to repay the debts of the company.
The liability of shareholders is limited to the amount of paid-up capital.
Corporate assets can only be sold to pay off their debts, and members cannot be paid out of their contributing funds.
Transferability of shares in a joint stock company, ownership is divided into convertible units known as shares.
Advantages of Joint Stock Company
One of the biggest attractions of a joint stock company is the limited liability of its members whose liability is limited only to the unpaid amount on their shares, and since their personal wealth is secure, they are encouraged to invest in joint stock companies.
Shares in the market can also be sold and converted into cash, and this ease of ownership is an added advantage.
Permanent succession is another advantage of a joint stock company, the only liquidation under the Companies Law will close the company, and this difference between a joint stock company and a limited liability company characterizes joint stock companies significantly.
The company hires a board of directors to manage all activities, and skilled and talented people are elected to the board of directors and this leads to effective and efficient management.
From the foregoing, the difference between a joint stock company and a limited liability company begins to be clear.
Disadvantages of the Joint Stock Company
One of the disadvantages of a joint-stock company is the complex and lengthy procedures for its formation.
The Company is required to follow a large number of laws, regulations, notifications, etc. which restrict the freedom of the Company.
The company has many stakeholders such as shareholders, promoters, board of directors and employees, which leads to conflicts of interest at times.
These defects further clarify the difference between a joint stock company and an LLC.
Limited Liability Company
The owners of an LLC are called "members" and they are partners in a business entity with full company protection In addition to being able to pass through any business profits and losses to the personal income tax return, many business owners choose to establish an LLC, because they want to protect the liability that the company can provide in business, without double taxation, and to know more about the difference between a joint stock company and an LLC follow the following.
Pros of an LLC
LLC members are not personally liable for business decisions or actions taken by an LLC, which helps protect against personal liability and personal assets of LLC members, in case of legal consequences.
A company's profits and losses can be shared among members but they prefer to divide it; they don't have to be equal.
The number of paperwork required to establish an LLC is small compared to others.
A written LLC operating agreement can help clarify who is responsible for what, which is an important legal element for building a business.
This is one of the most important differences between a joint stock company and a limited liability company.
Cons of an LLC
Members are considered employees of an LLC, they are responsible for paying their own self-employment tax contributions.
The corporate entity is sometimes affected if one of the founding partners dies.
Title rights and compensation can become a bit complicated and difficult with an LLC, so the use of external legal advice is encouraged to ensure that LLC owners are protected.
Thus the difference between a joint stock company and a limited liability company was identified.
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