Table of Contents
Functioning of joint-stock companies has difficult enough system and in the different countries this system differs in connection with the local legislation a little. Here functioning is described and some requirements are led to joint-stock companies.
The joint-stock company is the organization created under the agreement by legal bodies and citizens by association of their contributions, having own legal body. Shareholders of joint-stock company participate with the contributions in the authorized capital stock divided into actions. Shareholders do not bear responsibility for joint-stock company obligations. Shareholders risk only the contribution.
The joint-stock company capital is formed at the expense of sale of actions. Formation of an authorized capital stock of joint-stock company occurs by merge of the general face-value of all actions. An authorized capital stock it is necessary to show in balance as the subscription capital of joint-stock company. The authorized capital stock cannot be less than the sum regulated by the law. Joint-stock company means can develop not only of means of the actions obtained from sale (own capital) and the saved up profit, but also at the expense of credits of bank and the repayment of bonds. Accumulation concern own capital. If accumulation is created from the sum of non-paid incomes they are called profitable accumulation.
The society is the proprietor of property, production made by a society, the incomes received from commercial activity and other property, got by it on other bases. Buildings, constructions, the equipment and other material assets, securities, rights of use of the earth, natural resources, and know-how can be the contribution of the participant of joint-stock company. Cost of brought property is defined by the joint decision of participants of a society. Formation and authorized capital stock increase is made by release and sale of actions, an exchange of bonds for actions, increases in a face-value of the action.
The action is a security which confirms the right of the shareholder to participate in management of a society, in its profits and distribution of the rests of property at joint-stock company liquidation. Degree of participation of each shareholder is defined by a face-value and quantity of the got actions.
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Pros and cons of joint-stock companies.
Wide prevalence of joint-stock companies is connected with a number of advantages of joint-stock company over other patterns of ownership:
The joint-stock form allows involving in one enterprise capitals of many persons, and even what cannot be engaged owing to any reasons in enterprise activity. Besides, restriction of responsibility in the size of the brought contribution together allows putting means not only in obviously perspective, but also in highly risky projects, essentially accelerating introduction of achievements of scientific and technical progress. There is also a set of other positive sides of the joint-stock pattern of ownership, doing it really universal and applicable everywhere where there is a necessity and possibility to limit scales of responsibility of the businessman.
This circumstance is especially important in the conditions of unstable economy when unforeseen conditions in manufacture sphere can lead to huge losses, to debts, on repayment which cannot have enough all available property. Individual businessmen and some legal bodies having other organizational-legal form are exposed to such risk. Joint-stock companies allow using more effectively also material and other resources, optimum to combine personal and public interests of all participants.
The joint-stock companies which are the basic form of the organization of the modern large enterprises and the organizations all over the world represent the most perfect legal mechanism on the organization of economy on the basis of association of property of private persons, corporations of a various kind and other bodies.
Joint-stock companies have a number of advantages in comparison with other patterns of ownership:
a) the Society has possibility to involve means of shareholders for replenishment of the authorized capital and expansion of the activity, and these means are not subject to return (except for a society complete liquidation) as actions are not redeemed by a society (except the separate cases stipulated by the law), and only resold to other shareholders.
b) the General management of society activity is separated from concrete management that allows to employ and choose the most suitable managing directors, directors, forces shareholders to concern selection of the operating personnel as each shareholder is responsible for effective work of a society as the enclosed means seriously.
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c) Possibility of real transformation of all labor collective of the enterprise in proprietors by acquisition by each of them of society actions Is created. Participation of members of labor collective in the property and profits of joint-stock company by means of acquisition of actions is one of the major preconditions of creation of master's motivation. When the shareholder and the worker are combined one person, the last has a direct interest in success of the enterprise as than is better it works, especially high percent from profit it will receive in the form of the dividend. The worker-shareholder has a stimulus to direct profit both on consumption, and on accumulation. The investments providing restoration and modernization of a fixed capital involve stock value growth and that increases personal property of shareholders. Besides, increase of a technological level of manufacture and the improvement of positions connected with it joint-stock a society in the market also leads to stock value increase. Let's add to it that the savings of the worker enclosed in the action do not lose real cost and in the conditions of inflation. On the other hand the worker-shareholder risks the savings for at bad work of the enterprise the action price can fall below a face-value, at bankruptcy of the enterprise it loses both savings, and work. Therefore interest of the worker-shareholder in high end results of activity of joint-stock company is strong enough. Certainly, the described mechanism of a material interest will be effective only in that case when workers get actions not for symbolical, and for the powerful sum. To create real interest of members of labor collective in production management, to stimulate the initiative and creativity, the share of the actions which are in the property of the personnel, should reach certain critical weight. For the company small and the average size such share is defined by the American experts at a rate of 10-15 % of the capital, for large it should be above. Therefore it is necessary to stimulate in the greatest possible degree participation in the joint-stock property of members of labor collective of the enterprises. Details about the joint-stock property of workers are written in the third chapter.
d) There is a possibility to involve in structure of shareholders of the constant partners, creating thus the general interest in results of activity of a society. As well the society can get securities of other societies, forming thus whole networks interested in work each other the organizations connected by relations of the property and the right of participation in management.
e) At the enterprises of a joint-stock pattern of ownership higher, than in other organizational-legal forms, degree of nationalization of manufacture. It gives the chance to lower expenses for a unit of production and to get rather high profit, and also to conduct expensive researches and to introduce the newest technologies in manufacture without essential increase in the prices at the goods as the modern technology is connected with the increasing expenses which only large manufacturers presume, heat-sink means of huge number of people.
Thus, joint-stock company, uniting on a uniform legal basis of all participants, provides the unique form of realization of the collective property, creating thus interest in work end results. Release and distribution of actions gives real possibility of the control of activity and management of it from outside shareholders. However there is a number of lacks peculiar a joint-stock pattern of ownership:
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Joint-stock company creation is interfaced to great difficulties. Besides search cofounders which should be allies in the intellectual plan and preparations of constituent documents of joint - stock company should be registered in a state structure.
The joint-stock company is under a steadfast eye of the state, i.e. Its activity is exposed from outside the states to considerable legal regulation. It is quite clear: the set of shareholders is involved in joint-stock company, working, serving; production and services, to it made, have mass character.
In joint-stock company the real power concentrates in hands of founders, managers, instead of shareholders. They often operate independently and independently. Only the controlling interest (50 % plus one action) this or that member of corporation or the block of shareholders forces to operate the above-named persons on their pointer or really allows to limit independence of founders or operating certain frameworks.
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The joint-stock company bears heavy tax burden: its income is taxed payments in insurance, pension and some other funds, besides, become. The tax assesses also wages of workers and the income of shareholders under dividends.
And nevertheless advantages of joint-stock company nevertheless outweigh lacks. That is why this form more and more extends in business sphere, pushing aside on a background other kinds of corporations.
Perspectives of Joint-Stock Companies.
In the long term joint-stock companies also will remain further the most attractive pattern of ownership. It is connected by that the increasing influence is rendered by the large companies which are easier for creating to a group of persons as they possess the big capital and influence in a society.
The big prospects are assigned to the joint-stock property of workers (Employee Stock Ownership Plan - ESOP) which does workers of the joint-stock company, owning actions interested in result of their work that does ESOP favorable to all holders of actions. As such joint-stock companies are rather effective and perspective I have decided to devote enough most part of the head.
In an estimation of potential of the joint-stock property of workers it is necessary to pay attention to the purposes reached at introduction ESOP, first of all. We will notice that there are some groups of such purposes.
For owners of the company the structure of the purposes includes:
- strengthening of interest of the personnel of the company in its steady, long-term and effective work, formation of its responsibility for results of joint work;
- reduction of number and depth of conflicts between workers and management;
- expansion of possibilities for self-financing of business at the expense of decrease in tax burden;
- restriction of possibilities for hostile absorption;
- formation of a steady layer of long-term investors - insiders.
For workers interest to ESOP is connected with acquisition of the right by them on the action at the expense of the company, and also on dividends and management. The future compensatory payments of cost of actions belonging to the worker at its leaving on pension have special value. On occasion the repayment of the enterprise for prevention of its closing becomes such purpose.
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The state, initiating process of creation of the property of workers, pursues some the purposes. For the federal government an overall objective is formation of the financial mechanism additional (to state) a provision of pensions of working citizens. Encouraging employers to transfer to workers of actions of the enterprise with their subsequent repayment at them at leaving on pension, the state aspires to reduce probability of that the budget will appear a unique source of the income for a considerable part of the future pensioners. For the regional authorities the main interest consists in preservation of workplaces and the enterprises, as tax bearers.
Joint-stock companies have passed a long way in the development, considerably having accelerated development of all economic, and now are one of the most widespread and effective patterns of ownership with simple plans of functioning and the big prospects.