Joint-stock companies are typically formed by individuals or groups of individuals who wish to raise capital to start or expand a business. The company's shares are then sold to investors through a public offering or private placement. The proceeds from the sale of the shares are used to finance the company's operations.
Joint-stock companies have several advantages over other forms of business entities. First, they allow for the easy transfer of ownership. Shares of stock can be easily bought and sold on the stock market, making it easy for investors to enter and exit the company. Second, joint-stock companies provide limited liability for investors, which means that investors can only lose the amount of money they invested in the company. Third, joint-stock companies can raise large amounts of capital, which can be used to finance growth and expansion.
However, joint-stock companies also have some disadvantages. First, they can be more complex to form and operate than other forms of business entities. Second, they can be subject to more regulation than other forms of business entities. Third, the interests of shareholders may not always align with the interests of the company's management team.
Overall, joint-stock companies offer a number of advantages and disadvantages. They are a popular choice for businesses that need to raise capital and that want to provide limited liability for investors.