The Industrial Revolution created the modern factory system involving production on a very large scale. Mass production requires huge capital investment and expert professional management. It also involves heavy risk. Sole proprietorship and partnership forms of organisation could not meet these requirements due to shortage of funds, lack of stability, owner-oriented management and unlimited liability. Joint Stock Company was evolved to meet the requirements of the factory system. Thus, the company form of organisation came into existence due to the defects of proprietorship and partnership forms of business organisation.