Question

13) Discuss the various

limitations of joint stock
company.​

Answer 1

Answer:

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Explanation:

1 . Costly and difficult to form: Number of legal formalities must be observed by the promoters of the company.

2 . Nepotism: Directors and managing agents may appoint their own relatives as the important officers of the company.

3 . Lack of interest: The officers of the company do not have

incentive to work hard. They are not usually inclined to take risks. They lack initiative.

4 . High taxation: Joint stock companies have to pay tax at higher rates compared to other forms of organizations.

5 . Delay in decisions:There will be great delay in making decisions. As a result, profitable opportunities may be missed.

6 . Excessive government controls: A company has to submit many statements and returns to the government. There are many inspections and formalities of submission of records, especially

in the case of manufacturing companies. Excessive government control leads to waste of time, money and loss of freedom.

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