Explain any two merits and two demerits of joint stock company.
please give correct answer
Answers
A joint stock company has an association with various persons. It has the merits of huge capital because different member invests a large amount of capital. When there is a lack of capital in a joint stock company it can issue the shares to the public. Hence, huge capital can be collected when shares are issued.
Answer:
A company can collect large sum of money from large number of shareholders. There is no limit on the number of shareholders in a public company. (2) Limited Liability : The liability of shareholders in a company is limited to the face value of the shares they have purchased.
Joint stock company has demerits of difficult legal formalities. It is difficult to establish and run. It has to follow difficult legal formalities in comparison to sole trading and partnership firm. The legal formality also cost some amount of money.