Question

explain the four merits. and demerits of joint stock company

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Answer 1

Answer:

Some of merits are:-

1. Limited liability: Shareholders of a company are liable only to the extent of the face value of shares held by them.

2. Large financial resources: Company form of ownership enables the collection of huge .financial resources. The capital of a company is divided into shares of small denominations so that people with small means can also buy them.

3. Continuity: A company enjoys uninterrupted business life. As a body corporate, it continues to exist even if all its members die or desert it.

Some of demerits are:-

1. Unhealthy speculation: The shares of a public company are dealt in on a stock ex­change.

2. Conflict of interests: Company is the only form of business wherein a permanent con­flict of interests may exist.

3. Lack of secrecy: Under the Companies Act, a company is required to disclose and publish a variety of information on its working.

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