Explain, why the joint stock company form of business organisation is advisable to undertake huge and risky projects.
Answers
Explanation:
1. Difficulty in Formation 2. Lack of Secrecy 3. Delay in Decision Making 4. Concentration of Economic Power 5. Lack of Personal Interest 6. More Government Restrictions 7. Incapable and Unscrupulous Management 8. Undue Speculation in the Shares of the Company 9. Impersonal Work Environment 10. Numerous Regulations
11. Oligarchic Management 12. Conflict in Interests 13. Lack of Motivation and Personal Touch 14. Social Evils 15. Separation between Ownership and Management 16. Fraudulent Promotion and Management 17. Adverse Impact of Large Scale 18. Lack of Continuity 19. Lack of Secrecy and a Few Others.
Answer:
(b) Limited Liability: In a joint stock company the liability of its members is limited to the extent of shares held by them. This attracts a large number of small investors to invest in the company. It helps the company to raise huge capital. Because of limited liability, a company is also able to take larger risks.