Question

Merits and demerits of joint stock companies

Answer 1



Merits of Joint Stock Company. Huge capital: Joint stock company has an association of various persons. It hasmerits of huge capital because different member invests a large amount of capital. ... Limited Liability: Limited liability is the significance ofjoint stock company.

Answer 2

*merits *

1- Limited liability - limited liability of shareholder reduces the degree of risk Borne by him.

2-Transfer of interest - easy transferability of shares increases the attractiveness of share for investment

3- Shares transfer Facility- any shareholder for public company can transfer his share freely without the approval of other members

4- Continuity - the Existence of the company is separate from its member .There is no effect on its life in case of death of the shareholder ,their bankruptcy Or their Madness

5-scope for growth and expansion - there is every possibility of growth and expansion in the company business because of sufficient capital, sufficient management capability and limited liability

*demerits*

1 - Difficulty in formation- the formation of a company is in itself a very difficult and expensive activity

2- lack of Secrecy - according to the companies at a public company has got to public its account and deposit many important document in the office of registrar

3- lack of motivation- divorce between ownership and control and absence of a direct link between efforts and reward leads to lack of personal interest and incentive

4- delay in decision making - read papsim and bureaucracy do not permit quick decision and prompt action .there is a little scope of personal initiative

5- Excessive government control- excessive government control is another drawbacks of the Company organisation