Q. 14. State the limitations of Joint Stock Company
Answers
Answer:
Explanation:
Excessive government control leads to waste of time, money and loss of freedom. 10. Lack of secrecy: Maintaining secrecy is the most difficult part in any Joint Stock Company. Every matter has to be discussed in the board of directors' meeting or in the annual general meeting of shareholders
Answer:
1. Costly and difficult to form: Number of legal formalities must be observed by the promoters of the company. To observe these legal formalities, promoters have to spend much time and money.
2. Scope for dishonest and unscrupulous management: The directors manage the company with the help of paid officers. If the directors are dishonest, they may make personal gain at the expense of the company. They may misuse their power and position.
3. Management oligarchy: A few rich persons may secure control over the affairs of the company. Thus, the management of a joint stock company might become oligarchic in character.
4. Nepotism: Directors and managing agents may appoint their own relatives as the important officers of the company. Merit may not be given importance.
5. Speculation: A few individuals may corner the shares to gain control over the company.
6. 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.