Question

State demerits of Joint Stock company.

Answer 1

♦♦♦♦♦♦♦♦ Hey ♦♦♦♦♦♦♦♦♦

Here is your answer,⬇⬇⬇⬇

▶Disadvantages of Joint Stock Company:

1. Formation is not easy : To act as a legal entity a company has to fulfill various legal and procedural formalities making it a complicated process.

2. Double Taxation : This is the biggest disadvantage which the company faces. Firstly, company needs to pay tax for the earned profits and again the shareholders are taxed for the earned income.

3. Control by Board of Directors : After electing directors of the company which manage the business for the company the shareholders become ignorant of their responsibilities. This may be due to lack of interest and lack of proper and timely information.

4. Excessive Government Control : A company has to comply with provisions of several acts, non-compliance of which can cause a company heavy penalty. This affects the smooth functioning of a company.

5. Delay in Policy Decisions : All the legal and procedural formalities which are required to fulfill before making policies of the company delay the policy decisions.

6. Speculation and Manipulation: As the shares of a joint stock company are easily transferable thus the shares are purchased and sold in the stock exchanges on the value or price of a share based on the expected dividend and the reputation of the company.

Hope it helps you!

Answer 2

ANSWER

______________________________________

Demerits of joint stock company are as follows :-

•Legal formalities :- formation of a company is a time consuming and expensive process to many legal formalities have to be observed and several legal documents have to be prepared and field delay information Mein deprived the business from the momentum of an early start.

•corrupt Management :-In accompanied there is often danger of fraud and misuse of property by dishonest management bogus companies may be formed to deprive the investors of their hard earned money.

______________________________________