Question

The ownership and management are not separate in Joint stock company. (State with reason whether the given statement is true or false)

Answer 1

Ans.The above statement is False.


(i) The shareholder in the company is large and they are spread all over the country. Therefore, they cannot take part in the day to day routine business of the company.


(ii) Therefore, the management of the company is done professionally by experts who are the representatives of the shareholders are called the board of Directors.


(iii) Further, these shares are easily and freely transferable in public limited company. The shareholder does not have to take permission of other shareholders or the company before transfering the shares. Therefore, the membership of the company keeps changing on frequently.


(iv) Hence, shareholders appoint their representative i.e. the Board of Directors who handles the management on their behalf. Thus in joint Stock company management and ownership is separated.

Answer 2

ANSWER: TRUE

As it is a joint stock company, all the investment and profit are always shared among the people who invests and are called investors.

Even the loss of a promotion or product must be shared among them.

There is no prioritization on any factor for a member in the company.

All are given equal share with no partiality.