what are the main advantage of joint stock company
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A joint-stock company is an entity or an organization that is owned by all its shareholders. All the shareholders hold a certain percentage of stock in which is represented by shares. Each shareholder who owns stock in a joint-stock company will be given a certificate of ownership as a shred of evidence.
The following advantages of a joint-stock company are:
- Larger Capital - A huge fund is required to start a modern business which could not be possible in a sole proprietorship and even in a partnership. Joint-stock provides creates a huge pool of capital as lots of people invest and gather resources.
- Expansion of business - There is no such hardbound rule of limited members, entry of new members can be easily done by issuing shares.
- Limited liability-The shareholders have to be liable for the risk of the shares they issued, due to which the liability is limited.
- Transferability of Shares- As there are no restrictions in this type of business, shares are easily transfered.These shares are listed on the stock exchange and easily can be sold.
- Tax benefits -This type of business pays taxes on flat rates, does not depend upon the turnover or revenue, the company can maximize profit if they create their business in sub-urban areas.
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As compared to sole proprietorships and partnership firm, a joint stock company can accumulate huge amount of funds. It facilitates the mobilization of savings of millions for the productive purposes. Since its capital is divided into share of small value, even an ordinary investor can contribute to its capital.
Explanation:
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