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| 1. |
advantage s and disadvantages of joint stock company |
| Answer» <p>Advantages of a Joint Stock Company</p><p>One of the biggest drawing factors of a joint stock company is thelimited liability of its members. their liability is only limited up to the unpaid amount on their shares. Since their personal wealth is safe, they are encouraged to invest in joint stock companies</p><p>The shares of a company aretransferable.Also, in the case of a listed public company they can also be sold in the market and be converted to cash. This ease of ownership is an added benefit.</p><p>Perpetual successionis another advantage of a joint stock company. The death/retirement/insanity/etc does affect the life of a company. Only liquidation under the Companies Act will shut down a company.</p><p>A company hires a board of directors to run all the activities. Very proficient, talented people are elected to the board and this results in effective and efficient management. Also, a company usually has large resources and this allows them to hire thebest talent and professionals.</p><p>Disadvantagesof a Joint Stock Company</p><p>One disadvantage of a joint stock company is the complex and lengthy procedure for itsformation. This can take up to several weeks and is a costly affair as well.</p><p>According to the Companies Act, 2013 all public companies have to provide their financial records and other related documents to the registrar. These documents are then public documents, which any member of the public can access. This leads to a completelack of secrecyfor the company.</p><p>And even during its day to day functioning a company has to follow a numerous number of laws,regulations, notifications etc. It not only takes up time but also reduces the freedom of a company</p><p>A company has many stakeholders like the shareholders, the promoters, the board of directors, the employees. the debenture holders etc. All these stakeholders look out for their benefit and it often leads to aconflict of interest.</p> <p>is democratic set up is advantage</p> | |