Merits of joint stock company. MERITS OF JOINT STOCK COMPANY 2018-12-26

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What are the merits and demerits of Joint Stock Company?

merits of joint stock company

Transferability of Shares : -Shares of the Joint Stock Companies can be easily transferred. Advantages of Joint Stock Company: The joint stock company type of organization has become very popular throughout the world because of many advantages. A corporation is legally a citizen of the state or other jurisdiction in which it is incorporated except when circumstances direct the corporation be classified as a citizen of the state in which it has its head office, or the state in which it does the majority of its business. Perpetual lifetime Another advantage is that the and structure of the corporation may continue beyond the lifetimes of its shareholders and bondholders. Closely held corporations have some advantages over publicly traded corporations. Ease of transfer of ownership: It permits its member to easily transfer their shares and get out of the venture as and when they so choose. If the company is unable to pay the creditors then the shareholder won't pay anything more than what is to be paid to the company.

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Characteristics and Merits & Demerits of Joint Stock Company

merits of joint stock company

Following are the advantages of Joint Stock Company: 1. Large amount of capital is necessary for conducting business on a large scale. When they want to purchase the shares they lower the rate of dividend and when they want to dispose of the shares they declare dividends at a higher rate. Every member of a partnership firm is an agent of the firm and also of the other members. A joint stock company can avail some merits over other forms of business organisations.

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8 Important Merits of Joint Stock Companies

merits of joint stock company

As a result of these types of waste many places experience loss of potable water, loss of local animal populations, and the spread of disease and infection. This may encourage the managing director and directors to manipulate the shares on the stock exchange in their own interest to the detriment of the majority of shareholders. Sending report regularly to the registrar of companies, maintenance of statutory books, this will help to create Public confidence in this form of organization. Again, there may be disputes between the directors and shareholders. The Board of Directors are professional managers who efficiently look after the management and control of the organisation. To a greater extent, after the completion of construction, tourists as a group consume a tremendous amount of natural resources and produce an equally tremendous amount of waste.

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8 Important Merits of Joint Stock Companies

merits of joint stock company

Thus, the risk is known and estimated. The over production of waste is an ever-present threat to tourist communities. Large scale operation: Joint stock company has an association of different managerial skill because different members are associated with it. Profit and Loss Accounts and Balance Sheet are required to be published. As the procedure of the meeting is lengthy and time consuming. Lack of interest: The officers of the company do not have incentive to work hard.

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Joint Stock Company: Definition, Features, Advantages and Disadvantages

merits of joint stock company

They may misuse their power and position. Limited liability: Shareholders of a company are liable only to the extent of the face value of shares held by them. The merits of Capitalism are not theoretical, Capitalism give each individual the ability to be rewarded for their effort to whatever degree they can rise to. Limited liability reduces the amount that a shareholder can lose in a company. The banks and the financial institutions believe in a joint stock company because of the accounts disclosed. Public confidence: A public company the confidence of public because its acĀ­tivities are regulated by the government under the Companies Act. Further, the shareholders are not the agents of the company and a shareholder cannot bind them by his acts.

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Advantages & Disadvantages of Joint Stock Company

merits of joint stock company

The speculators try to fluctuate the prices of shares according to their suitability. Public confidence: A company is under a statutory obligation to make public its activities through accounts and annual reports. The management of the company is done professionally by experts who are the representatives of the shareholders are called the board of Directors. A company and the management have to function well within the law and the provisions of Companies Act are quite elaborate and complex. This promotes confidence in the minds of the public. The company form of organisation is democratic both from ownership and management side. Joint Stock Company is simply an artificial person created by law.

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What are the Advantages and Disadvantages of Joint Stock Company?

merits of joint stock company

Limited liability: Limited liability is the significance of joint stock company. . The important decisions are taken by following the principles of democracy in the annual general meeting and the board of director meeting. The managerial talents supported by vast finance leads to huge earnings and to ultimate expansion of the business and growth. It means that the company can own property, make contracts, and file suits in it own name. This is due to no limit in the membership of public limited company. Shareholders, therefore, experience some loss of privacy in return for limited liability.

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Joint Stock Company: Definition, Features, Advantages and Disadvantages

merits of joint stock company

Hence, there is delay in decisions and actions. In such cases, they become widely held organization, with shareholders even worldwide. A considerable time and money of the company is involved in the process of regular compliance. Competent members are elected from election to manage the company. Difficulty in Formation: The legal requirements and formalities required to be completed are so many. Such conflicts reduce employee morale and efficiency of operations.

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