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Question
Justify the following statement:
The company has a distinct feature of separate ownership and management.
Solution
(a) In a joint-stock company, though shareholders are the owners, the management of the affairs 0f the company is entrusted to the Board of Directors’ The shareholders cannot participate in the management because they are too large in number5 and are scattered over a wide area.
(b) Shareholders lack the necessary business skill and experience. They are mainly interested in the returns on the shares held by them. The sense of proprietorship of the shareholders is lost due to the changing membership from one shareholder transferor) to another (transferee). Thus, in a joint-stock company, the ownership remains with the shareholders and the management with the Board of Directors.
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