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Question
State true or false.
The ownership and management is not separated in a Joint Stock Company.
Options
True
False
Solution
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.
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