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Question
Write short note on the following.
Merits of Joint stock company.
Solution
Merits of a joint stock company:
i. Limited liability: The liability of the shareholders is limited to the amount paid by them for the shares purchased.
ii. Perpetual existence: A company is a separate legal entity that cannot come to an end by itself. It continues to operate even
after the death of its members.
iii. Professional management: A joint stock company hires professionals and specialised managers for handling complex
operations. Thus, increasing efficiency.
iv. Transferability of shares: The ownership of shares is freely transferable in a company. This acts as an incentive for
investors to invest in the company.
v. Huge capital: The capital can be easily expanded by issuing new shares.
vi. Sharing of risks: The risks in a company are jointly shared by all shareholders. This reduces the burden on a single
shareholder.
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