3/12/2021 0 Comments Ppt On Joint Stock Company
This is granted after a long time when all the formalities are completed. 2. Reckless Speculation Encouraged: This form of organisation encourages reckless speculation in shares at stock exchanges.
![]() A very large number of people acquire interest in the company by purchasing shares. No other form of business organisation is so well adopted in raising large amounts of capital as the Joint Stock Company. Vast Scope of Expansion: The vast capital collected by means of shares coupled with the earnings of the company contribute sufficient scope for its expansion. The company offers an excellent scope of self-generating growth. The managerial talents supported by vast finance leads to huge earnings and to ultimate expansion of the business and growth. Limited Liability: The liability of the members of the company is limited. Members cannot be called upon to pay anything more than the nominal value of the shares held by them. ![]() Permanent Existence: The life of the company does not depend on the life of its members. The death, insolvency or the transfer of shares of members does not, in any way, affect the existence of the company. The company is listed with the Stock Exchange and hence companys shares are readily sold and purchased. As shares are freely transferable, a shareholder can convert his holding into cash. This facility coupled with the limited liability has an encouraging investment by general public. Democratization of Ownership: ADVERTISEMENTS. While it permits all types of people, big or small, venturesome or cautious, to become part owners, it permits the use of skill and initiative of the able entrepreneur, his expert knowledge and business ability which would otherwise be lost to the community. Diffused Risk: The risk of loss is to be shared by the large number of shareholders and the possibility of huge hardship on few persons as in the case of partnership or sole trader does not exist. Moreover, the risk of loss is also limited to the extent of the value of share. There is no need for the wealthy men to bear the burden of the business as large capital can be collected from far and wide, and from rich and poor, controlled under one management. Organized Intelligence: ADVERTISEMENTS. The skill and flexibility of administration is enhanced as a result of limited liability and entity idea. The wisest and the most skillful directors may be chosen and one found inefficient or indifferent could be removed. The company being independent on any single man, the organized intelligence of the Board of Directors and other top managers is available for sound and bold policies. Tax Relief: A company pays income-tax as a separate legal person at a flat rate fixed by the Finance Act from year to year. In case of higher incomes, the- rate is lower than that charged in case of sole proprietors and partners. Social Advantage: The social advantage of company form of organisation is that it affords employment to so many persons, produces articles which otherwise would have been imported and affords opportunity to middle and lower class of people to become members of the company and earn profits. Disadvantages of Joint Stock Company: Despite so many advantages it has got many disadvantages which are as follows: 1. Difficulty in Formation: ADVERTISEMENTS: The legal requirements and formalities required to be completed are so many. It cannot start its business unless certificate of incorporation has been obtained. This is granted after a long time when all the formalities are completed. Reckless Speculation Encouraged: This form of organisation encourages reckless speculation in shares at stock exchanges.
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