Outline the merits of a Joint Stock Company.

Explanation

Merits of a joint stock company are:

(i) There is a perpetual existence because the death of any shareholder does not affect the business.

(ii) It has enough capital to engage specialists.

(iii) Joint stock company operates on a large scale and therefore enjoys the economies of large scale.

(iv) The company enjoys limited liability. The shareholders' liability is limited to the amount of shares held or agreed to purchase.

(v) It is a separate legal entity: It can sue and be sued as a corporate body.

(vi) The company can raise large capital by offering shares to the public.

(vii) It can easily raise loans, e.g debentures.

(viii) There is no limit to expansion.

(ix) There is democracy in its management: Shareholders are entitled to attend the annual general meeting and in the election of members of board of directors they have equal right to vote and be voted for.

(x) There is greater opportunity to undertake research programmes.