Explain the advantages and disadvantages of a joint stock company as a form of business...
Explain the advantages and disadvantages of a joint stock company as a form of business organization.
Explanation
Advantages of Joint Stock company are:
(i) There is easy transfer of shares.
(ii) There is continuity of existence.
(iii) There is limited liability of shareholders.
(iv) Access to larger capital (in the case of a PLC, sales of shares, stocks and debentures).
(v)It has separate legal entity, which makes it possible for the enterprise to sue and be sued in its own name.
(vi) It enjoys internal economies since it can produce on a large scale.
(vii) Joint stock company attracts men of ability and skill to work for it.
Disadvantages of Joint Stock company are:
(i) Less flexibility arising from size.
(ii) There is high cost of incorporation.
(iii) Due to its size, there may be delays in the making of decisions.
(iv) Separation of ownership from control.
(v) Shareholders' interest not always identical with those of paid managers who exercise the function of control.