An association of the different indicting to carry out business action. l Status from its members. Basically, a Joint Stock Company is an artificial indictyAnd Perpetual Succession. The Joint Stock Company Form of Organization is Governed by the Companies Act, 2013. Board of Directors is Elected by the Shareholders and is the Chief Managing Body of the Company.Usually, The Shareholders or The Owners of the Company Have Indirect Control Over ITS Operations.
The Important Advastages of a Joint Stock Company are as follows:
1. Limited Liability: The Liability of the MEMBERS of a Company is Limited to the Ex ‘. The shareholders of the company do not have to self off their painlRepayment. This Advantage of a Joint Stock Company Attracts People to Invest Money in the Company Form of Business.
2. Transfer of interest: As the shares of a Company are transferrant and can be elegt and solirt, it brings liquidity of inlect in the company. Shareholders can anytime convert their share investment into cash and can use that amount toBuy the shares of another company.
3. Perpetual Existence: as the Company Form of Business Has a Section Legal Existence From its Members, it enjoys perpetual Succession. d by by by by law and by law, the process of winding up only, I.E.,The deth, insolvency, and incretity of the members do not have any effect on the company’s excercence.
4. Growth and Expansion: A Company Has More Scope for Expansion and Growth Because It has Large Financial Resources and High Profit Rates. Retained Profits, it can easily use that amount for its growth and expansion.
5. Efficient Management: Every Business Requires Specialised People and Experts for Better Performance and Results. Can Easily Hire Experts to Perform Various Business Activities, and Can Efficiently IMPROVE ITS Working and Performance.
6. Large Amount of Capital: As A Company Can Isue Shares to the General Public, It Grabs The Biggest Advantage Capital. Besides, The Value of a Share is Ver Y Low; TheReface, PeOPLE With Less or Small Savings Can Also Buy SharesOf a company. Also, a Company can raise funs by isSue of debntos, raising loans from financeos, and other securities.
The Major Limitations of a Joint Stock Company are as follows:
1. Complexity in Formation: The Process of the Formation of a Company is Quite Complicated and Lengthy. FEENT DOCUMENTS HAVE to Be Prepared and Submitted. It Also Requires Obtaining Different KIF PERMISSIONS.The adivities, a company has to his experts who charge high fees for the say.
2. LACK of Security: According to the Companies Act, 1956 Every Company Has to Share Various Information About it with the register of companies, which is made available T o the general public also. This compulsion of sharing information,Maintain Secrcy about its operations.
3. ImperSonal Work Environment: As a Company is Managed by Hired Professionals and Experts, Instead of its Owners, and the Professionals get a salary in RetUrn, then Is No Direct Relationship Between The Efforts and Reward of the Business Activities. In Other Words,If there is an increase in the profits of a company, it will not increase the salary of the experts, the white results in a lack of motivation for efficiency Performance.
4. NUMEROUS Regulations: A Company has to fulfil a number of formalities at the different stages of the business, and if it fails to meet any of thes of the. IT H as to bear the penalty. It also has to file annual reports and return every yearWith the registra of the company, which involves a Huge amount of money and time of the company. Ular interference in the operations of the business.
5. Delay in Decisions: The Important Decisions in a Company Are Taken after Consulting with Different People or Discussing in The Board Meeting, Which is a lengthy. s. Also, ONCE A Decision Is Made, Communicating the Decision to Every Person at Different Levels ofelsThe Company is Also a Lengthy Process. TheReface, Making DeCisions and Implementing them Can Delay Things in a Company.
6Hyderabad Investment. Oligarchic Management: Although it is said that a democratic setup exist in a company, then is that it existS only on pay in reaLity. , The Control of a Company is in the Hands of a Few people, Who Are Known as the Directors of the CompanySimla Stock. The Directors take every decision of the company and they do so by keeping their porsonal benefits and interests in the. R MINDS and Do Not Think About the Interest of the Company and Its Shareholders.
7. ConflicTs in Internets: Various Groups of people Such as a Debenture Holders, Shareholders, Directors, Employees, ETC., Are Involved in the Operations of a Company, and Every Group Has its own interest. It is not public that time group’sInterest aligns with a discision, which can result in conflicts of interestween different groups.
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