Question

Justify the following statement.

There is more Government control and supervision over the working of Joint Stock Company.

Answer 1

(1) As per the provisions of the Companies Act 1956, the registration is compulsory for every joint stock company. For registration, various legal documents and statements are required to be submitted to the Registrar of the Companies which is one of the government bodies. The Government keeps strict control on the Joint Stock Company to protect small investors as they are unable to Protect their financial Interest. Every company is required to follow the provisions of the Companies Act 1956. Thus, there is excessive statutory control right from the stage of its incorporation up to the stage of its winding up.

(2) A company has to prepare its Profit and Loss Account, various financial statements, and Balance Sheet and get them audited from the company’s auditors. The audited annual accounts, annual returns, financial statements, and reports are required to be filed with the registrar. They are also required to be published. A company has to prepare and maintain certain statutory books and proper books of accounts. The non-compliance of any of those rules or provisions results in penalties of a higher amount.