Question

What advantages does a joint stock company enjoy over other forms of business organisations?

Answer 1

A joint stock company enjoys several advantages over sole proprietorship and partnership:

1. Large Capital: Can raise huge funds by issuing shares to many investors.
2. Limited Liability: Shareholder’s liability is restricted to unpaid value of shares.
3. Perpetual Succession: Company continues despite death or insolvency of members.
4. Efficient Management: Companies can appoint experienced and professional management. Managerial abilities are limited in sole proprietorships and partnerships.
5. Transferability of Shares: In public companies, shares can be easily bought and sold on the stock exchange, however in partnerships, transfer requires the approval of all partners.
6. Economies of Scale: Large-scale operations reduce costs and increase competitiveness.