Question

Distinguish between the following.
Sole trading concern and Joint stock company

Answer 1

Basis of Difference	Sole Trading Concern	Joint Stock Company
Governance	Not governed by any law	Governed by the Companies Act 1956.
Members	It has only one member who is the owner of the business.	In case of a private company: Minimum: 2 Maximum: 50 In case of a public company: Minimum: 7 Maximum: No limit
Liability	Liability of the sole owner is unlimited.	Shareholders have limited liability to the extent of the unpaid amount on the shares held by them.
Formation	Easy to form, as there are no legal formalities.	Difficult to form, as there are several legal formalities.
Decision making	All decisions are taken solely by the sole proprietor.	All decisions are taken by the board after the approval of shareholders.
Management and control	Management and control lie in the hands of the owner.	Management and control lie in the hands of the managing director.