Question

“In a joint stock company, the liability of the members are unlimited.” Justify this statement against and give a reason.

Answer 1

No, in a joint stock company the liability of the members is not unlimited because the company exists separately from its shareholders. Members are solely responsible for the unpaid value of their shares, nothing more. If a shareholder owns ₹ 10,000 shares and has already paid ₹ 8,000, their obligation is restricted to the remaining ₹ 2,000.

Thus, the liability of members in a joint stock company is limited, which safeguards their personal assets and promotes greater public investment.