Association consisting of more than ten person formed for carrying on a banking business and any association consisting of more than 20 person formed for the purpose of carrying on any business, is to be known as joint stock company
1. Share holders are limited to their shares.
2. More capital
3. Easily transferable share from person to person.
4. Board of directors runs the administration.
5. In public limited company the maximum member’s should be seven and there is no limit for maximum number.
6. In private limited company the minimum numbers should be two and maximum is fifty.
7. Shares of profit are distributed according to their share valve. Some profit is kept reserve for future use
8. Company does not discontinue due to expel of any member due to death, madness etc
9. Change of business is difficult because there are more legal restrictions
10. Every shareholder does not participate directly in the business
11. Company can sell its assets by its name.
Merits of Joint Stock Company
- Large mount of capital
- Limited liability
- Transfer of shares
- Better management
- Large scale business
- Long life
- Encouragement of investment
- Services of experts
- Auditing of accounts
- Experiment and research
- Democratic style
Demerits of Joint Stock Company
- Unsatisfactory management
- Difference of opinions
- Heavy expenses of formation
- Lack of secrecy
- Difference of interest
- Heavy taxes: Tax paid by the company at the time of dividend distribution
- Danger of fraud: From directors
- Relation b/w employer and labors are sometime tense.
- Individual choice is not concerned.