Merits or advantages of joint stock company can be studied as follows:
1. Limited Liability
In joint stock company shareholders' liability is limited to the amount of share they invest in the business. So, their personal property will not be used to pay the debt and other liabilities of the business in case of loss.
2. Perpetual Existence
Joint stock company is stable and long lasting form of business (as compared to sole proprietorship and partnership firm). The death, lunacy, or insolvency of the shareholder does not affect the existence of the company.
3. Easy Transfer of Share
A shareholder of joint stock company can easily sell or transfer the right of share to any one without any restriction.
It can raise large amount of capital by issuing equity share and by taking long-term loan from banks and other financial institutions. So, the company does not suffer from the limitations of inadequate capital.
5. Scope Of Expansion
Because of huge capital resources and better management, large scale production is possible. So there is a scope of future growth and expansion.
6. Efficient Management
Joint stock company is run by experienced, skilled and talented professionals. It helps to increase the efficiency of management.
Also Read:
Also Read:
7. Economic Development
A joint stock company collects and mobilizes scattered savings, promotes industrialization, and creates employment opportunities in the society. So, it plays significant role in the economic development of the country.
8. Flexibility
A company has the ability to cope with both internal and external business environment. Changes or modification in working pattern can be made as per the situation. So, joint stock company is a flexible type of business organization.
