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Saturday, 4 June 2011

Advantages of Joint Stock Company


Following are the important advantages of Joint stock company :

1. Expansion of Business :-
A joint stock company sells the shares bonds and debentures on large scale. So it can collect a large capital and can expand its business.

2. Limited Liability :-
In case of loss the liability of the shareholders is limited to the amount, they have invested. So their private property remains safe in case of loss.

3. Transfer of Shares :-
The share of the public company can be easily transferred or disposed off. There is no restriction on it.

4. Larger Capital :-
There is no problem of capital shortage in this business organization. Because there is no limit for maximum number of members. So it collects the capital from all the people rich and poor.

5. Durability :-
This type of organization is more stable and durable because the life of company is not affected by the death or insolvency of any member.

6. Economics of Large Scale :-
The company increases the size of business and enjoys all the economies on large scale.

7. Increase in Saving and Investment :-
The shares are in large number but their value is small. So rich and poor both can purchase the shares. To earn maximum profit people save more money to invest in the joint stock company.

8. Better Management :-
A joint stock company is administrated by the elected directors. These are generally experienced and qualified people, so efficiency of the company improves.

9. Experts Services :-
Due to sound financial resources a joint stock company may hire the services of qualified and technical experts.

10. Provide Employment :-
Joint stock company are paying very effective role in reducing the unemployment in the country.

11. Flexibility :-
There is flexibility in this business. New changes can be made easily with the changing circumstances.

12. Public Confidence :-
An experience auditor is appointed to audit the income and expenditure of the company. So the chances of fraud if are less in the joint stock company. So this type of business can easily win the public confidence.

13. Higher Profits :-
Due to the availability of large capital and technical skill cost of production reduces. It increases the rate of profit.


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