Write short notes on the following. Merits of Joint stock company.

ANSWER:

Merits of a joint stock company:

i. Limited liability: The liability of the shareholders is limited to the amount paid by them for the shares purchased.

ii. Perpetual existence: A company is a separate legal entity that cannot come to an end by itself. It continues to operate even after the death of its members.

iii. Professional management: A joint stock company hires professionals and specialised managers for handling complex operations. Thus, increasing efficiency.

iv. Transferability of shares: The ownership of shares is freely transferable in a company.  This acts as an incentive for investors to invest in the company.

v. Huge capital: The capital can be easily expanded by issuing new shares.

vi. Sharing of risks: The risks in a company are jointly shared by all shareholders. This reduces the burden on a single shareholder.