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Class : 11
Unit : Business


Explain the merits of joint stock company.

Ans : The merits of joint stock company are explained below: i) Limited liability:- The liability of the shareholder is limited to the extent of the value of shares held or the amount. ii) Managed by representatives:- The management of the company is done by the representatives of shareholders known as members of board of directors. The boards of director are the elected representative of shareholders. iii) Transferability of shares:- The shares of Joint Stock Company are easily transferable to the third party without prior permission from company management. It cannot dissolve the company. iv) Perpetual existence:- A joint stock company continues to exist as long as it fulfills the requirements of law it is not affected by the death, lunacy, insolvency or retirement of its shareholders. v) Publication of financial statements:- A joint stock company should publish its audited financial statements early in renowned national newspaper. This statement helps to provide information to general public. vi) Public faith:- People have faith in all joint stock company. It has an obligation to discuss the financial documents to annual general meeting. The public believe in joint stock Company because of accounts disclosed. vii) Employment:- Joint Stock Company provides employment to a large number of people directly and indirectly. This leads to higher national income for the country and higher living standard of living for the people. viii) Easy to obtain loan:- For the knowledge of general people and shareholders joint stock company published financial statement at the end of fiscal year. It is helpful to obtain goodwill and reputation in the market. Therefore, the company can obtain loan from Bank in easily.
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