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Explain the merits of joint stock company.

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Merits of Joint Stock Company:

1. Huge capital: A joint stock company has an association with various persons. It has the merits of huge capital because different member invests a large amount of capital. When there is a lack of capital in a joint stock company it can issue the shares to the public. Hence, huge capital can be collected when shares are issued.

2. Perpetual existence: A Joint stock company has a separate legal existence. The life of a joint stock company is not affected by death, lunacy, and insolvency of the members. Therefore, a joint stock company has a long-term life. Even if there are any changes in management, the board of directors or some member may come or go, the function of the company is not affected.

3. Limited Liability: Limited liability is the significance of a joint stock company. The shareholders should not pay the excess debt of the company by selling their private/personal property. Shareholders are liable up to the invested amount. Due to the provision of limited liability potential investors are attracted by a joint stock company.

4. Transfer of shares: A joint stock company has the provision of free transfer of shares. No one is compelled to join and leave the company. Permission or mutual consent is not needed to transfer the shares of a joint stock company.

5. Democratic management: A joint stock company has democratic management. It is managed by the majority of shareholders who elect the board of directors. They are responsible for managing the activities of a joint stock company. Competent members are elected from election to manage the company. Thus, democratic management can be seen in a joint stock company.

6. Public faith: People have faith in a joint stock company. It has an obligation to disclose the financial documents to the Annual General Meeting. The banks and the financial institutions believe in a joint stock company because of the accounts disclosed.

7. Large-scale operation: A Joint stock company has an association with different managerial skill because different members are associated with it. Due to the sufficient capital and competency of the members (directors)joint-stock company has the possibility of a large-scale operation. Hence, a joint stock company has a large-scale operation.

8. Social importance: A joint stock company is also a social creature. So, it invests amount for the betterment of society. It invests its capital in various sectors such as health, education, sports and so on. Hence, a joint stock company has a responsibility to society.

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