Advantages of Joint Stock Companies

Large financial resources:
A joint stock company is able to collect a large amount of capital through contributions from a large number of people. In a public limited company, shares can be offered to the general public to raise capital. The companies can also accept deposits from the public and issue debentures to raise funds.

Limited liability:
In case of a joint stock company, the liability of it's members is limited to the value of shares held by them. Private property of members cannot be confiscated for overcoming the debts of the company. This advantage attracts many people to invest their savings in the company and it encourages the company to take more risks.

Professional management:
Management of a company is in the hands of the directors, who are elected democratically by the members or shareholders. These directors are known as the "Board of Directors". They manage the affairs of the company and are accountable to all the investors. So, the investors elect capable persons who have sound financial, legal and business knowledge to the board so that they can manage the company efficiently.

Large-scale production:
Since there is an availability of large financial resources and technical expertise, it is possible for the companies to have "large-scale" production. This enables the company to produce more efficiently and at a lower cost.

Research and development:
Only in joint stock company form of business, it is possible to invest a lot of money on research and development so that new design, better quality products, etc. can be achieved.

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Table Of Contents

  1. How to incorporate?
  2. Understanding Sole Proprietorships
  3.   - Advantages of Sole Proprietorships
  4.   - Disadvantages of Sole Proprietorships
  5.   - What kind of business is suitable for Sole Proprietorships?
  6.   - How to start a Sole Proprietorship business?
  7. Understanding Partnerships Business
  8.   - Advantages of a Partnership Business
  9.   - Disadvantages of a Partnership Business
  10.   - Different types of partnership firms
  11.   - Business suitable for Partnerships legal structure
  12.   - How to form partnership deeds & start a partnership firm?
  13. Understanding Joint Stock Companies (Private & Public Ltd.)
  14.   - Advantages of Joint Stock Companies
  15.   - Disadvantages of Joint Stock Companies
  16.   - Business suitable for Joint Stock Companies
  17.   - Procedure to start a Joint Stock Company? (Incorporation)