Class 11 Exam > Class 11 Videos > Advantages/Merits of Joint Stock Company-CBSE/NCERT Class 11 Business Studies,HSC,Class 12
Advantages/Merits of Joint Stock Company-CBSE/NCERT Class 11 Business Studies,HSC,Class 12 Video Lecture
FAQs on Advantages/Merits of Joint Stock Company-CBSE/NCERT Class 11 Business Studies,HSC,Class 12 Video Lecture
| 1. What is a joint stock company? |  |
Ans. A joint stock company is a form of business organization where the capital is divided into shares and the liability of the shareholders is limited to the extent of the face value of the shares they hold. It is governed by the Companies Act and can have a large number of shareholders.
| 2. What are the advantages of a joint stock company? | |
Ans. The advantages of a joint stock company are:
1. Limited Liability: Shareholders are liable only to the extent of the face value of their shares, providing them with limited liability protection.
2. Large Capital Base: Joint stock companies can raise a large amount of capital by issuing shares to the public, enabling them to undertake big projects.
3. Transferability of Shares: Shares of a joint stock company can be easily bought and sold in the stock market, providing liquidity to the shareholders.
4. Professional Management: Joint stock companies can hire professional managers who have expertise in running the business, leading to efficient management.
5. Perpetual Existence: A joint stock company has a separate legal entity from its shareholders, ensuring its continuity even in the event of the death or withdrawal of shareholders.
| 3. How can a joint stock company raise capital? | |
Ans. A joint stock company can raise capital through the following ways:
1. Issue of Shares: A company can issue shares to the public and raise capital by selling these shares.
2. Issue of Debentures: Debentures are long-term borrowings by a company. A company can issue debentures to raise capital.
3. Retained Earnings: A company can retain a portion of its profits and use it as capital for future expansions.
4. Loans from Financial Institutions: A company can raise capital by taking loans from banks or other financial institutions.
5. Issue of Bonds: A company can issue bonds and raise capital by selling these bonds to investors.
| 4. Can a joint stock company have unlimited liability? | |
Ans. No, a joint stock company does not have unlimited liability. The liability of the shareholders in a joint stock company is limited to the extent of the face value of the shares they hold. This means that if the company faces financial losses or liabilities, the shareholders are not personally liable beyond their investment in the company.
| 5. What is the legal status of a joint stock company? | |
Ans. A joint stock company has a separate legal entity from its shareholders. It can sue and be sued in its own name, enter into contracts, and acquire or dispose of property. The company's shareholders are not personally liable for the company's debts or actions, except to the extent of their investment in the company.
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Nov 08, 2024 Last updated |
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