What advantages does a joint stock company enjoy over other forms of business organization?

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Company form of business organisation has become very popular because it enjoys the following advantages over other forms of ownership.

1. Accumulation of large funds:

No form of organisation can accumulate as much finan­cial resources as a joint stock company. A public company can have any number of members exceeding seven. Its capital is divided into a large number of shares of small value. People from all parts of the world can buy them.

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Limited liability and transfer­ability of shares motivate people to invest in the shares of a company. Borrowing capacity and credit standing of a company are also higher.

2. Limited liability:

The liability of a shareholder is limited to the face value of shares held by him. It enables the management of a company to take greater risks and to undertake large scale operations.

3. Stability:

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A company is a separate legal entity. It enjoys a continuous and uninter­rupted existence. Therefore, there can be continuity of policy and administration in company form of organisation.

4. Transferability of shares:

Shares of a public limited company are freely transferable. A person can become a member and can withdraw his investment whenever necessary.

5. Divided risk:

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Risk of loss in a company is divided among a large number of sharehold­ers. This encourages interested persons to become members in a company.

6. Better management:

A joint stock company can employ experts to manage its business affairs. It can avail of advantages of specialisation. Therefore, it can ensure efficient and effective management of resources.

7. Expansion and growth:

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Company organisation is best suited for large scale business operations. There is unlimited scope for growth and expression in a company A com­pany can secure economies of large scale operations.

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