Company form of business organisation has become very popular due to the following reasons:
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. 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.
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2. Limited liability:
The liability of a shareholder is limited to the face of shares held by him. It enables the management of a company to take greater risk and to undertake large scale operations.
3. Stability:
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.
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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:
Risk of loss in a company is divided among a large number of shareholders. The encourages interested persons to become members in a company.
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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:
Company organisation is best suited for large scale business operations. There is unlimited scope for growth and expansion in a company A company^ can secure economies of large scale operations.