Applicability of Joint Stock Companies to Different Kinds of Business

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The suitability of a Joint Stock Company depends upon the nature of operation of the organisation. If the operations are to be such that huge capital investments are to be anticipated, the most ideal form of organisation would be company form of organisation, as it would be easy to raise funds.

The areas of operations, however, are not restricted. The company form of organisation is suitable to the manufacturing and trading units, service industry, financial sector or any corporate sector.

Limited liability to members, large scale operation, huge capital requirements, greater managerial skills and continuity in operations are attributes which can be present only in the company form of organisation.

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Applicability:

1. It is suitable, if large scale operations are to be undertaken.

2. It is suitable when greater managerial skills are needed.

3. It is suitable for an organisation which intends to exist for a long period of time.

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4. It is suitable when greater capital is required for business operations.

5. It is suitable when the owners want to have limit to the liability in case of losses incurred by the organisation.

6. It is suitable for both manufacturing and trading unit as well as service industry.

7. It is suitable for non-profit organisation.

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8. It is suitable for the financial and corporate sector organisation.

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