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Advantages
Advantages of joint stock company are explained below:
i. Limited liability: Shareholders of the company have limited liability which means
they have liability only up to the amount of their capital investment. In case of
liquidation, shareholders are not liable for excess claims even if the liability of the
company is insufficient to pay its debt which encourages many people to invest
in share of Joint Stock Company.
ii. Huge capital: Joint Stock Company can collect large amount of capital by issuing
its shares and debentures to the general public. Since the capital of company is
divided into small units called shares, so all level of people (rich or poor) can
purchase its shares. It can also easily raise funds from various financial institutions.
iii. Transferability of share: The shareholders of Joint Stock Company can sell their
shares to other persons though secondary markets when they are in need of
money. It facilitates liquidity to their investment. This transfer of shares from one
person to another will not affect the management and control of the company.
iv. Economies of scale: Since the Joint Stock Company has large capital, they can buy
the advanced technology and can involve in mass production, distribution, and
promotion of goods and services which help to capture large market share. This
mass production and distribution helps to reduce the cost per unit of product.
v. Perpetual succession: Company is a separate legal entity and it is not affected
by the death, lunacy and bankruptcy of the shareholders. So, life of the company
is independent of its shareholders. The stability of business for longer period of
time is beneficial to the society and nation.
vi. Efficient management: The management of Joint Stock Company is done by
the elected representatives of the shareholders i.e. Board of Directors. Usually
the shareholders elect those members who are expert in their respective fields
and it can also hire highly skilled manpower by offering better salary and career
opportunity. Therefore, it can get efficient management team that can lead their
business towards higher profitability and market share.
vii. Public confidence: The joint stock company gets the public confidence because of
efficient management, publication of financial statement, perpetual existence and
the existence of legal rules and regulations to govern it. Public have good faith in
the company. Due to this, it will be easier to obtain capital from different sources
through issue of shares and debentures.
viii. Easy to obtain Loan: It is easier for Joint Stock Company to obtain loan from the
general public and financial institutions due to public confidence, publication of
financial statement, investment of huge capital in business and perpetual existence.
Disadvantages

Disadvantages of joint company are explained as follows:
i. Difficulty in formation: The formation of a company is a difficult task; laborious
and long legal formalities have to be undergone and considerable expenses
incurred in its formation.

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