Distinguish between the following.
Sole trading concern and Joint stock company
Sole trading concern and Joint stock company
Difference between Sole Trading Concern and Joint Stock Company
Basis of Difference
Sole Trading Concern
Joint Stock Company
Governance
Not governed by any law.
Governed by the Companies Act 1956.
Members
It has only one member who is the owner of the business.
In case of a private company:
Minimum: 2
Maximum: 50
In case of a public company:
Minimum: 7
Maximum: No limit
Liability
Liability of the sole owner is unlimited.
Shareholders have limited liability to the extent of the unpaid amount on the shares held by them.
Formation
Easy to form, as there are no legal formalities.
Difficult to form, as there are several legal formalities.
Decision making
All decisions are taken solely by the sole proprietor.
All decisions are taken by the board after the approval of shareholders.
Management and control
Management and control lie in the hands of the owner.
Management and control lie in the hands of the managing director.
|
Difference between Sole Trading Concern and Joint Stock Company |
||
|
Basis of Difference |
Sole Trading Concern |
Joint Stock Company |
|
Governance |
Not governed by any law. |
Governed by the Companies Act 1956. |
|
Members |
It has only one member who is the owner of the business. |
In case of a private company: Minimum: 2 Maximum: 50 In case of a public company: Maximum: No limit |
|
Liability |
Liability of the sole owner is unlimited. |
Shareholders have limited liability to the extent of the unpaid amount on the shares held by them. |
|
Formation |
Easy to form, as there are no legal formalities. |
Difficult to form, as there are several legal formalities. |
|
Decision making |
All decisions are taken solely by the sole proprietor. |
All decisions are taken by the board after the approval of shareholders. |
|
Management and control |
Management and control lie in the hands of the owner. |
Management and control lie in the hands of the managing director. |
