What is meant by Joint Stock Company? Explain the merits of Joint Stock Company?
Two or more individuals or enterprises, either private or government, owned or a foreign company joining together through participation in equity capital for achieving a common target and mutual benefits is known as joint stock company.
Merits of Joint Stock Companies are:
(i) Reduces competition : When two companies join together, it results in reducing the competition as instead of wasting resources in competition they will strengthen their organization.
(ii) Reduces risk : High risk involved in new and innovative ventures can be reduced when two companies join together to share the risk.
(iii) Advanced technology : By joining hands with foreign companies, Indian companies can get the benefit of advanced technology.