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Question

Which of the following is/are disadvantage of a company form of organisation?

A
The formation of a joint stock company is much more complicated than sole proprietorship or partnership.
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B
A joint stock company has greater tax burden.
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C
Separation of ownership from control
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D
All of above
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Solution

The correct option is C All of above
A company is a distinct legal entity separate from its shareholders or officers. The following are the disadvantages of a company form of organization:
1. The formation of a joint-stock company is much more complicated than a sole proprietorship or partnership.
2. A joint-stock company has a greater tax burden.
3. Separation of ownership from control.
4. The reporting requirements can be complex.
Thus the correct answer is D.


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