Question

Write Short notes on the following:
Limitations of Joint Stock Company.

Answer 1

The major limitations of a company form of organization are as follows:-

1. Complexity in Formation:- The formation of a company requires greater time, effort, and extensive knowledge of legal requirements and the procedures involved.
2. Lack of secrecy:- The Companies Act requires each public company to provide from time to time a lot of information to the office of the registrar of companies. Such information is available to the general public also.
3. Numerous regulations:- The functioning of a company is subject to many legal provisions and compulsions.
   
4. Delay in decision making:- Companies are democratically managed through the Board of Directors which is followed by the top management, middle management, and lower-level management
   
5. Conflict in interests:- There may be a conflict of interest amongst various stakeholders of a company.