Q:
Consider the following statements about a joint-stock company:
1. It has a legal existence.
2. There is limited liability of shareholders.
3. It has a democratic management.
4. It has a collective ownership.
Which of the statements given above are correct?
Answer & Explanation
Answer: D) 1, 2, 3 and 4
Explanation: Joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.
The definition of a joint stock company highlights the following features of a company.
Separate legal entity:From the day of its incorporation, a company acquires an identity, distinct from its members. Its assets and liabilities are separate from those of its owners. The law does not recognise the business and owners to be one and the same.
The management and control of the affairs of the company is undertaken by the Board of Directors, which appoints the top management officials for running the business. The directors hold a position of immense significance as they are directly accountable to the shareholders for the working of the company. The shareholders, however, do not have the right to be involved in the day-to-day running of the business. The liability of the members is limited to the extent of the capital contributed by them in a company
The risk of losses in a company is borne by all the shareholders. This is unlike the case of sole proprietorship or partnership firm where one or few persons respectively bear the losses.
View Answer
Report Error
Discuss
Aptitude and Reasoning
General Knowledge
Puzzles
Interviews
Technical
Certifications
Exams
Job
Roles
True or False
Exams