Q.What are the merits of the company form of business organisation?

The company form appeals to investors and entrepreneurs mainly because it limits personal risk while opening the door to large amounts of capital. …

The joint stock company form has become the dominant vehicle for large-scale business precisely because it offers advantages that a sole proprietorship or a partnership cannot match.

1. Limited liability: A shareholder's liability is restricted to the amount unpaid, if any, on the shares held; personal assets remain protected, which encourages people to invest even in businesses they do not personally control.

2. Perpetual succession: The company continues to exist regardless of changes in its membership, giving it the continuity needed for long-term contracts, projects and borrowing.

3. Large and diversified capital: A public company can raise substantial capital by selling shares and debentures to a very large number of investors, funding projects far beyond what a proprietor or a small partnership could finance.

4. Transferability of shares: In a public company, a shareholder can sell shares on a stock exchange without affecting the company's operations, making share investment attractive and liquid.

5. Professional management: Because ownership (shareholders) and management (the Board of Directors and executives) are separated, a company can hire qualified professionals to run the business rather than depending solely on the abilities of its owners. …

Students sometimes list 'easy formation' as a merit — formation is actually a limitation (it is costly and formal), so …